Understanding Price Competition on Amazon

Understanding Price Competition on Amazon

Price competition on Amazon is fierce.

How is your brand targeting a particular market segment with your pricing strategy? Does your brand know how they stack against the competition? 

Below, we are going to use search results to analyze pricing on the digital shelf and provide examples of pricing strategy. 

We will be looking at: 

  • What is the distribution of prices?

  • Does Amazon search preferentially return lower-priced items?

  • How are our focal brand’s products priced compared to other listings?

Use search to identify the competition

 Analyzing search results is an effective way to quantify the competitive landscape for your brand on the digital shelf.  You can keep tabs on all brands and products showing up on Amazon searches on your priority keywords.

Here are the first results from an example search on the term ‘outdoor bench’.

Amazon digital shelf

We highlighted the headline advertising results at the top of the page in green.

Below the headline ad, we outlined the sponsored product listings in red and organic search results in blue.

Understanding your place on the digital shelf

We will collect pricing, share of voice, and search rank (SRP) of organic search results on a single day for 'outdoor bench'.

The blue bar graph below shows the prices of all page 1 search results (note: price here refers to the price displayed on the Amazon search results page).

Our focal brand, Christopher Knight Home, has an organic share-of-voice of 5% for this term. Five of their products appeared on the first page of results, indicated by the orange dots on the graph below.

In this case, the prices of top organic listings are normally distributed with an average of about $117.

The Christopher Knight Home products are priced slightly higher than average, between $130 to $200, but they are not the most expensive products returned.

This pricing likely reflects an optimized strategy on the part of the brand manufacturer.

price distribution for competitive items in the furniture category

Let’s look at another example in the furniture category, a search for ‘mid century coffee table’.

In this case, the Christopher Knight Home items are on the lower end of the pricing spectrum.

If the brand’s strategy is to increase click-throughs by offering a value product, then this may be the appropriate price point.

However, if their goal is to present the brand as mid-range to premium, these items may not be reinforcing that perception. The brand manufacturer might decide to advertise some of their higher-end products on this keyword.

Amazon price competition for furniture

In the graph below, you can see prices of page 1 search results for ‘3 piece luggage set’.

Our focal brand, Samsonite, has three items that rank highly on this search. These are three of the most expensive items in search results. Is this what the brand wants to represent? Are they targeting a luxury shopper?

If so, the brand should reinforce this message by maintaining a high-quality shopper experience, including A+ content and great reviews.

digital shelf analytics for premium brands

Let's switch gears and take a look at ‘organic garlic powder’ on Amazon.

The McCormick brand owns a large share-of-voice on this keyword. They have offerings at several different price points. Overall, McCormick products tend to skew toward the lower to mid-range of the price spectrum.

This pricing speaks to a well-recognized, mid-range brand. In addition, McCormick has the Amazon's Choice badge on one of its bestselling, lower-priced products.

Amazon digital shelf analytics for CPG items

Lastly, let’s turn to the electronics category.  In a search for ‘wifi router’, the NETGEAR brand has 22% share-of-voice.

They have six products on page 1 of search results, as well as a headline ad and several mentions in the editorial recommendations. NETGEAR is clearly a dominant manufacturer in this product category and they offer products at a variety of price points.

This makes sense in this particular electronics category because there are a variety of ways to configure the technology to suit a broad range of consumer needs.

prices of products in the electronics category

Takeaways

Understanding the pricing distribution for product searches is vital, whether you are an Amazon Vendor, third- party seller, or pursuing a hybrid strategy on Amazon.

In this post, we used Amazon search results to examine price competition on the digital shelf for brands in several different product categories. 

  • Our exploration shows that most price distributions are centered around a median price for each search term.

Interestingly enough, this indicates that Amazon’s search algorithm does not appear to use price in ranking its search results. If Amazon search preferentially returned the lowest-priced items, we would expect to see a left-skewed price distribution. 

  • Brand manufacturers should understand how their products are priced relative to competitors.

For brands that operate a seller central account, competitive pricing information is critical to setting prices and controlling the buy box.

Brands that act as Amazon vendors have less direct control over the pricing of their products, but there are still actions you can take. For example, you could use competitive pricing data to decide which products and keywords to advertise on within each category. Sponsored listings eventually can help to improve organic search rank and share-of-voice, as well as driving product visibility and sales.

  • If you're launching a new product, competitive pricing information provides key context. 

If you want to understand the competitive landscape for your products and optimize your pricing on Amazon, you’ll need data. That’s where Reviewbox comes in.

Reviewbox provides comprehensive digital shelf analytics for brand manufacturers on Amazon and other major retail sites.

If you're interested in pricing analytics for your brand contact us at info@getreviewbox.com

 

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