This Issue's TLDR...

• Insider details on Amazon's competitive price matching systems
• How to update your prices in bulk
• The Amazon halo effect

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I get enlisted to troubleshoot Amazon competitive price matching 1-2x per week, and in most cases, the brands seeking help only care about getting the issue resolved, not the "Why" behind it.

Fair enough.

But, I know many of my Best@Amazon readers do care about the "Why," so here's a brief-ish technical explanation of Amazon's price matching protocol:

Overview of Amazon's Price Matching Protocol

Unsurprisingly, Amazon uses dynamic pricing algorithms to continually adjust its own (i.e., 1P) product prices in response to market conditions. The goal is to remain competitive without blindly matching the lowest price at any cost.

Now, Two key internal factors filter when and how Amazon will match a competitor's lower price: Contribution Profit (CP) and Competitor Type. In essence, Amazon weighs profitability per unit and who the competing seller is before it decides to drop its price to match a competitor.

This means a cheap price on a rival site won't always trigger an Amazon match. It depends on whether the match would erode Amazon's profit beyond an acceptable threshold, and on how important/credible that rival is deemed to be.

Now, let's dig in to each of those factors...

Contribution Profit (CP) – Amazon's Profitability Filter

CP is Amazon's per-unit profit after accounting for variable costs like the wholesale cost, shipping, and marketplace fees. Amazon closely tracks CP on the products it sells, and this plays a major role in pricing decisions. If undercutting a competitor’s price would push a product's CP below a certain floor (i.e. minimal or negative profit), Amazon often won't match that price.

In practice, Amazon's Retail teams constantly analyze CP and flag items with heavily negative CP –- they will "pull levers" (like price adjustments or vendor cost negotiations) to make those items less unprofitable.

Now, sometimes, Amazon is willing to carry some items at a slight loss (negative CP) when it believes having the lowest price is strategically important for customer trust and selection. However, there is a limit to how much loss Amazon will tolerate on a price match. If a competitor's price is so low that matching it would mean losing more money per sale than Amazon’s internal thresholds allow, Amazon's algorithm may simply not match that price or might quickly revert to a higher price.

On the flip side, Amazon rarely raises prices on items that already have a healthy profit margin. A positive CP often indicates the price is competitive, so Amazon doesn't try to "squeeze" more profit by increasing it (REMEMBER: Customer Trust is a BIG deal at Amazon). The focus is on staying competitive while still at least breaking even on a unit level in the long run.

Competitor Type – "Image" vs "Super Image" Competitors

Not all competing retailers are treated equally by Amazon's pricing algorithms. Amazon internally classifies external competitors into tiers based on their market stature and the trustworthiness of their pricing. In Amazon's terminology, an "Image Competitor" (IC) refers to a competitor of moderate significance or lower trust, whereas a "Super Image Competitor" (SIC) is a top-tier, highly credible rival across many products. This classification strongly affects Amazon's price-matching aggressiveness:

• Super Image Competitors (SIC): These are major retailers that customers commonly see as credible alternatives to Amazon across a wide range of products. SICs are competitors with large market share across multiple product families – ones that directly compete with Amazon on key facets like selection, price, delivery, and service. In practice, this means well-known first-party retailers such as Walmart.com (sold by Walmart), Target.com, BestBuy.com, Costco.com, etc. When Amazon's system detects a lower price from a SIC, it reacts quickly and decisively. Amazon will often match (or even beat) the price from a Super Image Competitor very fast...even if doing so drives Amazon's own CP to zero or slightly negative. In other words, Amazon is willing to tolerate minimal or no profit on a product in order to not be undersold by these major rivals.
• Image Competitors (IC): This tier covers lesser or "lower-trust" competitive sources. Often these are marketplace listings or third-party sellers on other sites – for example, a 3rd-party seller on Walmart Marketplace or Target Plus, or smaller online retailers/marketplaces that aren't as universally trusted. Amazon still monitors these competitors' prices, but applies tighter profit guardrails and more caution in matching them. If a small seller on Walmart.com or eBay offers a product at a rock-bottom price, Amazon might respond only within limits – or not at all – especially if matching that price would violate Amazon’s CP floor. Price matches to ICs, when they occur, tend to be limited and often short-lived. Amazon may briefly match a flash sale or a low 3P price to test the waters, but if the competitor's price seems unsustainably low (or the competitor soon goes out of stock), Amazon will quickly raise its price back up to protect its margin. In short, Amazon does not "chase" every random low price on the internet, only those from sources it considers relevant and reliable.

This tiered strategy ensures Amazon remains ultra-competitive against the Walmarts and Targets of the world, without committing to match every low-price outlier that could drain profits. It's a balancing act between price image and profitability.

Worth noting...Amazon will sometimes shift its approach depending on internal goals: during periods where Amazon is prioritizing profitability, it may relax some price matching (letting certain items stay at higher prices to maintain margins); conversely, when the focus swings to growth and market share, Amazon becomes more aggressive about matching top competitors even if margins suffer. This explains why vendors occasionally observe Amazon backing off price matching in one quarter, then slashing prices in the next – Amazon adjusts those dials based on its current objectives.

What Amazon Doesn't (Always) Match: Coupons, Bundles, and Hidden Discounts

Another important nuance is that not all types of competitor price reductions are matched by Amazon. The pricing algorithms need a clear, apples-to-apples price to react to. Therefore, certain promotional or conditional discounts are often ignored or treated differently:

• Coupons and Promo Codes
• BOGO and Multi-Buy Deals
• Checkout-Only Discounts
• Out-of-Stock or Limited Offers

In Summary...

Amazon's competitive pricing system can be thought of as guardrails: one guarding the bottom line (Contribution Profit) and one assessing the competitive landscape (Competitor Type).

Any potential price match runs through these two filters internally. Amazon asks: "Can we match this price and at least break even on our contribution profit? And is this competitor one we care deeply about beating?"

If the answer to both is yes – for example, Walmart.com offering a deal that still leaves a small margin – Amazon will often match it rapidly. If matching would destroy the unit's profitability, Amazon may hold the line (especially if the competitor is a minor player), or find another way to stay competitive (such as highlighting 3P sellers or suppressing the Buy Box).

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BEST from the Group Chats

This question/request came up in one of my group chats:

Has anyone successfully updated prices in bulk using an inventory feed file?

We need to update prices for about 70–100 listings, but changing them directly in Seller Central isn't working because of some SKU error, so we’re turning to feed files instead.

Manually downloading the category template for each SKU and filling them in one by one is way too time-consuming. I've experimented a bit with the Listing Loader and the Category Listing Report, but haven't had much success yet.

If anyone has an efficient process or tips for bulk price/listing updates, I'd really appreciate hearing how you do it!

Here's the answer:

You need to use the 'Update price & quantity template" for bulk changes, ignore any settings relating to FBM. Simply enter in the SKU, the new price, and channel.

• Step 1: Catalog>Add products by upload>select 'Download Blank Template'>Then Update price & quantity
• Step 2: Enter SKU, Price and Amazon as fullfillment (if this is FBA)
• Step 3: Save your file as a tab-delimited text file (.txt)
• Step 4: Upload!

BEST from LinkedIn

My good friend Neha Bhuchar posted this on LinkedIn recently with an important message:

Your KPIs, and their target levels, will always depend on your advertising strategy.

It sounds basic and obvious, but I see this nuance lacking in most "expert" commentary and social media think-pieces.

Thanks, Neha.

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BEST from X

Two things:

1. David's podcast setup is NEXT LEVEL!
2. My favorite line from the video: "People say Amazon devalues brand—but 80% of U.S. households are on Amazon; being visible only helps."

Thanks for this great content, David.

David Holmes @dholmes94 I recorded a conversation with the CMO of a 8 figure DTC brand about how he thinks about Amazon and how it's impacted the overall business (MER, CAC, and LTV). 30 minutes of advanced level content that you can't find anywhere else. Search - David Holmes Amazon FBA on Youtube 9:43 AM • Apr 14, 2025 2 Retweets 8 Likes Read 3 replies

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This tweet speaks for itself.

Jasdev Kailey @JasdevKailey One of the best things I’ve heard recently: “Your price, my terms” Get creative when negotiating. 3:36 PM • Mar 7, 2025 0 Retweets 0 Likes

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There are 3 factors that determine whether a deal gets done:

1. Price (and, relatedly, the ability for the deal to be underwritten)
2. Buyer-seller rapport
3. Creativity

For any given Price, there are an almost infinite number of Terms that could get a deal done.

Remember that.

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