|Thu Nov 22 2012 12:14:08|
Pricing Matters on Amazon
By: Ina Steiner
No one is more acutely aware of the complexities of pricing than third-party sellers on Amazon. Today, the New York Times Bits blog suggests Amazon is raising the price of its books, and wondered why.
"Another possibility," it writes, "Amazon is intentionally pricing its books higher so buyers will instead purchase from the cheaper third-party sellers, which are more profitable for Amazon. In other words, Amazon would rather run a mall or bazaar than try and be Wal-Mart."
That runs counter to the many merchants' belief that Amazon actively competes with them, some believing Amazon goes so far as to identify popular products supplied by 3P sellers and start selling those items itself.
Bits wrote, "Amazon executives say the price of a book falls as it sells faster," but that seems counter-intuitive to retail philosophy. It's when demand for a product diminishes that retailers tend to slash prices to move them off their shelves, aka clearance sales.
In fact, pricing is much more complicated than that, and that's where repricing programs come into play. Retailers use business rules so tell software to adjust prices automatically depending on business conditions, usually setting ceilings and floors to help ensure prices don't get too out of whack. (Repricing tools can be stand-alone programs or part of inventory management tools - see EcommerceBytes Ratings and Reviews chart.)
Amazon told the Times that, generally, it wasn't raising prices. Who better to answer that question than sellers - what are your observations about Amazon pricing? Are prices going up in your category?