Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon Nov 6 2017 13:52:11

Amazon Lowers 3P Seller Prices in Unprecedented Move

By: Ina Steiner

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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Discount good while supplies last or until withdrawn by Amazon.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?




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Readers Comments

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by: FeelingFroggy This user has validated their user name.

Mon Nov 6 14:35:09 2017

Ebays response will be to increase prices.....

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This user has validated their user name. by: eXtinctBay

Mon Nov 6 15:30:50 2017

The day that eBay lowers 3P seller prices (at their expense) is the day pigs fly or Jesus Christ him (or her) self returns to earth. Or a new management or ownership team comes on board.

But they are certainly trying their best to encourage us sellers to drop our prices to lure buyers to the site. Of course, the discounts passed along to customers would come out of our own pockets.

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by: TomH This user has validated their user name.

Mon Nov 6 17:02:05 2017

Knowing Amazon, although they are conducting some sales discounts with this, they are, I would bet, also using this as a testing ground. If they deem it successful I too think we will see some pricing policy changes next year.

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This user has validated their user name. by: Ming the Merciless

Mon Nov 6 17:46:07 2017

The only entities that win in the 3rd party race to bottom are these exponentially over "managed" marketplaces.

You can bet that Amafia's generosity is limited and that 3Ps seller soon see them involuntarily lowering prices with no recourse.

Ebafia clumsily started in this direction a few months ago when they began lecturing sellers with "suggested" prices regardless of whether the items were actually comparable or not.

Every day brings a new bait and switch of varying degrees of complexity.

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by: sellerchick This user has validated their user name.

Mon Nov 6 18:24:50 2017

Discounting is unnecesssary. I already have my items marked 30% MORE on Chinazon than everywhere else I sell! Doesn't matter, people still flock to Amazon and buy the same stuff there anyway. They don't comparison shop. It's Amazon or nothing for a lot of people.  

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by: futervest This user has validated their user name.

Mon Nov 6 22:40:35 2017

I think ANY site like ebay or amazon should not be allowed to dictate how a different business using their service  has to operate. They are in the business of selling airtime on a marketplace . And it is NOT there business to dictate how a 3rd party has to have for return policies or regulating prices like this is doing.

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This user has validated their user name. by: Rexford

Tue Nov 7 06:47:14 2017

Here is the potential fall out as a result of the race to the bottom.  Brands see their items being sold for much less than they wish for them to be sold online, particularly luxury brands who want to protect their image.  Brands then put additional pressure on these "venues" to "go after" 3P sellers.   More categories are gated and more 3P sellers will be required to be "authorized" by the brand manufacturer, providing invoices to show that they are authorized.

These venues are only looking out for their own profits. They don't give a flying fig about a 3P sellers' profits.  This goes doubly if they are a publicly traded company.  

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by: leathermermaid8 This user has validated their user name.

Tue Nov 7 08:42:09 2017

I've noticed that some items can't be purchased at all unless you are a Prime subscriber, other items get discounted only with a membership.   One item was a SnugPack patrol poncho.  It was $39.99 (now $33) with prime, their other 3rd parties sellers prices ranged from $42- $59.99.   I bought one elsewhere for $39.99 with free shipping.  I can see how this will affect some sellers.  Very curious to see if there will be pushback and if it will affect stock prices.

I have nothing against big businesses per se but I think about all the things that have disappeared due to Walmart it is sobering to think about.  There are very few independent anythings around anymore.....

My husband managed to get opted into Prime but we really don't buy enough from them to make it worthwhile.  

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This user has validated their user name. by: Ming the Merciless

Tue Nov 7 16:36:59 2017

Bravo, Rexford. so very well stated!

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by: Chicago48 This user has validated their user name.

Thu Nov 9 02:11:56 2017

Amazon is very intrusive.  Their front door "key delivery" system is intrusive.  Who wants a stranger having access to their house to deliver a package.  I predict that the front door key delivery will fail.  It's just a way to get people to buy their Amazon camera and security system anyway.

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by: Barbbie This user has validated their user name.

Thu Nov 9 20:42:07 2017

If I ever give my house key to some Amazon employee, I hope my son sends me to a home, as I have clearly lost my mind.



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