Q&A: How much do we have to undercut Amazon to get a sale?
QUESTION: Amazon now shows their book listings at the top of the list, above our Marketplace listings, unless we undercut Amazon by more than $3.49 -- the amount the buyer pays for standard shipping. This is somewhat misleading to the buyer, implying that every purchase from Amazon qualifies for free shipping.
My question: Do you think this is forcing prices even further downward? Are there any statistics showing how many people actually buy more books to get the free shipping deal? Are we effectively now having to give free shipping to compete with Amazon?
ANSWER: I'm not sure if it's driving prices downward -- my guess is yes. But there is no doubt that this policy has made our Marketplace listings less competitive against Amazon's.
There are no statistics on this, all we can do is guess. My guess is that about one-third of customers don't consider our Marketplace listings, even when we've got the best deal. Some people just believe it's "safer" buying from Amazon. And I suppose there's another big chunk of buyers who just buy the first listing they see, regardless of the feedback or the price.
But I would not arbitrarily discount by $3.50 below Amazon's price unless the average price is well below there. If there is any demand for the book, a smart buyer who doesn't qualify for free shipping is going to buy from you. So, if possible, wait for the smart buyer.
It's tough to compete with a landlord that gives themselves top billing and a sign that says "Fulfilled by Amazon." Here's a good example of how tough it is to compete: Currently I'm conducting an experiment by selling some slightly shopworn copies of my book Plug Your Book on Marketplace for $11.99. It's a new title so there's no used copies listed except for my listing. So here's the way it looks:
Now, you'd think I'd be getting most of the sales, right? The buyer saves $7.50 if they buy from me and pick standard shipping, versus buying from Amazon and paying for standard shipping. Even if they qualify for Amazon's free shipping, they still save $3.51 if they buy from me.
But I'm only getting about 30 percent of the sales -- the rest are going to Amazon and the Marketplace sellers who are selling new copies.
My question: Do you think this is forcing prices even further downward? Are there any statistics showing how many people actually buy more books to get the free shipping deal? Are we effectively now having to give free shipping to compete with Amazon?
ANSWER: I'm not sure if it's driving prices downward -- my guess is yes. But there is no doubt that this policy has made our Marketplace listings less competitive against Amazon's.
There are no statistics on this, all we can do is guess. My guess is that about one-third of customers don't consider our Marketplace listings, even when we've got the best deal. Some people just believe it's "safer" buying from Amazon. And I suppose there's another big chunk of buyers who just buy the first listing they see, regardless of the feedback or the price.
But I would not arbitrarily discount by $3.50 below Amazon's price unless the average price is well below there. If there is any demand for the book, a smart buyer who doesn't qualify for free shipping is going to buy from you. So, if possible, wait for the smart buyer.
It's tough to compete with a landlord that gives themselves top billing and a sign that says "Fulfilled by Amazon." Here's a good example of how tough it is to compete: Currently I'm conducting an experiment by selling some slightly shopworn copies of my book Plug Your Book on Marketplace for $11.99. It's a new title so there's no used copies listed except for my listing. So here's the way it looks:
Now, you'd think I'd be getting most of the sales, right? The buyer saves $7.50 if they buy from me and pick standard shipping, versus buying from Amazon and paying for standard shipping. Even if they qualify for Amazon's free shipping, they still save $3.51 if they buy from me.But I'm only getting about 30 percent of the sales -- the rest are going to Amazon and the Marketplace sellers who are selling new copies.
posted by Steve Weber at 3/21/2007
2 Comments:
Hi Steve, thanks for posting and researching my question. I too have done more research on this. I tried pricing one New title at 3.50 below the current advertised Amazon price. The result within 24 hours was that Amazon had dropped their 'free shipping' price (the one that assumes you will buy $25 or more) another 39 cents so that their copy still stayed in the number one position. Their intial price was 13.99, my listed price was 10.49. Their price revision took them to 13.59, keeping them at the top of the New listings. However, I have sold 4 copies even though my price plus shipping is higher than Amazon's 'free shipping' price.
I've tried explaining to my friends how much money they can save by buying from other sellers, but most of them don't get it. This is not going to help! Still, I'm getting good sales with this going on, so I'm not going to worry about it. You'd think I'd say that Amazon works for me, but I realize that I work for Amazon, for the privelege of selling books on a site that gets the most book traffic out there. And like any boss, they are out for their bottom line, not my happiness. I'm just grateful that they are there in the first place!
Bariki.
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