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.

And new technologies like Dash buttons could very represent the next step in the evolution of subscription commerce.

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.

And that could pave the way for it to put pricing hacks like dynamic pricing to use in ways other retailers can't.

Patricio Robles

Published 7 July, 2016 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)

Andrew Martin

Andrew Martin, Head of SEO and Analytics at Personal

Not really my field of expertise, but I think in the UK there are (or were) some pretty strict rules about how you display discounted prices and show consumers how much they're saving. If that still stands, I guess it'll just be another difference between Amazon.com and Amazon.co.uk

almost 2 years ago

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NATHAN GRIMM, Director of Marketing and Product at DNA Response

I absolutely think this is about legal considerations and not a move to avoid discounting. I can cite two recent moves to show that Amazon is always trying to drive costs lower.

Amazon released their own repricer for 3rd party sellers in the last few months. While many of the 3rd party tool providers in the repricing game are talking about how to use a repricer to sell products for a higher price, Amazon's repricer is only good at making your price lower.

Second, Amazon's Selling Coach is now offering discounts on the Referral fee if you take them up on their price-lowering suggestions. Amazon is giving up their own margin to encourage sellers to lower price.

almost 2 years ago

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