Amazon Starts Discounting Third Party Items Ahead of Holidays
Steep discounts on Amazon is nothing new. Consistently low pricing is one of the main reasons consumers today constantly turn to the ecommerce platform on a more than regular basis.
But, until recently, the discounts that you’d find—and that were offered by Amazon—came on products the company sold directly to consumers. Third party sellers might offer their own discounts through Amazon’s Marketplace, but the actual pricing wouldn't be touched.
First cited by the Wall Street Journal, Amazon has quietly started lowering prices on goods offered by independent merchants by as much as 9 percent. Shoppers may start noticing the “Discount provided by Amazon” tag popping up on such items as we inch closer to the holidays and as the ecommerce giant continues to compete in a pricing war with other big names in retail.
According to the details of the promotion as provided by Amazon on discounted items, the discount is a limited time offer and is good until supplies run out or “until withdrawn by Amazon.”
But while the company is covering the cost difference itself, the reaction from the merchant community isn’t likely to be a positive one. One of the main draws about the Amazon Third Party Marketplace is that it gives smaller and independent merchants the opportunity to utilize Amazon services to expand their potential reach to consumers. As we’ve reported on Dealerscope, the Marketplace can be a tricky place to operate as a retailer, and there is the potential for consumers to get scammed by phony merchants. But now retailers and brands find themselves having to worry about Amazon potentially giving off the perception that their products can be gotten on the cheap.
According to WSJ’s analysis of the Marketplace, the Amazon discounts appeared to apply only to items from sellers using Amazon’s in-house fulfillment option, and discounts never exceeded 10 percent. And while the discounts seemed to only last a few days, the methodology behind it seemed nonexistent, and the sellers were never notified that the discount was being applied.
To be fair, since Amazon is fronting the money for these discounts, there is absolutely no financial burden to the merchant. And the lower pricing reflected by the Amazon-applied discount could lead to increased sales. But the discount could put the merchant in an bind as inventory starts to unexpectedly run out. Or, as the WSJ points out, it could inadvertently cause the merchant to be in violation of agreements with brands to keep certain products at or above a set minimum advertised price (MAP).
In a statement on the practice to Reuters, an Amazon spokeswoman said, “When Amazon provides a discount, customers get the products they want at a price they’ll love, and small businesses receive increased sales at their listed asking price.” She also noted that businesses can opt out at any time. Instructions for how to do that (which really just involves contacting Amazon) can be found here.
Several discussions are ongoing on the Amazon Services Seller Forums, and while most of the feedback from sellers appears to be positive, some merchants have raised the same concerns brought up by the WSJ. One seller said they planned to opt out of the program because of possible MAP violations and possible violations of parity agreements the seller has with other marketplaces.