Remember back in 2020 during the height of the COVID-19 pandemic when Amazon faced a flood of criticism for price gouging?
People were outraged, especially since essential items like hand sanitizers, face masks, and disinfecting wipes suddenly became ridiculously expensive.
Some sellers took advantage of the increased demand, jacking up their prices far beyond what they were before the pandemic. We’re talking about price increases that, in some cases, shot up over 1,000%.
And some sellers used automated repricing tools to keep adjusting prices based on real-time demand, which only made the problem worse.
This is a classic case of price manipulation, where sellers or platforms intentionally mess with prices to gain an unfair advantage. Unfortunately, it's the customers who end up paying the price—literally.
Price gouging is a type of price manipulation aimed directly at buyers, but there are other types of price manipulation that target fellow sellers. For example, some sellers may slash their prices so low that it becomes impossible for competitors to make a profit.
Imagine you’re running your store, optimizing your listings, getting good reviews, and suddenly you notice your sales tank.
What happened?
You check your competitors and find that someone has dropped their prices so low that you can’t possibly compete. Next thing you know, even your loyal customers have started buying from them.
Now, price manipulation isn’t just about one competitor playing dirty. As mentioned in my example, it’s often an automated process where repricing tools are used to adjust prices in real-time, constantly undercutting others.
You might have experienced it firsthand—suddenly your well-optimized product is no longer the cheapest option, and customers flock to the lower price because that’s what we’ve been trained to do.
This starts a race to the bottom, where everyone drops their prices, and before long, your margins are so thin that you wonder if it’s even worth selling that product anymore.
And don’t be surprised if you see the very same competitor raising their price again once they’ve bullied everyone else out of the market.
The issue becomes even more troubling when you consider who’s doing it. While your competitors are the obvious culprits, they aren’t alone.
Some sellers use third-party software to manipulate prices automatically, playing by algorithms that are hard to outsmart.
They create tiny, frequent price changes that seem innocuous at first but can flood the market with artificially lower prices. Over time, this affects the natural pricing structure of the marketplace.
And, believe it or not, sometimes even the marketplaces themselves get involved in price manipulation.
Take Amazon, for example. They’ve been known to dynamically adjust prices based on algorithms, constantly tweaking them to offer what seems like the best deal to consumers.
But for you, the seller, this means competing against a system that can drop prices without notice, leaving you scrambling to adjust your strategy to maintain profitability.
Price wars are another byproduct of manipulation, and they’re a nightmare for small sellers. Big sellers with deep pockets can afford to play the long game, lowering prices just to push out smaller competitors. They know that once you’re out, they can raise prices again and reclaim their profits.
For small sellers, it’s like playing poker with someone who’s got an endless supply of chips—it’s not about who’s the best; it’s about who can last the longest.
And let’s not forget about fake listings. Some shady operators create listings with absurdly low prices just to undercut legitimate sellers, disrupting the marketplace.
These fake listings might disappear just as fast as they appeared, but the damage to pricing expectations has already been done.
For private label sellers, price manipulation takes on a different shade. Even if you’ve built a solid brand, knock-offs and copycats can sneak into the marketplace and undercut you.
They’ll sell similar-looking products at a lower price, causing confusion among customers who might not even realize they’re buying an inferior version.
It’s frustrating to watch a competitor profit off your hard work simply because they slapped a similar logo on a cheaper product.
So how can you deal with all this as an online seller?
First, let’s agree on one thing: you don’t want to join the race to the bottom.
Dropping prices might seem like a quick way to stay competitive, but once you start, it’s hard to stop. Instead of chasing lower prices, focus on creating real value for your customers.
Offer something unique that justifies a higher price—whether that’s bundling products, providing exceptional customer service, or even adding an extended warranty that no one else offers.
If you can position your brand as the better choice rather than just the cheaper one, you’ll attract buyers willing to pay more.
Speaking of pricing strategies, you’re going to want to automate, but you need to be smart about it. Repricing tools are great, but they can be a double-edged sword if you’re not careful.
Set limits—know the absolute lowest price you’re willing to sell at, and don’t go below it. You can use dynamic pricing, but make sure you’re not sacrificing your profit margins just to win short-term sales. There’s no point in selling more if you’re losing money on every sale.
Let’s also talk about building your brand. This is crucial, especially if you’re a private-label seller. A strong brand is your armor against price manipulation.
If people trust your name, they’ll stick with you, even when someone tries to undercut you. It’s all about cultivating customer loyalty through great reviews, stellar service, and consistently high-quality products.
Think about brands like Apple—people don’t go there for the cheapest option; they go because they know what they’re getting. You can aim for that same trust in your niche.
But it’s not just about the brand. Keep an eye on your competitors. You can’t fight what you don’t see. Regularly monitoring the marketplace lets you catch manipulative pricing tactics early and adjust your strategy accordingly.
Maybe a competitor is having a sale, or maybe they’re using some shady tactics to win the Buy Box. Either way, knowing what’s happening lets you stay proactive instead of reactive. You don’t want to wait until your sales have plummeted to figure out why.
Here’s another tip: don’t put all your eggs in one basket. If you’re only selling on Amazon or eBay, you’re putting yourself at the mercy of that marketplace’s algorithms and policies.
Diversifying across multiple platforms gives you some breathing room and reduces the risk of being caught off guard by sudden price shifts. Better yet, build your own eCommerce site.
That way, you control the pricing, the customer experience, and your brand identity without worrying about price manipulation from the platform.
One last thing—don’t panic. Yes, price manipulation is frustrating, but it doesn’t have to be the end of your business.
Stay calm, stick to your pricing strategy, and don’t react impulsively when you see a competitor’s price drop. Instead, think of creative ways to offer value.
Maybe you can run a limited-time promotion or offer free shipping to incentivize buyers without lowering your price.
At the end of the day, price manipulation is like an annoying guest who overstays their welcome—they’re hard to get rid of, but with a few smart moves, you can still run a profitable and sustainable business.
Keep your eye on the long game, differentiate your brand, and don’t let the pricing wars drag you down. You’re in control here—play your cards wisely, and you’ll come out on top.