As the holiday season kicks into gear, seasonal discounts and sales become the retail norm. However, some Amazon sellers have recently noticed discounted pricing on their products without their consent. Indeed, The Wall Street Journal recently confirmed that Amazon is discounting select products sold by third parties by as much as 9 percent.
The catch is, in this new discounting push, Amazon is covering the cost difference, meaning there is no bottom line impact for the sellers in question. In fact, as Amazon’s overall revenue continues to grow, with expectations for a huge 2017 holiday season, these discounts could increase sales for affected sellers.
Why is Amazon Discounting Items?
As any third-party seller can attest, Amazon takes a premium for products sold on their marketplace. Furthermore, smart sellers utilize Amazon’s marketing and advertising tools to get their products in front of the right customers as they’re ready to make a purchase. These additional measures that benefit both the seller, and theoretically, the consumer, also serve as a bonus revenue stream for Amazon.
Placing small discounts on items that were already on track to have huge holiday profits serves as an extra bump for Amazon. These discounts are meant to boost Amazon’s overall profit and pull shoppers away from other retail outlets, even if it slightly narrows their margin on select items for the holidays.
Is There a Downside for Impacted Sellers?
Obviously, since Amazon is covering the difference in selling price, the sellers in question stand to profit from the resulting increased sales volume. However, for brands that have agreed to a Minimum Advertised Price with an Amazon selling partner, this sudden price drop could prove problematic. If you have a Minimum Advertised Price for goods sold on Amazon, keep an eye on your prices this season to avoid upsetting other relationships.
How Can Sellers Opt Out of Amazon’s Holiday Discounts?
In the event that one or more of your items is impacted by Amazon’s holiday discount and thus violates a particular MAP agreement, Amazon offers sellers the opportunity to opt out of the program. Sellers can simply open a case with Amazon regarding the pricing change and Amazon will restore the item’s price back to its original amount.
With just a few weeks until holiday shopping season kicks into full swing with Cyber Monday and Black Friday, smart Amazon sellers are preparing for an increase in traffic and sales. If your brand isn't aware of regular changes on the Amazon marketplace, such as this latest development, partner with a trusted seller who is.