Amazon is lowering the prices of some products offered for sale by third-party merchants through special discounts, but is giving sellers the full retail price when the items sell. Here's an example of a board game
offered by a 3P seller who listed it for $46.56. Amazon shows the listing with the price crossed out and a Sale price of $42.88, and displays the following: "You Save: $3.68 (8%) - Discount provided by Amazon."
Clicking on "Details" displays the following message:
This item is sold by a third-party seller. The discount is provided by Amazon.
This is a limited time discount.
Discount does not apply to digital content.
Discount good while supplies last or until withdrawn by Amazon.
Shipping charges and taxes may apply to pre-discounted prices.
Amazon reserves the right to modify or cancel the discount at any time.
If any of the products or content related to this discount are returned, your refund will equal the amount you paid for the product or content, subject to applicable refund policies.
It sounds like a great deal for sellers since it could result in increased sales - and they still receive the full selling price. In the case of the example above, the buyer would pay $42.88 for the board game, the seller would receive $46.56, with Amazon making up the difference out of its own pocket.
However, there are some major concerns about the way Amazon has implemented the new practice. First is that no one likes surprises, and it seems Amazon failed to communicate with sellers. Surprise!
Another obvious problem: merchants told the Wall Street Journal
they believe it violates their MAP pricing restrictions with brands as well as price-parity clauses in their contracts with other marketplaces. "The discounts could be a mixed bag for some sellers. A lower price on an item that matches or beats a competitor could help drive more sales at no extra cost to the seller. It may deplete inventory unexpectedly, though. And the lower prices could inadvertently violate a merchant's agreement with a brand to keep its products at or above a set minimum advertised price."
Sellers pointed out additional concerns:
- It could devalue sellers' products; one seller explained that lowering the cost could give buyers the perception that the product is no longer worth the full retail price - especially if the product is also being sold on the sellers' own website and elsewhere.
- Sellers who don't get included would be at a disadvantage if Amazon lowers their rivals' prices for the same product, but not their's.
Volusion CTO Bardia Dejban called it a sneaky move and a reminder that Amazon can do whatever it wants, whenever it wants - for better or for worse. He said sellers with their own ecommerce websites are at a disadvantage, since consumers will likely buy from Amazon to get the discount, and that means the seller can't "own" the customer. (If the shopper makes the purchase on the merchant's website, the seller can then freely communicate with them, including upselling and cross-selling.)
"The good news," Dejban said, is that "Amazon is covering the cost difference for third party sellers this time - but makes me wonder if they'll use the data collected to change their terms of service and pricing policies next year or sooner."
Let us know what you think - would you like it if Amazon, eBay, or other marketplaces offered discounts on your products that they subsidized?