How Algorithmic Repricing and Predictive Business Intelligence Drive Enterprise-Level Growth on Amazon

December 18th, 2018

Unlocking Amazon’s significant profit potential takes more than savvy knowledge of your product category, quality products, or a streamlined operation. As we have seen over the years, even the smartest, most aggressive Amazon sellers face insurmountable difficulties and barriers scaling their operation. If your business is managed by rule-based systems or not fully optimized based on AI, you face the very real risk that your profitability will flat-line or even erode due to increasing competition on Amazon.

Without the right algorithmic software, data-driven insights, or operational expertise, sellers will continue to go from one software solution to another in the race for ever-greater profits. In this post, we explore five different Amazon businesses and reveal how algorithmic, data-driven software can power enterprise-level growth.

Enterprise Art Supplies Retailer 

Feedvisor was approached by an art supplies retailer who wanted a comprehensive pricing strategy. With a portfolio of nearly 4,000 SKUs, the business sells art supplies such as paints, palettes, and brushes, as well as digital projectors and mat cutters. In addition to Amazon, the company sells on eBay, Jet, and Sears. The Amazon arm is the bulk of their business, which is pacing to achieve an annual revenue of about $20 million.

To unlock deeper levels of profitability, Feedvisor performed a strategic account review and value analysis for the business, focusing on the items that were in stock for more than 50% of the analysis period, which was just over one year long. Next, we applied our machine-learning algorithm to the subset of items that sold with and without Feedvisor. Lastly, our team of Amazon experts provided performance assessments and hands-on support on an ongoing basis to ensure the company’s pricing strategy was robust and could be tracked by SKU, category, or time of year, amongst other variables.

The Results 

-Upon partnering with Feedvisor, the company’s Buy Box share for their entire catalog increased from 30% to 55%.

-The company also experienced a 49% increase in their average daily sales and a 64% increase in average daily profits versus before they were implementing Feedvisor’s price optimization and intelligence platform.

Cookware and Food Service Retailer 

A cookware and food service product retailer made the switch to B2C from B2B, only to realize that they needed a stronger repricer with AI software. Their repricer needed to maximize overall profitability and not just sales. On Amazon, they have a hybrid portfolio — selling both private label items and items that are competing for the Buy Box. The company fulfills the majority of their items via FBM, about 10,000 SKUs, but have 75 items that are fulfilled via FBA.

Given that 75 of the retailer’s SKUs are fulfilled via FBA and the remaining items are drop shipped directly to the customer via FBM, it was very important that Feedvisor’s repricer analyze and consider data points related to an individual SKU, product category, or time of year.

The Results 

-The company experienced a 110% increase in ROI versus before they were implementing Feedvisor’s price optimization and intelligence platform.

-Their average monthly profits increased by 68% in their first year with Feedvisor and have remained positive for each year that they have been a customer.

-They are now on par to achieve about $15 million this year through Amazon.

Large Seller for Hardware, Lawn and Garden, and Home Improvement 

This large seller joined the Amazon marketplace in 2015. Historically a brick-and-mortar family operation, the company has been around for four generations and Amazon makes up about 20% of their total company sales. With about 50K active SKUs on Amazon, the company is also selling on Walmart, eBay, and Sears and experienced an annual revenue in 2017 of about $20 million.

After trying another solution, this seller discovered that Feedvisor could more comprehensively optimize his operation, through algorithmic repricing, data-driven dashboards, granular reporting, and Amazon expertise from a customer success team. 

The Results 

-When the customer compared the performance of another software solution to Feedvisor, he saw a 19% difference in average daily sales volume.

-The customer saw increases in Buy Box share, number of sales, per-item profit margins, and product sell prices. He saw performance improve within a few weeks of returning to Feedvisor.

Industry-Leading Retail Brand for Large Appliances and Lawn & Garden Items 

A widely recognized retail brand joined the Amazon marketplace in March 2017. Specifically dedicated to selling repair parts for large appliances and lawn and garden items, their products include specific parts for refrigerators, dishwashers, ranges, water filters, and lawn mowers and trimmers. Currently, the retail brand’s Amazon store has approximately 90K active SKUs and is pacing to achieve an annual revenue through Amazon of $27 million in 2018.

After using one software solution, they quickly realized that they needed a platform that provided greater functionality and flexibility. It had to be less binary. They also needed to implement a repricing solution with more granular reporting to help them make stronger pricing, fulfillment, and replenishment decisions. With so many SKUs, they required deeper insights to help them identify where products are in their lifecycle, liquidate stagnant items, or break down performance by SKU. With Feedvisor, they could create a customized pricing strategy to drive overall profitability and sales.

The Results  

-The brand’s Buy Box share for their entire catalog increased by an average of 18%.

-The company experienced an increase of nearly 30% in their average daily sales versus before they were implementing Feedvisor’s price optimization and intelligence.

-The first batch of items that the brand moved over to Feedvisor that had never sold previously brought in over $100K in additional profits during the first six weeks.

Enterprise Health Care Seller

In mid-2014, an enterprise health care seller expanded to Amazon for supplemental income and have since integrated e-commerce into their operation. Previously focused on distributing durable medical equipment to small and mid-sized medical office suppliers and independent pharmacies, the business has grown to include pharmacy items such as over-the-counter medications and health & beauty products.

Once they hit their stride and their sales started to grow, repricing their 500+ SKU portfolio manually became immensely time-consuming and difficult to manage. They needed to streamline their Amazon operation by finding the right platform that would automate their repricing efforts and help drive profitability at the same time. Feedvisor gave them real-time repricing and predictive business intelligence in one place. 

The Results 

-When comparing February-May 2018 to the previous four months, this seller’s profits increased by 26% and margins by 57%.

-For their top ten best-selling items, they were able to charge a higher price than their competitors while either maintaining or dominating the Buy Box.

Final Thoughts

Finding the right Amazon optimization platform is not just critical; it is an indispensable gateway to enterprise-level growth. Many of the companies in the space are ambitious startups with limited resources. To ensure your success for the long haul, you will want to choose a partner that leverages the most innovative technologies possible to maximize your growth today and evolve with you tomorrow. In line with those concerns, Amazon also continues to introduce new solutions for sellers, such as its recent expansion of advertising services. Sellers will also want to find a technology partner and end-to-end platform best positioned to capitalize on these new changes.