Feedvisor, a Tel-Aviv based tech firm, won a Red Herring Top 100 award on April 15 for a system that automatically reprices items in the Amazon Marketplace.
Amazon may look like a calm, well-ordered online mega-store, but behind its civilized veneer is a savage, wild, ultra-competitive marketplace where sellers engage in cutthroat competition to get customers’ attention. Like the commotion in a Middle Eastern fruit market, sellers throw out prices as potential patrons surf by, with the company claiming the best price and having greatest presence getting the business.
Without a little help, sellers are liable to find themselves eaten alive by the competition, but Tel Aviv-based Feedvisor’s algorithmic repricing system enables sellers to automatically raise or lower their prices in order to maximize profitability. Feedvisor’s technology impressed the folks at Red Herring, a media company, who last week honored them with a Red Herring Top 100 award for most promising private technology venture from the European business region
When consumers shop at Amazon.com, they are not shopping at a department store, where all the goods belong to one merchant; but rather at an online mall, where numerous vendors can sell a broad range of products, paying Amazon a percentage of their revenue. The system, called Amazon Marketplace, is wholly integrated into the main sales platform, so products sold by Marketplace merchants appear in search results on the site. Buyers purchase the product from the site, with Amazon transferring the request to the merchant, who is responsible for shipping the product to the customer.
When potential buyers search Amazon for a product, even with criteria that allow them to narrow their search to a specific product (same manufacturer, color, product number, etc.), the returns are likely to show options that allow them to buy from one of several merchants — each charging a different price for the same product, usually not including shipping costs. In addition, the merchants may also be competing against Amazon itself, which is likely to sell the same product — and if the buyer is a member of Amazon’s Prime program, they get free shipping, making the competition even more intense. Amazon Prime is available for $75 for an annual membership.
The bottom line for independent merchants using the Marketplace platform is that they are in a fierce price war with other merchants — and with Amazon itself, which has the ‘house’ advantage. One such edge is the ability to tweak prices in response to traffic, product views, and numerous other factors (the specific criteria are top secret, Amazon says). This lets Amazon drop prices on a hot item and keep all the business for itself. As a huge trader, Amazon can more easily negotiate with wholesalers for better prices on those hot items creating a clear lead on Marketplace merchants.
It’s a dog-eat-dog world, capitalism at its finest. Just as in the fruit market, merchants have to keep constant guard in order to stay competitive. That’s where Feedvisor makes use of what it calls “the only fully algorithmic repricing solution on the market today, enabling you to continuously and consistently win the BuyBox without sacrificing your profit margins.”
The “BuyBox” is the box on a product detail page where customers start the purchase process by adding items to their shopping carts. Essentially, it is the first buying choice presented for the product. According to Amazon, the two biggest factors in determining which merchant’s version of a product gets into the BuyBox are price and availability. Only merchants with top approvals and reviews from customers are eligible for the BuyBox, Amazon says.
With price a major factor in determining whether a product gets into the BuyBox and Amazon and other merchants constantly adjusting their prices to qualify for BuyBox status, Feedvisor’s automatic repricing comes in very handy, the company says. While there are many repricing services available for Marketplace, Feedvisor is the only one that is automatic. “Instead of repricing your products based on your competitors’ prices, Feedvisor understands how the Amazon BuyBox works, and is able to reprice your products based on maximum profit, optimum sales, or any other business goals,” the company adds.
Other solutions require users to set up rules — such as when a price change should be implemented, in response to which circumstances and how much profit to sacrifice — whereas Feedvisor does all the work. “Feedvisor does not require any pricing rules or business rules to be set up. This saves hundreds of hours of setting and resetting rules, removing conflicts, and testing pricing scenarios, and removes all risk of human error,” the company says. The product follows all of Amazon’s rules regarding fair competition, such as parsing Amazon HTML pages for information about competitors. “As a member of Amazon’s Technology Partner Network, we have worked very closely with Amazon to ensure that we offer the best possible solution to our customers, without breaching any of their requirements and with the highest possible level of accuracy,” says Feedvisor.
The Feedvisor site is full of testimonials from satisfied merchants who thank the company for helping to shepherd them through the treacherous Marketplace jungle. That was enough to convince Red Herring to present its award to the company.
“We are ecstatic about winning the prestigious Red Herring award and view it as a sign that our achievements over the last two years have been recognized by the industry,” said Victor Rosenman, Feedvisor’s co-founder and CEO. “It is testimony to our hard work and a great honor for us. We’ve developed a solid product and are constantly fine-tuning it according to our customers’ needs. It is also reflective of our growing customer base and our high rates of customer satisfaction.”
Click below to see Rosenman explain Feedvisor: