Amazon Selling Question- Crazy Prices

Speaking as a full-time Amazon seller, the answer is yes.
There are algorithms that WON’T make the mistake you outlined above, but plenty of ones that wouldn’t make that mistake.
Additionally, some sellers misconfigure their repricing software, so that features that WOULD protect them from the problem are disabled.

IIRC, the “” people have a relatively intelligent algorithm, that wouldn’t make the mistake you outlined.
Unless, of course, you disabled the ‘smart’ algorithm and went with a rules-based option.

What would happen?
On the kind of item you mentioned, it would probably not work.
Expensive watch retailers likely have per-item floors set to prevent them from losing money.
Unless they JUST started selling on Amazon, they’d have learned in the past that not having floors on items with very real fixed cost and substantial residual value is a poor idea.
That being said, if you chose certain other items, it would work.
In fact, it HAS worked in the past for others.
I have discussed the behavior in the past with multiple perpetrators and a few victims as well.
All of the perpetrators were, however, established sellers. None of them started a fresh account to do this with.
I will note that at least one seller lost his account for doing what you described.
At least at one point in time it was a “one strike and you’re out” offense.

Another variant involves two sellers legitimately selling an item getting into a price war.
Seller A undercuts seller B. Seller B fights back, ridiculously.
Both sellers are pricing manually at this point.
The cycle repeats, now one of them is angry and goes more ridiculously low.
At a certain point, one of the sellers realizes that he can solve his problem by stocking the other seller out, so he just buys out his competitor. He then resells them items once he gets them.

By the way, in certain circumstances, Amazon sellers CANNOT cancel your order.
I made some pricing mistakes last year in my storefront (uploaded the wrong column in Excel), and I sold about $1500 worth of inventory for $750 on accident.
I tried to get Amazon’s ‘Fulfilled by Amazon’ warehouse to cancel the orders and not ship. They refused.
Additionally, if you sell any decent volume, you’re probably not going to notice the prices on everything you sell.

Amazon is pretty good at keeping one person from opening multiple storefronts without super-secret-special permission to do so.
You’d have to steal a couple of identities and open several bank accounts and credit cards to pull that off. Probably also use multiple ISPs and computers…

Additionally, some business owners will use prices as a tool to clear inventory regardless of their cost for the item.
When I run my own business, after an item has hit a certain age (let’s say 9 months*) I’ll set my repricer to:

  • aggressively chase prices down
  • set the price to whatever the cost of Amazon fees to ship and sell are for that item

Then, I watch the items clear out of inventory.
The few items that remain after this treatment… I simply destroy to take the tax write-off, and move along.

  • Certain items are excluded from automatic repricing, so they aren’t included in this discussion.