A typical pricing alert reads: “One or more of your offers is currently ineligible for being a featured offer on the product detail page because those items are priced higher on Amazon than at other retailers.”
In plain English, that means merchants lose the prominent “buy now” button that simplifies shopping on Amazon. With that icon missing, shoppers can still buy the products, but it’s a more tedious and unfamiliar process, which can hurt sales. The lost purchases cascade through algorithms determining which products shoppers see, resulting in the items getting buried on the site, according to several merchants.
Anders Palmquist, a former Amazon employee and now vice president of the e-commerce consulting firm ARMR, said one of his clients was told that a lawn and garden product sold on Amazon was found at a lower price on another site. Palmquist investigated and discovered the item was selling for less on Walmart, prompting his client to halt the discount. Palmquist said his client is the only one selling the product online, so it wasn’t a matter of a competing manufacturer offering the same product for less.
The company’s behavior contradicts testimony Amazon associate general counsel Nate Sutton gave last month during a congressional hearing examining the growing power of big tech companies. Sutton said Amazon faces stiff competition from rivals like Walmart and EBay, giving it an incentive to help online merchants succeed on Amazon so they don’t defect to other sites.
“We know sellers have other ways to reach customers, so we invest in them, support them and make continuous efforts to improve their experience,” Sutton said. “Our incentive is to help the sellers succeed because we rely on them.”
While that’s true, the pricing alerts have a chilling effect on merchants since many can’t afford to jeopardize their sales on Amazon by offering better deals on other sites. It’s an example of a practice that’s potentially harmful to sellers but beneficial to Amazon.
Jason Boyce, an Amazon merchant turned consultant, said he instructs clients to offer the same prices on all sites to avoid losing prominence on Amazon even if they can afford to sell for less on other sites.
“Amazon is in control of the price, not the merchant,” said Boyce, who runs Avenue 7 Media.
Molson Hart, who sells toys online through his company Viahart, typifies the challenge. Hart says more than 98% of his $4 million in 2018 sales came from Amazon even though he also sells his products on EBay, Walmart and his own website. He was trying to sell a toy stuffed tiger for $150 on Amazon. Hart designs, manufactures, imports, stores and ships the item to customers; Amazon would get $40 for listing some photographs on its website, handling the payment and charging Hart to advertise the product on the site.
Hart said he could sell the product for about $40 less on his own website, but won’t since that would jeopardize his sales on Amazon due to its pricing enforcement, he said. “If we sell our products for less on channels outside Amazon and Amazon detects this, our products will not appear as prominently in search,” he wrote in a recent article on Medium. Hart has since lowered the price of the tigers on Amazon and is now selling them at a loss.