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Mon Nov 21 2022 22:13:45

Study Says Sellers Offer Fake Discounts on Amazon

By: Ina Steiner

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Sellers are gaming prices on Amazon, according to academic research published in October. The University of Florida explained in a post today what researchers observed by studying prices of consumer goods. They found that over a quarter of vacuum cleaners sold on Amazon during the study had at some point 'pretended' to offer a discount when they had actually just increased the price.

"By pairing a price increase with the introduction of a previously unadvertised "list price" for a product, Amazon signals to shoppers that they are receiving a discount when they actually pay 23% more, on average, for their new vacuum than they would have just a day earlier," according to the University of Florida post.

The full research was published in the journal Marketing Science. The research abstract published on INFORMS PubsOnLine explains in part:

"This research investigates a newly observed pricing practice by which a seller frames a price increase as a discount by simultaneously increasing the price and introducing a list price, a scheme we call "price-increase and list-price synchronization" (PILPS). To investigate this potentially deceptive practice, we tracked multiple product categories on Amazon over a 13-month period. 

"We find that PILPS (1) is a prevalent practice adopted by a broad range of categories and sellers, (2) allows sellers to simultaneously achieve higher profit margins and a larger sales volume at consumers' expense, and (3) is most effective for and more likely to be deployed by products with advantages in consumer reviews."

The three professors who published the research paper are Jinhong Xie (University of Florida), Sungsik Park (University of South Carolina) and Man Xie (Arizona State University).

The researchers studied the pricing of household products on Amazon from 2016 to 2017 and followed more than 1,700 vacuums and gathered nearly half a million individual observations of prices.

Professor Xie said the pricing practice allowed sellers to "achieve the impossible: increasing margins and increasing sales simultaneously."

Xie wants consumers to be aware of the practice to protect themselves (the University of Florida post includes some suggestions) and advised consumer organizations and regulators to evaluate the new marketing practice.

We've written about crackdowns on price-fixing, such as Three More Amazon Sellers Plead Guilty to Price Fixing (January 2022) and Amazon Seller Pleads Guilty to Price Fixing (August 2016).

Those cases show that US and UK regulators take seriously price manipulation even by relatively small marketplace sellers and have serious consequences for those who find themselves in regulators' crosshairs.

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This user has validated their user name. by: Bill

Mon Nov 21 23:58:58 2022

I have seen that myself with pricing on Amazon and I normally get items a lot cheaper in a regular store.

Amazon and a lot of their "co-horts" are thieves.

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This user has validated their user name. by: iheartjacksparrow

Tue Nov 22 10:45:22 2022

I thought it was illegal to raise prices, and then lower them to claim they were on sale.

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by: toastedmutt This user has validated their user name.

Tue Nov 22 11:23:07 2022

Seen the same practice on eBay and Etsy.  I never buy anything "on sale" with a strike-through price showing.

Read comments posted on eBay community boards by sellers asking how to do this for their listings.

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by: pace306 This user has validated their user name.

Tue Nov 22 11:59:30 2022

Complain to the people who allow (the courts) MAP and MSRP pricing restrictions on sellers.

Sure you DONT HAVE TO DO MAP, but if you dont, they will just close your account (brands being at fault here). They are always on the look out to protect the big guys/sellers by making everyone knuckle under)

To get traction (either site) you have to manipulate the price - on Amazon to get the box, on eBay you pay the VIG to get seen/placement (promoted listings).

I dont do any of these things - but I understand what sellers are put through when they look at reports and items dont move (because of platform manipulation) and so SOMETHING must be done to "shift the goods" and that is - playing with price.

Not saying its right, not saying you should do it - just explaining WHY it happens.

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by: AddyUp This user has validated their user name.

Wed Nov 23 08:22:30 2022

Over here there was a recent check into highstreet Black Friday (more like a week) discounts. The result wasn't really surprising. It was that 98% of the items checked were available at a lower price previously and at other times.

So it was a case of Black Friday sales why bother. Unless you know for sure the one item you are after is definitely the cheapest it has ever been.

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by: Stone Cutter This user has validated their user name.

Wed Nov 23 10:33:36 2022

Etsy’s current sale requires that sellers discount products by 20%. I see sellers (particularly overseas sellers), who will increase prices, to then discount them.

These type of discounts are a joke, and I feel like I’m always being scammed. I’ve never offered discounts for my Etsy shop, and I avoid shops that try to fool me.  

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by: Snapped This user has validated their user name.

Wed Nov 23 10:39:32 2022

“…. this potentially deceptive practice…”

There’s the thing - this doesn’t really seem to be ‘deceiving’ anyone.  It’s just another example of advertising something as ‘good’ for the one footing the bill, when all it really does is reach deeper into the patron’s purse.

Sound familiar?  

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by: Reproretro99 This user has validated their user name.

Thu Nov 24 07:02:39 2022

I got stung on Amazon. I tried to explain the problem (several times) to Support, but the lady couldn't understand it.
It was a portable mini fridge. It was showing a discount of 50% and the feedback was great.
But it was a bait and switch.
The seller must have been selling a mini fridge freezer, then after selling out, they edited the advert to now be a mini fridge. Which explains the big drop in price.
And most of the feedback (my own fault for not reading carefully) was actually related to the fridge freezer, not the fridge.

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by: cvsharkey This user has validated their user name.

Thu Nov 24 11:00:25 2022

Many of the Black Friday sale prices are listed regularly for those products.  

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by: cvsharkey This user has validated their user name.

Thu Nov 24 11:05:11 2022

Has anyone stumbled upon this: An item has over 100 reviews, sometimes 4000 or more, but if/when you read them they pertain to a completely different product. This was not caused by people reviewing the wrong item. This is some kind of hack. If you have cookie cutters with 4,370 or so reviews and all of them referring to some iPhone accessory....this is NOT a mistake. It's a hack. I'm just not sure who is doing this--the vendor or it's an Amazon issue.

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by: WalmartClassAction This user has validated their user name.

Mon Nov 28 11:07:49 2022

Not my job to do the research for the customer. The price is what somebody is willing to pay for it, nothing less.  



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