How do you deal with competitors massively undercutting you?
I’ve noticed a lot of my product lines have been copied by a few competitors who are trying to price me out of the market. One product in particular, I know for a fact costs around 80p more to manufacture than the seller is selling it for… Other products, bearing in mind FBA fees, they must also be making a loss on those products.
How would you compete with this?
I’d usually advise just waiting it out but the fact they’re deliberately making a loss (maybe they’re just trying to clear inventory, mind you) and on one product especially, as I mentioned, it costs more to manufacture than they’re selling it for (I considered whether it could be a counterfeit item but haven’t test purchased), I can’t help but think there’s a breach of CMA rules or Amazon terms somewhere…
46 replies
Seller_JB8wPCk9zkyad
Historically, if they are selling cheaper than you and less than you buy it for …
BUY THEIR ITEMS !
Seller_FEXQNLthJaFTn
I’ve had a similar problem, sellers with suspiciously low prices or aggressive pricing actions. Checkout their feedback see if there’s a hint of fake goods. It turned out that a couple of my competitors were selling cheap nasty Far Eastern manufactured fakes.
Seller_64jziShTiTjOq
You can’t, unless you’re prepared to lose money as well. It’s a common tactic to get rid of competition and is perfectly legitimate. It’s usually done by sellers with a big enough range that they can afford to make a (probably temporary) loss on one line
Seller_lljyzgTxr5fgI
Nope, it’s simply that they can afford to do it and you can’t. And you state:
How do you know this? How do you know that they are not getting the item a lot cheaper than you think? Some sellers have a lot more buying power than others, just look at the likes of Tesco over Tommy’s Corner Shop? There is also no law against deliberately making a loss. Many sellers want to shift stock to make way for new stock. They have already made enough profit on the previous units they have sold so now they can sell the rest at a heavily discounted price just to shift them. Again, Tesco etc do this all the time; it’s called a “loss leader”, items deliberately sold at a loss to get you into the shop.
Unfortunately, my answer to this is always the same as for other similar threads. If you can’t compete, sell elsewhere or sell something different. Don’t get into a price war.
Seller_iwDZC5h1MCUbw
How do you know someone is not buying more of this item to get it cheaper ?
Does the manufacturer sell the product in different countries ? If so currency exchange can make a product cheaper.
Does the manufacturer offer preferred partner rebates ?
Maybe the other seller bought a load of clearance stock or stock from a company who wanted to free up cash flow.
Many reasons and ways you can undercut but as a general rule bigger fish can undercut smaller fish.
Seller_QxIBrul0jbDHu
We’re very close to when most commercial rents will be due (the June Quarter Day). If they have a bricks and mortar shop, especially one that’s been closed due to Coronavirus they may be doing it simply to get money to pay the rent, regardless of the current loss to themselves.
Not saying that’s the case here but it’s one reason why a retailer might have to sell at a loss.
Seller_L0QTscu6PnOvv
I have this a lot, silly priced products that is under market value and the buyers are getting a major bargain, makes you wonder how the seller makes any money at all !! The truth is they are not, and going for turnover.
After 10 years of being on Amazon Ive learnt to let them sell at the crazy price they set, eventually they will sell out or go bust (own doing) and you get your price. Dont get involved in a price war its not worth it. You may sit on the product a little longer but it will eventually sell at the right market price you think is fair and gives you margin. Remember turnover is vanity, profit is sanity.
Seller_xUKHc5xSYJmI4
We did some research behind this type of activity and discovered the following:-
A number of sellers were not paying the correct postage for example sending a parcel with a weight of 500g but actual weight was 2500g same applies to large letter and letter.
Seller_6sxtIS0RbZ5k7
If this is happening on a lot of your products and they are all from the same manufacturer then I think you need to consider that the manufacturer may be retailing themselves.
Seller_Rkf2znCXtSZpI
If they are using automated pricing you could find their bottom price that still wins them the buy box through trial and error. Price your item 1p more expensive.
You will minimise their profit and you may run them out of stock and thus enable you to win back the buy box and you can move your price back to normal. Your competitor may then rethink whether they replenish stock.
