From The New York Times:
In a major shift for online commerce, Amazon is quietly changing how it entices people to buy.
The retailer built a reputation and hit $100 billion in annual revenue by offering deals. The first thing a potential customer saw was a bargain: how much an item was reduced from its list price.
Now, in many cases, Amazon has dropped any mention of a list price. There is just one price. Take it or leave it.
The new approach comes as discounts both online and offline have become the subject of dozens of consumer lawsuits for being much less than they seem. It is also occurring while Amazon is in the middle of an ambitious multiyear shift from a store selling one product at a time to a full-fledged ecosystem. Amazon wants to be so deeply embedded in a customer’s life that buying happens as naturally as breathing, and nearly as often.
. . . .
“When Amazon began 21 years ago, the strategy was to lose on every sale but make it up on volume,” said Larry Compeau, a Clarkson University professor of consumer studies. “It was building for the future, and the future has arrived. Amazon doesn’t have to seduce customers with a deal because they’re going to buy anyway.”
Or so Amazon hopes. Digital stores live by Alec Baldwin’s maxim in “Glengarry Glen Ross”: “Always be closing.” The retailer has been experimenting with another method of closing a sale. It tells the potential buyer what the price used to be on Amazon.
. . . .
“We’ve been conditioned to buy only when things are on sale,” said Bonnie Patten, executive director of TruthInAdvertising.org, a consumer information site. “As a result, what many retailers have done is make sure everything is always on sale. Which means nothing is ever on sale.”
Amazon has both benefited from that conditioning as well as encouraged it, which is most likely why it is changing cautiously. It began eliminating list prices about two months ago, pricing specialists say, both on products it sold itself and those sold by other merchants on its site. The retailer did not return multiple requests for comment.
“Our data suggests that list prices are going away,” said Guru Hariharan, chief executive of Boomerang Commerce, a retail analytics firm. Last spring, Boomerang compiled a list for The New York Times of 100 pet food products that Amazon said it was selling at a discount to a list price. Only about half of them still say that.
“Amazon is a data-driven company with very few sacred cows,” Mr. Hariharan said. “At the very least, it is conducting a storewide test about whether it should change its pricing strategy.”
Link to the rest at The New York Times and thanks to Allen for the tip.
Quietly? Does Amazon have snatch teams that grab list prices while they’re sleeping? Do they wear rubber-soled shoes so they can sneak up on their keyboard and hit “Delete”?
I never pay attention to the price comparisons, but last night I was shopping on Amazon and came across an item that was on sale. I don’t recall ever seeing “Sale” beside the price before. It was a third-party seller.
List prices don’t exist for 3rd party merchandise, and many of those listings are horrible deals. Compound that with 3rd parties able to choose any name they want to display as the seller name and there’s plenty of “Buyer Beware” to be found when shopping on Amazon. There’s plenty to like too, but still, just sayin’.
Wonderful how TNYT reads Amazon’s mind and discovers the secrets of their marketing PLANS.
It’s this kind of article, all insinuations and little in the way of data, which makes me mistrust the Times.
Amazon keeps its plans to itself, and its data to itself, because that has always served its best interests.
Even when Hachette was being horrid to Amazon on all public platforms it could, Amazon just ignored most of the ranting.
I think that’s a refreshing business model. Do, and don’t talk about it too much, especially to people trying to find clickbait.
Apparently Canada considers it ‘wrong’ to have a list price that no one ever pays.
https://www.recode.net/2017/1/11/14243250/amazon-canada-fine-list-prices-misleading-pricing
I’m guessing they’ve never noticed the list prices in books and gone after B&N …
It is considered manipulative to have a list price the price setting has no expectation of collecting. However, it is odd the Competition Bureau would fine Amazon for this. Generally the standard is applied to entities which both set the MSRP and sell the goods. Amazon doesn’t set the MSRP. The Bureau itself said in a statement that “Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate.” In effect they are fining Amazon for being lied to. It seems to be an attempt to get Amazon to police their suppliers on the Bureau’s behalf. Amazon is being left holding the bag for generally skeezy practices that involve several players.
Amazon might be able to successfully dispute this fine. Their claim would be stronger if the offers in question stated MSRP rather than “list price” as the latter is a vaguer term. Amazon’s case would be weak if they themselves have never sold the goods for “list price”. It’s fine to advertise a price is lower than what you previously charged. It’s fine to advertise a price is lower than what you will be charging next week. Where it gets sketchy is advertising a savings in comparison to a price that has never been charged. Where it gets vague is whether that standard is applied within one seller or across all sellers.
Books from the old mills of course have prices printed on them, so there is no dispute that any seller or buyer would assume that was the expected price. Even though that price is paid in less than half of all book sales.