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Amazon and Walmart Set Holiday Tone with Aggressive Pricing

Competing with big name retailers like Amazon and Walmart on pricing represents a fool’s errand. Creative online sellers try to find niches that can be filled with unique items to avoid taking on the biggest companies head-on, and that’s looking like a survival strategy this holiday season.

Pricing research by Wall Street firm Susquehanna International Group (SIG) suggests a measure of panic among big name retailers as the abbreviated holiday shopping period arrives. Analysts from SIG found Walmart, Amazon and Target engaging in serious price cutting and matching, as well as lowered free shipping thresholds and promotions taking place ahead of Black Friday.

The biggest traditional draws for shoppers likewise have the attention of Walmart, Amazon, and Target. Those three retailers have carved up prices in the toys and electronics categories. Amazon has been particularly competitive here, as well as in the video games category where Sony and Microsoft both have new consoles shipping to gamers.

As part of its pricing research, SIG compiled a list of 58 items across five product categories, including Toys/Games, and selected top holiday items that could be found across all the major retailers to ensure product comparability, and tracked pricing over time. Product prices from all the retailers exclude shipping costs. For Toys/Games, the company compared prices for 17 items from Amazon 1P, Amazon 3P, Walmart, Target, and Toys R’ Us.

In other areas, Walmart briefly held an edge in pricing in the home and kitchen category. However, SIG found Amazon trimmed its prices in that category to the point where they now edge Walmart, which has staked out a low price leadership position for years.

While these categories are going to present major challenges to smaller competitors, and even to significant names like Best Buy, Nordstrom, Toys R’ Us and Macy’s, SIG believes ecommerce has an edge.

“This year’s truncated holiday shopping period (six fewer days between Thanksgiving and Christmas) should favor ecommerce. From our perspective, consumers will place a higher value on convenience and fast shipping which will materialize against the backdrop of declining mall traffic,” SIG’s report said.

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.