When Brandon Fishman decided to offer a discount on his vitamin-infused coffee during Target’s weeklong deals event, he did not anticipate the negative repercussions it would have on his Amazon sales. The decision to lower the price of his product resulted in a significant drop in sales on Amazon, putting his business at risk.
Amazon’s commitment to offering the lowest prices has prompted the use of automated systems that continuously scan the internet to match or beat the prices of products available on other platforms. This practice has been the subject of scrutiny by lawmakers and regulators who claim that it is anti-competitive. The Federal Trade Commission filed a lawsuit against Amazon, alleging that the company uses an “anti-discounting strategy” to stifle competition. Despite these allegations, Amazon maintains that its pricing tool is essential for running a good business and providing customers with competitively priced offers.
One of the most valuable assets on Amazon’s platform is the buy box, which is the listing that appears first when a visitor clicks on a product. Losing the buy box can have a detrimental impact on a seller’s sales. Fishman, the owner of VitaCup brand, experienced firsthand how losing the buy box to a reseller of his products affected his sales on Amazon. To avoid further losses, Fishman had to intentionally lose the buy box during Target’s sales event, resulting in a significant decline in his Amazon revenue.
Target’s Circle Week promotional event created challenges for sellers like Fishman and Mason Arnold, whose products saw a decline in sales on Amazon due to changes in Target’s discount strategies. By displaying the actual sale price instead of the percentage discount, Target inadvertently triggered Amazon’s pricing algorithms, causing sellers to lose the buy box to resellers. This put sellers like Arnold in a difficult position of having to lower their prices on Amazon to regain the buy box and maintain sales, even if it meant operating at a loss.
Third-party sellers like Arnold and Fishman play a significant role in Amazon’s e-commerce business, accounting for a substantial portion of goods sold on the platform. However, these sellers often face challenges and penalties from Amazon for trying to compete and make a living. The emphasis on offering the lowest prices by Amazon can limit sellers’ ability to run promotions on other platforms, such as Target, without negative consequences on their Amazon sales.
The interplay between Target’s discounts and Amazon’s pricing algorithms can have a profound impact on third-party sellers and their businesses. The struggle to maintain the buy box and competitiveness on Amazon while running promotions on other platforms highlights the challenges faced by sellers in the e-commerce landscape. As Amazon continues to prioritize pricing competition, sellers like Fishman and Arnold are left with difficult decisions to navigate the complex dynamics of online retail.
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