Amazon Irks Third-Party Sellers Via Discounts
Third-party sellers on Amazon woke up Sunday to find the e-tailer was discounting their products. The marketers may not have noticed the discounts of as much as 9 percent, because Amazon was paying them full-price.
The phenomenon, reported on by the Wall Street Journal and others, may seem like a win-win for third-party sellers and consumers. After all, consumers were the ones upset about "surge pricing" on Prime Day. But there is a catch.
The WSJ reports:
Jason Boyce, chief executive of home recreation retailer Dazadi.com, says he’s been selling on Amazon for nearly 15 years, and the majority of his more than $20 million annually in sales stem from that platform. He isn’t sure if any of his products have been marked down yet, but said he’s signed agreements with Wal-Mart and other marketplaces to maintain price parity on the same products he’s also selling on Amazon.
“At first glance, we thought it was great,” he said of the practice. But it would mean “violating our seller agreement with every other marketplace that we sell on.”
Boyce mentions Wal-Mart to the WSJ. So article author Laura Stevens follows up:
The new “Discount provided by Amazon” tag allows Amazon to compete more fiercely with low-cost rivals including Wal-Mart Stores Inc. … and Dollar General Corp. … just as the all-important holiday season gets under way.
Stevens notes that the discount note shows up on tagged items and lets consumers know that “This item is sold by a third-party seller. The discount is provided by Amazon.” She wrote that the tagged sellers she found were using Amazon’s in-house order fulfillment option.
Without notifying sellers, though, they may not be prepared for a rush and may have unexpected inventory shortfalls. Also, a brand consultant tells the WSJ, it makes it more difficult for brands to maintain pricing controls — which is why some brands have exercised their right to opt out of third-party selling on the site.
It’s unclear if Amazon had been notifying its third-party sellers. In Amazon Seller Central, Rock Creek Gifts posts on Oct. 6:
I do not know if this is new or if I just never noticed it before. Discount provided by Amazon is noted near the a [sic] listing by a third-party seller.
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Discount good while supplies last or until withdrawn by Amazon.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.
What do you think, marketers?
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Related story: How Amazon Has Affected the Online Customer Experience