Since Amazon attracts millions of customers to its platform, it is an excellent marketplace for any seller. With so many sellers on the platform and other competitive platforms, setting a competitive price for your products can be pretty complicated. You'll not want to miss out on valuable profits by setting prices too low or risk not getting the sales you wanted by setting your prices too high.
Unfortunately, Amazon does not offer price matching on a case-by-case level. However, through its fair pricing policy, Amazon tries to ensure that products on the platform are available at low and competitive prices. Therefore, if you plan on selling on Amazon, you should understand their fair pricing policy to avoid getting penalized. In this article, we'll look at everything about Amazon's fair pricing policy.
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What is Amazon's Fair Pricing Policy?
Amazon Fair Pricing Policy states that Amazon regularly monitors the prices of items on their marketplace, including shipping costs, and compares them with other prices available to ensure that there are no pricing practices that harm customer trust.
While Amazon allows sellers to set their own prices, it strives to provide its customers with a wide range of products at the lowest price possible. Therefore, if a seller fails to price their products at a competitively low price, Amazon reserves the right to alter the product listing.
How Can Amazon Sellers Follow the Amazon Fair Pricing Policy?
Amazon sellers must abide by the Amazon fair pricing policy when setting prices for their products. To do this, Amazon sellers are required to avoid practices that harm customer trust, which include the following:
- Setting reference prices on products or services that mislead customers
- Setting a price on a product or service that is significantly higher than recent prices offered on or off Amazon, including competitive platforms like Walmart, Alibaba, or eBay.
- Selling multiple units of a product for more per unit than that of a single unit of the same product.
- Avoid setting overly excessive shipping fees.
If a seller fails to follow the Amazon fair pricing policy, Amazon can remove the Buy Box, deactivate your listing, suspend the shipping option or, in some serious or repeated cases, suspend their selling privileges. Since Amazon strives to be a customer-centric company, it won't hesitate to punish you severely. You'll not receive any warning, and, in some cases, you may not even realize that your listing was removed until you check your Account Health Dashboard in Seller Central. Therefore, Amazon sellers need to avoid practices that harm customer trust.
What is a Suppressed Buy Box?
The Amazon Buy Box helps increase your sales by simplifying the buying process. Therefore, one of the dire consequences of violating the Amazon fair pricing policy is that Amazon may suppress your Buy Box. Amazon suppresses the Buy Box to protect its customers from buying overpriced items.
Buy Box suppression happens when the Add to Cart option is removed from your listing and replaced with the See All Buying Options. Usually, when customers visit your product on Amazon, they will see the Add to Cart or Buy Now options.
When it's suppressed, your customers will see the See All Buying Option, allowing them to look at other sellers' listings and choose who to buy from. This will affect your sales and damage the customers' trust in your products.
Do Sellers Still Have to Price Match on Amazon?
Since Amazon does not price match, sellers must take the steps necessary to stay competitive to keep their Buy Box available. Amazon keeps track of your product's pricing to determine whether your Buy Box should remain open or suppressed. This helps Amazon ensure its customers don't find the same products at a lower price on any other platform.
Therefore, you can avoid losing your Buy Box by watching your competitor's pricing on other online platforms. This will help you ensure that your product's pricing stays competitively lower than your competitors on other platforms.
Which Marketplaces does Amazon Fair Pricing Monitor?
To ensure that its sellers abide by its fair pricing policy, Amazon watches other online marketplaces, mostly Walmart, eBay, Target, and Alibaba. Amazon could also monitor category-specific websites for specific products. For example, it could monitor Chewy.com for pet products, among other relevant platforms.
How to Craft an Effective Pricing Strategy for Your Products on Amazon
As an Amazon seller, it's your obligation to ensure that you offer the best prices for your products. Therefore, you'll have to develop a pricing strategy that features a consistent retail price for all sales channels. You can consider various factors when developing prices for your products listed on the Amazon marketplace. These include:
- Fair pricing: For any single product or multiple product packages, you should set a price equal to or lower than the price of the same item sold by sellers on other marketplaces.
- Price limitations: Sellers with an Individual Seller Account can only list items that are below $10,000. This does not apply to those with Professional Seller Accounts.
- Shipping: You should also consider the fluctuating shipping and delivery costs when calculating an item's price.
- Handling: You should also consider handling costs and the time taken to package and process an order.
- Discounts: Sellers can offer discounts, promotions, and rebates on their products. However, these deductions will be at the seller's expense and not Amazon's. That's why it's important to consider them when setting your product's prices.
- Low Price Comparison: Sellers can use the Amazon Low Price Comparison filter to check the prices of similar items listed across the platform. This will help them create a competitive price based on other platforms' prices.
Amazon strives to remain the best marketplace for any shopper. That's why Amazon protects its customers from price exploitation through its fair pricing policy. Amazon's fair pricing policy requires all Amazon sellers to provide the best prices for their listings. They have to either set their product's prices at or below the prices on other marketplaces.
Any seller who violates the Amazon fair pricing policy will have their product delisted, or their Buy Box suppressed. Therefore, Amazon's fair pricing policy is a way for Amazon to ensure consistency and maintain a competitive edge in the eCommerce marketplace.