Amazon has recently begun to lower prices for goods sold by third-party sellers, increasing its market share with discount stores, including Walmart and Dollar General.
The company began posting a new label, "Discount provided by Amazon," The Wall Street Journal reported Sunday. So far, price reductions have been just under 10% on products sold by independent retailers.
Amazon made the cuts unilaterally and absorbed the losses itself, in order to provide customers with lower prices on a more and more important product mix.
"The" Amazon-provided rebate "is another way for Amazon to provide the low prices that customers expect," the company said in a statement sent to E-Commerce Times by spokeswoman Cecilia Fan. "When Amazon offers a discount, customers get the products they want at a price they'll love, and small businesses receive higher sales at the asking price."
Vendors can withdraw from the program at any time, she said.
Best prices no matter where
Amazon's willingness to absorb the costs of discounting and passing on the full value on third-party sellers is a tactic designed to pursue a broader goal, namely effectively competing with all major price segments, notes Cindy Zhou, senior analyst at Constellation Research.
"It's about offering a wider assortment across third-party sellers, and making sure that they maintain price competitiveness as we enter the season of vacation, "she told the E-Commerce Times. "This could encourage new sellers to sign up for Amazon and further increase their product range and reach."
Sales on the market have become an increasingly important part of Amazon's product line. Access to these small independent retailers serves some purpose for Amazon. During the first half of 2017, the company has sold more than 2 billion items to more than 300 million active customers.
Third-party sales enable Amazon to offer its customers a wider range of original and unique product and gift options that might not otherwise be available.
The market also helps to fill the gaps of the vast network of planes, warehouses and logistics services of Amazon required to route goods between major market centers and points of sale. 39, remote access.
In addition, the market contributes to the brand image of Amazon. It neutralizes, to some extent, the impression that it has diverted business from small independent retailers by giving them a way to reach their giant clientele.
Many customers do not care who they buy a product for as long as their quality meets a certain standard, suggested Michael Levin, a partner of
Consumer Information Research Partners.
"From our experience, Amazon's customers can not really distinguish the products purchased from Amazon, purchased from the Fulfilled by Amazon program, and purchased from a merchant. who is content with a list on Amazon, "he told the E-Commerce Times.
[Amazon9004] Amazon wants to make sure it remains the price leader in the eyes of the consumer, said Matt Sargent, senior vice president of retail sales at
Magid.
Forty-one percent of retail sporting goods customers who participated in the recent Magid Pulse survey described their best choice of retailers as offering the best prices, he told the E-Commerce Times.
However, after Amazon was added to the mix specifically, that figure reached 62 percent, Sargent said.
"Quite simply, customers believe that Amazon offers the best prices, and Amazon wants to keep this perception in place," he added. "In order to keep this perception in place in a world that has become more competitive, Amazon has chosen a select group of highly visible products and offered discounts to sell these products for less than competing retailers."
Risk Reward
Although Amazon may be able to strengthen its leading price position, the threat of a reaction from its product manufacturers or competitors is legitimate, according to Sargent.
"This decision could put brands in a difficult position as they could inadvertently offer lower prices at Amazon than other key partners like Walmart," he told the E-Commerce Times.
"Brands are still trying to keep their price" balanced "between retailers so that they can claim neutrality, but Amazon's desire to be considered a price leader could force the conflict, "noted Sargent.
In some cases, this could mean that manufacturers will have to make a choice between Amazon and Walmart.