Historically, discounting has been a lifeblood for many retailers. And the bane of their existence at the same time.
Now, the 800-pound gorilla of online retail appears to be experimenting with ditching discounts. Sort of.
As detailed by The New York Time’s David Streitfeld, list prices, which Amazon has traditionally used to highlight product discounts, are increasingly disappearing.
For example, according to Boomerang Commerce, a year ago only half of the 100 pet food products it identified as being sold at a discount to their list price still had the list price displayed.
The Times observed a similar trend across other product categories it has been monitoring.
So what gives? Why is Amazon apparently doing away with list prices at a growing clip?
Legal issues could be a motivator. Numerous online retailers have come under fire for displaying discount information based on list prices that are inaccurate.
More than two dozen lawsuits alleging violations of a California law that forbids deceptive advertising have been filed this year alone against retailers including Macy’s, Ann Taylor and Ralph Lauren.
Other large retailers have settled similar suits.
Amazon has changed the game
But legal considerations probably aren’t the only motivator for Amazon’s changes.
As Clarkson University professor of consumer studies Larry Compeau told the Times, ”They are trying to figure out what product categories have customers who are so tied into the Amazon ecosystem that list prices are no longer necessary.”
In other words, Amazon increasingly doesn’t need to compete on price; it has built a base of such loyal customers that many will likely purchase from Amazon even when they can get a slightly better deal elsewhere.
The reason? Amazon is frequently seen as having a superior customer experience.
By one estimate, Amazon now offers nearly half a billion products for sale, and thanks to Amazon Prime, tens of millions of customers can trust Amazon to deliver their orders within two days for free.
Amazon has also found ways to make itself a bigger and bigger part of many of its customers’ lives.
For example, Prime offers access to streaming movie, television and music content, as well as ebooks through a number of Kindle programs.
While none of this means that Amazon doesn’t need to be price competitive at all, it seems entirely possible that Amazon is now at the point where it doesn’t need to play by the rules most retailers have to play by.