Amazon Squeezes Sellers That Offer Better Prices On Walmart (bloomberg.com) 56
An anonymous reader quotes a report from Bloomberg: Amazon's determination to offer shoppers the best deals is prompting merchants selling products on its marketplace to raise their prices on competing websites, a testament to the company's growing influence over the e-commerce market. Amazon constantly scans rivals' prices to see if they're lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace -- effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon. Pricing alerts reviewed by Bloomberg show Amazon doesn't explicitly tell sellers to raise prices on other sites, and the goal may be to push them to lower their prices on Amazon. But in interviews, merchants say they're so hemmed in by rising costs levied by Amazon and reliant on sales on its marketplace, that they're more likely to raise their prices elsewhere. The Amazon policy is likely to attract scrutiny from Congress and the FTC for fitting the definition of antitrust behavior.
"Monopolization charges are always about business conduct that causes harm in a market," said Jennifer Rie, an analyst at Bloomberg Intelligence who specializes in antitrust litigation. "It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price."
"Monopolization charges are always about business conduct that causes harm in a market," said Jennifer Rie, an analyst at Bloomberg Intelligence who specializes in antitrust litigation. "It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price."
Re:Wouldn't that just open the market to competito (Score:4, Interesting)
Amazon is only able to do this because of its dominant position, hence the allegation of monopoly abuse. In a functioning market, rising costs or being forced to offer the lowest price would drive merchants away from Amazon, as seems to be the case with your business. But the reality is that this isn't an option for many merchants.
Re: (Score:2)
Reminds (Score:2)
me of how Walmart "Prompts" manufacturers to produce Walmart editions.
The Merchants (Score:1)
The Merchants are manipulating the price, not Amazon.
Amazon is trying to deliver the best value for its customers.
If the same two products are available from different merchants I want to see the lower cost item. I'll perform my own due diligence from there.
Re:The Merchants Absolutely Not - (Score:4, Interesting)
Re:The Merchants (Score:4, Insightful)
Except that Amazon deliberately make the products sold by that merchant harder to find on their site, depressing sales.
If this was simply a "heads up - this other site is cheaper than you" then you'd have a point. But Amazon take it a step further by negatively impacting their own merchant.
Shopping price? (Score:1)
"It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price."
So If I go to the supermarket to buy laundry detergent instead of 7-11 , now the supermarket has an unfair "illegal" advantage?
Re: (Score:2)
Break up (Score:3, Interesting)
Re: Break up (Score:2)
capitalism != free enterprise
Different vendor names (Score:2)
How would Amazon even know it was the same merchant?
This is how it's supposed to work, no? (Score:5, Interesting)
Meaning in other cases, them merchant opts to lower prices on the Amazon site. If a merchant is selling the same product at different prices in two different markets, then either one price is too low, or the other price is too high (or one is low and the other is high). Whether they decide to raise the price on walmart.com or lower the price on Amazon.com depends on which of these cases they were doing.
The overall effect (assuming Walmart implements a similar price-matching policy) is that the buyer's price on Amazon and Walmart are the same. Meaning that how much money the seller makes depends entirely on the percentage cut Amazon or Walmart is taking. Sellers will then prefer to flee the store which is taking a bigger cut, resulting in them voluntarily removing products from that store. If Amazon is charging 5% and Walmart is charging 4%, and both require the seller have the same list price, the seller will make more money selling through Walmart so will tend to de-list items from their Amazon store. Amazon and Walmart will then have to compete (reduce their percentage cut) in order to get sellers to list the same items with them.
If Amazon were entering contracts with sellers requiring them to raise the price on Walmart (instead of lowering them on Amazon), then you'd have a situation like Apple was doing with ebook sellers and worthy of FTC investigation. But as long as sellers are free to raise prices on the rival site OR lower the price on Amazon to match, there's no problem.
Re:This is how it's supposed to work, no? (Score:5, Insightful)
Meaning in other cases, them merchant opts to lower prices on the Amazon site. If a merchant is selling the same product at different prices in two different markets, then either one price is too low, or the other price is too high (or one is low and the other is high). Whether they decide to raise the price on walmart.com or lower the price on Amazon.com depends on which of these cases they were doing.
The overall effect (assuming Walmart implements a similar price-matching policy) is that the buyer's price on Amazon and Walmart are the same. Meaning that how much money the seller makes depends entirely on the percentage cut Amazon or Walmart is taking. Sellers will then prefer to flee the store which is taking a bigger cut, resulting in them voluntarily removing products from that store. If Amazon is charging 5% and Walmart is charging 4%, and both require the seller have the same list price, the seller will make more money selling through Walmart so will tend to de-list items from their Amazon store. Amazon and Walmart will then have to compete (reduce their percentage cut) in order to get sellers to list the same items with them.
If Amazon were entering contracts with sellers requiring them to raise the price on Walmart (instead of lowering them on Amazon), then you'd have a situation like Apple was doing with ebook sellers and worthy of FTC investigation. But as long as sellers are free to raise prices on the rival site OR lower the price on Amazon to match, there's no problem.
Your argument misses the fact that sellers are likely making a smaller margin on Amazon than Walmart which is why their prices are lower on Walmart, but they sell much more on Amazon than Walmart. Which means that the price is neither too high or too low, it's based on the cost to sell the item on each store.
It's like the difference between paying rent of $250 a day for a storefront vs. paying $50 a day at a local flea market. A vendor at the flea market can sell for a bit less than in the storefront because the cost of doing business is lower. The price is neither too high nor too low in either location, it's just based on the overhead costs.
For example, say they make a 4% margin on Amazon but a 6% margin on Walmart. They can lower the price on Walmart to make a 5% margin and still make more per sale than Amazon. However, overall sales for the item is much higher on Amazon. For example, say they sell 100K widgets on Amazon and only 5K widgets on Walmart. They don't want to jeopardize their sales on Amazon because it's the largest overall revenue stream and enables them to manufacture in bulk at low cost. So, they are then forced to increase the price on Walmart.
Re: (Score:2)
Were you arguing against Amazon falling afoul of antitrust laws? This seems like it would run afoul of antitrust laws.
Re: (Score:2)
If Amazon were entering contracts with sellers requiring them to raise the price on Walmart (instead of lowering them on Amazon), then you'd have a situation like Apple was doing with ebook sellers and worthy of FTC investigation. But as long as sellers are free to raise prices on the rival site OR lower the price on Amazon to match, there's no problem.
Apple didn’t require anyone to raise prices. The eBook sellers were free to raise prices at rivals OR lower the price on Apple to match. Either approach would satisfy the “most favored nation” clause in those contracts, but regulators said that it wasn’t fine then, and there’s rumblings that it may not be fine here either.
More specifically, the reason why Apple ran into trouble wasn’t because of the most favored nation clause, but rather that they combined it with an agen
Re: (Score:2)
Economy lesson one, the five P's. Product, place, promotion, price, people. Notice the 'place' in that row.
Varying prices depending on sales point is as old as commerce itself, and integral part of competition and free market economics. In case of Walmart vs Amazon, the smaller entity (the one actually selling something) has no leverage to bargain with them two, hence, the bigger parties are easily in the position to abuse their power. And that's exactly where anti-competitive laws come in.
Amazon ought to c
Re: (Score:2)
That's the worst abuse of the word "different" I have ever seen.
Different. Look it up in the dictionary. It means: not the same.
Monoliths have few visible properties: some exposed lower-dimensional lengths (ratios 1/4/9), extreme hardness,
Re: (Score:2)
I used to sell on Amazon (and other sites) as a third party seller.
The seller agreement explicitly required that the price you sold for on Amazon was the lowest price you offered. You could sell for the same or more on other sites (including direct sales on your own website), but not less. Violations could result in the suspension or termination of your account.
Booking-com uses the same strategy (Score:1)
Re: Booking-com uses the same strategy (Score:2)
Like the other Big Tech companies, Booking.com bought up all their major competitors. Thereby establishing monopoly power over the hotel booking market.
https://en.wikipedia.org/iki/B... [wikipedia.org]
Break up Amazon! (Score:1)
They are too big and they abuse their dominant market position
Fuck Apple AND Amazon (Score:2)
Arms race (Score:2)
NOW it makes sense... (Score:2)
With increasing frequency, I've found products with a better price for sale on Amazon using a Google search than searching for it in Amazon itself.
"Why didn't this seller show up when I searched for the item inside of Amazon's ecosystem"? - Now I have an answer.
I never by anything from them without searching online first - better prices are often to be had.