In this video, we give you an overview of how Marketplace Management's Algorithm interacts with Amazon, and show you best practices for optimizing your Algorithm strategy.
In this video
- How our Algorithm interacts with Amazon market data
- How to create an Amazon Algorithm strategy
- How each Algorithm setting changes the behavior of our repricing engine
Our repricing engine for Amazon uses market data attached to the ASIN identifier your product is listed on. This market data includes your competitors’ prices, seller metrics such as feedback rating, feedback counts and fulfillment type. The Algorithm is designed to make intelligent price changes and maximize your time in the Buy Box by comparing your seller metrics with that of your competition. Additionally, we offer a few settings that give you control over how the Algorithm reacts to certain competition scenarios. These settings can be modified after creating an Algorithmic price strategy and navigating a few clicks past the initial strategy screen.
How to Create an Algorithmic Price Strategy
- Make sure Amazon is an active integration
- Navigate to Tools and click on the Pricing Strategies link
- Click on “Create Pricing Strategy” at the top of the screen. The default strategy that displays will be the Algorithm for Amazon so click next.
- You’ll be given the option to choose Profit Protection settings before arriving at the Algorithm settings.
Understanding Marketplace Management's Algorithm Settings
Risk Tolerance Slider
The first setting to be modified is our Risk tolerance slider. This setting alters the range of prices that we will consider when searching for an optimal Buy Box price. This tolerance range is independent of your minimum and maximum prices, which will always take priority when pricing occurs. A high-risk tolerance will consider the full range of prices between your minimum and maximum while a low-risk tolerance will shrink the range of prices we will choose from. For example, if your minimum price is $50 and your maximum is $100, a low-risk setting may only consider prices between $60 and $90.
The second setting is our Precision slider. Adjusting the precision will alter the speed and accuracy of the Algorithm when searching for an optimal Buy Box price. A high precision will take longer to find the optimal Buy Box price but will seek to maximize your margins. A low precision setting will allow the Algorithm to quickly settle on a price to maximize your time in the Buy Box.
Tip: Try first
When optimizing your Algorithm settings, we highly recommend that you first try the strategy using the default settings of High Risk and balanced precision before making any adjustments. After assigning the Algorithm to the products you choose to reprice, don’t forget to utilize our price report to monitor the price changes that we send out to Amazon. This report will help you make data-driven decisions about what Algorithm settings need to be adjusted.
Thank you for watching this tutorial on Algorithmic pricing. You will find more of these tutorials in our knowledge base which is accessible through our help center located at the lower left-hand corner of your Marketplace Management account.