this other seller agressively undercutting you. I imagine they see you as doing the same thing no? The obvious answer is set a price you yourself are happy to sell at and stick to it though once you are in a price war it can be tricky to get out of it.

In answer to the FBA question, having the Prime badge no longer builds into the featured offer algorithm so just doing FBA won’t necessarily get featured offer, though the quicker delivery time may increase sales.

Your competitor is probably using a repricer and and has a minimum price set. So every time you lower your price they automatically lower their price.

Sometimes being a bit more expensive than your competitor works and you get the buy box anyway. This is especially the case if you can offer a faster delivery time than your competitor.

Although the scenario you describe is typical of what happens on Amazon.....you just have to compete by dropping your price to match or hold onto a higher price.

It does seem like the pot calling the kettle, as you started undercutting first. That is one (of many) problems with selling on Amazon, there can be a race to the bottom. What happens if you put your price up? does your competitor also increase their price? I have yo-yoed prices in the distant past to maintain a margin and a share of sales.

I have seen small manufacturers and importers go out of business because of the race to the bottom, where at some point the margins are not enough to replenish stock and sellers move on to other products, leaving the manufacturer with excess stock and few distribution options left.

I feel as though many have abandoned repricing software, and are just happy making a profit with a share of sales. I may be wrong, it's just this type of problem doesn't seem to come up as often as it used to, although there are many more serious problems to focus on.

if i was him i would be thinking the same way , welcome to Amazon

Unfortunately this is the nature of the beast. I am facing this same issue currently. Large companies with huge buying power undercutting me significantly and near putting me out of business.

Definitely just need to echo what everyone else is saying. This story sounds exactly the same from the other side of the fence. People were happy selling this product at a good price, before you "finally got approved" to sell it. Instead of matching the price everyone else had, you undercut everyone by "just a pound or two" cheaper.

Whats then happened is that those other sellers have noticed that a popular item has suddenly stopped selling, and when they've checked, they've found some fool undercutting everyone else.

From what you describe, you're the bad guy here.

amazon do it themselves, so nothing to complain about. sounds like you are not exactly innocent of your own accusations against others

Nothing personal , it's just business , comes to mind. Many lessons lie ahead

Why did you have to undercut, you can just match a price

Sit slightly above their lowest price so they sell out quick for not much profit, wait for their stock to run out and then the listing is yours