The most common way a wholesale order loses money isn't a bad match or a fee surprise. It's a price that falls while your stock is still on the way or still on the shelf. Reading a falling price early, and sizing for it, matters more than any single number on the screen.
What a price war looks like
In the three price boxes, a price war has two signs together:
- the Buy Box line steps down again and again over a few weeks, each seller undercutting the last;
- the offers line rises at the same time, as more sellers arrive to share the sales.
A war usually ends when the sellers who bought high sell out, or when the price reaches the point where nobody makes money. It can take weeks or months.
Run the PO Assistant on the product and the chart marks it for you. Price war appears when the Buy Box is down 10% or more within 30 days while sellers rise, and Sellers piling in puts a dot with the count on the offers box, such as "+5". The read then names "Price war" as the thing to watch out for. See the marks on the chart.
A price that drifts down
Not every fall is a war. A price can drift down slowly over the year while the sellers stay the same: a newer version, a cheaper rival, a brand cutting its list price. The 1 year view shows it best. A drift is easier to buy around than a war, but it still means today's price is above what you'll sell at.
The opposite also happens: a Spike, a price 15% or more above its usual range for under 3 weeks. Don't size an order on a spike's profit.
How to size a falling price
A falling price isn't always a pass: a product with a healthy margin can still make money if you buy the right amount. Work out the price where you hit your minimum, estimate when the Buy Box gets there at its current pace, and buy only what sells before then. That's often fewer cases than your usual order.
The PO Assistant's suggested quantity doesn't shrink for a falling price: it's your share of sales for the days an order should last. When its read says "Price war", size the order yourself.
When the margin is thin, two things can still save it. A lower cost: the PO Assistant's read gives "Ask for $X", the unit cost that reaches your minimum ROI at today's price. See Ask a supplier for a better price. Or a price that comes back: pass for now and check the chart again later.
Count the fall once, in the price you size on, never as a second cut on top.
What to do in a war
- Buy small or not at all while it lasts. One case tells you where the price settles.
- Don't race the price down yourself: matching every cut only brings the end of the war closer to no profit for anyone.
- Check the chart again in a few weeks. When the Buy Box is back above the price that clears your minimums, it's a buy again.
A worked example
A phone case costs you $6.00. The Buy Box went from $19.99 to $15.49 in two months while sellers went from 4 to 9. At $15.49 you make $2.80 a unit; your minimum is $2.00 a unit, which you'd hit at about $14.55.
The Buy Box fell $4.50 in 60 days, about 7.5 cents a day. Even if the fall slows to half that pace, it reaches $14.55 in about 25 days.
Your share sells 3 a day, so cap the order at what sells in those 25 days: 75 units, 5 cases of 15. The PO Assistant's read suggests 9 cases for 45 days, with "Price war" as the thing to watch out for. The 5 cases is the safer order.