What is Velocity-based Repricing?
This method is used mostly by sellers that don’t have direct competitors or when the products sold have no alternatives under the same ASIN. Private label sellers are a common example of Amazon sellers that use this method. Although highly recommended for sellers without direct competitors, it can also be beneficial in some way for sellers from any category.
For example, sales for seasonal products like sunglasses can decrease dramatically during off-season, causing the product price to drop significantly. Before summer (and sales) come back, the sunglasses’ price will stay at the minimum price. This could be damaging for the seller’s long-term success as it sets a bad expectation for consumers to always expect a low price. They now see the low price as the default or market price.
A possible scenario is when the seller tries to reset the price back up it would be seen as unreasonable, even if it is a normal market shift. From the sellers’ point of view, the maximum price should be the normal price and the low price is a temporary pricing strategy when sales are low. However, from the buyers’ point of view, they’ve been watching the product maintain a low price, why should they pay more now? As a result, the price increase would backfire, damaging the sellers’ reputation and potentially losing customers.
A Solution from StreetPricer
The above is a reverse Sawtooth wave diagram that visualizes how the price changes under the price recovery feature are managed. The product price (y-axis) would decrease over time (x-axis) until it reaches the minimum price. It would then be reset immediately back to the maximum price at which point the process begins again.