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Amazon Price Parity - Bullying?

Discussion in 'E-Commerce Forum' started by edmondscommerce, Jan 30, 2012.

  1. edmondscommerce

    edmondscommerce Magento + PHP Expert Full Member - Verified Business

    Posts: 3,640 Likes: 624
    http://www.dailymail.co.uk/news/art...ng-small-firms-inflating-prices.html?ITO=1490

    Anyone here affected

    Of those that are, how many are planning to resist in any way or is everyone going to roll over because its just too much business to risk?

    What strategies are you coming up with to work around this scenario?

    * Setting up other domains/companies that are not linked to Amazon

    * Finding ways around the parity demands (e.g. customer segmentation pricing)

    I think this is going to become a more and more important issue for ecommerce in the UK
     
    Posted: Jan 30, 2012 By: edmondscommerce Member since: Nov 11, 2008
    #1
  2. OldWelshGuy

    OldWelshGuy UKBF Legend Staff Member

    Posts: 20,416 Likes: 7,047
    I have had issues with clients who are petrified of Amazon's power.
     
    Posted: Jan 30, 2012 By: OldWelshGuy Member since: Jun 12, 2008
    #2
  3. Method Man

    Method Man UKBF Newcomer Free Member

    Posts: 240 Likes: 51
    Is price fixing, cartel operation etc not a criminal offence in this country?

    I thought it was?
     
    Posted: Jan 30, 2012 By: Method Man Member since: Jan 11, 2012
    #3
  4. OldWelshGuy

    OldWelshGuy UKBF Legend Staff Member

    Posts: 20,416 Likes: 7,047
    Indeed, and that is what will be investigated pretty soon.
     
    Posted: Jan 30, 2012 By: OldWelshGuy Member since: Jun 12, 2008
    #4
  5. edmondscommerce

    edmondscommerce Magento + PHP Expert Full Member - Verified Business

    Posts: 3,640 Likes: 624
  6. consultant

    consultant I Can Help Your Business Staff Member

    Posts: 5,121 Likes: 702
    Interesting that they do not demand that retailers reduce their price to match the other outlets!
     
    Posted: Jan 30, 2012 By: consultant Member since: Jan 21, 2008
    #6
  7. LuckyNo8

    LuckyNo8 UKBF Newcomer Free Member

    Posts: 72 Likes: 4
    Eh?? My reading of that article was that:

    1. IF you sell product "A" on Amazon
    2. AND you sell product "A" more cheaply elsewhere

    You have to make prices the same or get kicked off Amazon.

    I don't see what's wrong with that? Why should Amazon provide a portal for people to find your product, if when they search for it again they'll most likely independently click onto your website and buy it? Amazon aren't a charity!

    I'd be amazed if the OFT could do anything... google shopping etc and the nature of the internet mean they wouldn't have a leg to stand on.
     
    Posted: Jan 30, 2012 By: LuckyNo8 Member since: Jul 31, 2010
    #7
  8. kulture

    kulture UKBF Legend Staff Member

    Posts: 7,239 Likes: 1,960
    That is exactly your reading of the article. Amazon will kick you off if you dare to try to undercut them. They want you to raise your prices (which you have to do to cover their 15% commission). So they are indeed protecting their market. They are definately NOT a charity. They are being paid at least 15% of the total for every sale.

    What is wrong with that is they are reducing competition, and raising prices upwards. Both of which is bad for the consumer. This is why it is illegal. Its called price fixing. Amazon have very carefully worded their demands and are trying to pass this off as trying to reduce prices. But the effect will be to increase them.

    To be honest I feel that they are being stupid to do this. It is enormously difficult to beat Amazon for position in google for a product. Amazon have a considerable reputation and brand loyalty, customers tend to search on Amazon FIRST even before Google, and will inevitably buy from Amazon (or a Amazon merchant) because they have confidence in them.

    By doing this Amazon are emphisising that they cannot be the cheapest because of the 15% commission and may encourage customers to look elsewhere.
     
    Last edited: Jan 30, 2012
    Posted: Jan 30, 2012 By: kulture Member since: Aug 11, 2007
    #8
  9. downsouth

    downsouth UKBF Ace Free Member

    Posts: 1,053 Likes: 120
    They provide a portal as you say at a cost, thats their fees, they cannot dictate the price you offer the product at, thats your business not their's as long as you pay their fees!

    Its not illegal to have differing prices across different selling channels
     
    Posted: Jan 30, 2012 By: downsouth Member since: May 16, 2008
    #9
  10. kulture

    kulture UKBF Legend Staff Member

    Posts: 7,239 Likes: 1,960
    I think you are missing the point. They ARE TRYING TO DICTATE THE PRICE. This is why its potentially illegal.

    What they are saying is you can sell your product on Amazon, you can set whatever price you like ON AMAZON. We will take 15% of this price when you sell. ANY YOU MUST NOT SELL THIS ELSEWHERE FOR LESS.
    So I agree with you, its not illegal to have different pricess across different selling channels, BUT AMAZON WILL KICK YOU OFF IF YOU DO.
     
    Last edited: Jan 30, 2012
    Posted: Jan 30, 2012 By: kulture Member since: Aug 11, 2007
    #10
  11. downsouth

    downsouth UKBF Ace Free Member

    Posts: 1,053 Likes: 120
    No, defo on the same page Kulture, wont be long then til Ebay follow suit!!!
     
    Posted: Jan 30, 2012 By: downsouth Member since: May 16, 2008
    #11
  12. liongroup

    liongroup UKBF Newcomer Free Member

    Posts: 175 Likes: 35
    Sellers use Amazon through choice i.e at the expense of other channels, including their own. It strikes me as slightly naive for companies to turn on Amazon when in fact, they signed up to use their service knowing full well of the chargers and therefore downsides to using them.
     
    Posted: Jan 30, 2012 By: liongroup Member since: Jan 23, 2012
    #12
  13. TotallySport

    TotallySport UKBF Legend Full Member - Verified Business

    Posts: 6,959 Likes: 1,029
    I disagree Amazon are not price fixing, Amazon are making sure the prices on there website are the cheapest so you come back to them, you can sell it whatever price you want, you just cannot sell it less anywhere else than you can on Amazon which IMO makes perfect sense.

    I wish Amazon would raise the price in the sports sector but they do nothing of the sort, however its manufacturers and suppliers that are in the wrong IMO since they sell it at reduced rates to Amazon and allow them to undercut anyway, then when all the retailers stop buying their products think OH poop and start back tracking.

    The amount of people on this forum with new products and they all want to sell to the nationals first in a get rich quick plan, without a thought to long term stability.
     
    Posted: Jan 30, 2012 By: TotallySport Member since: Jul 18, 2007
    #13
  14. Esk247

    Esk247 UKBF Legend Free Member

    Posts: 7,758 Likes: 1,514
    bet they're paying less tax than the retailers that sell on the site too:

    Financial accounts show that Amazon paid no corporation tax at all in Britain in 2010. The last time it reportedly paid the tax here was in 2007, when it is said to have handed over just £19,367 to the Treasury
     
    Posted: Jan 30, 2012 By: Esk247 Member since: Oct 6, 2008
    #14
  15. TotallySport

    TotallySport UKBF Legend Full Member - Verified Business

    Posts: 6,959 Likes: 1,029
    TBH i am suprised any web design or SEO (or similar service which can be web based) company is registered in the UK, it would be much more Tax efficient to establish overseas, the thing that I think is more astonishing is the goverment don't seem to be doing anything to keep the business in the UK
     
    Posted: Jan 30, 2012 By: TotallySport Member since: Jul 18, 2007
    #15
  16. Esk247

    Esk247 UKBF Legend Free Member

    Posts: 7,758 Likes: 1,514
    Perhaps if they offered much lower taxes they'd get many more businesses basing banking here?

    It's that old conundrum. Do you have high taxes and a few companies, or do you drop your taxes right down and have a flood of businesses with banking here?

    I'd say it was better to reduce the taxes, have them bank and operate here. They're operating in the UK anyway and not paying any tax at all, or very little.
     
    Posted: Jan 30, 2012 By: Esk247 Member since: Oct 6, 2008
    #16
  17. kulture

    kulture UKBF Legend Staff Member

    Posts: 7,239 Likes: 1,960
    I am sorry but telling a retailer that they cannot sell an item at a lower price elsewhere is price fixing. A retailer should be free to set whatever price they want depending on whatever criteria they choose.
    Of course it makes sense for Amazon.

    This is a completely different matter. Yes some sellers on Amazon set stupidly low prices. Yes some manufacturers and suppliers undercut their own retailers on Amazon. A completely short sighted approach. But nothing to do with Amazon price fixing.
     
    Posted: Jan 30, 2012 By: kulture Member since: Aug 11, 2007
    #17
  18. TotallySport

    TotallySport UKBF Legend Full Member - Verified Business

    Posts: 6,959 Likes: 1,029
    its not price fixing, price fixing is when they tell you what price to sell it at, all they are making you do is list it at the same price across the board, if you want sell it cheaper then remove it from Amazon until you put the price back up, why should amazon advertise your prices differently to your web site?

    My point about manufacturers and suppliers, was in relation to selling to Amazon so Amazon can sell direct nothing to do with them (manufacturers and sellers) selling directly to the public.
     
    Last edited: Jan 30, 2012
    Posted: Jan 30, 2012 By: TotallySport Member since: Jul 18, 2007
    #18
  19. LuckyNo8

    LuckyNo8 UKBF Newcomer Free Member

    Posts: 72 Likes: 4
    Agreed with TotallySport...

    Amazon are under no obligation to list your products, and by delisting them are not reneging on any contract you haven't agreed to.

    Think of it this way - what are people getting their backs up over it? Because they used Amazon to get hits on their sites, and then sold through their own, effectively using them as a marketing tool.

    Think of it as "never knowingly undersold" if it makes you feel better ;-)
     
    Posted: Jan 30, 2012 By: LuckyNo8 Member since: Jul 31, 2010
    #19
  20. kulture

    kulture UKBF Legend Staff Member

    Posts: 7,239 Likes: 1,960
    Amazon are not talking about delisting a few of your products, it's an all or nothing. If you try and sell any one of your products cheaper than you sell it on Amazon, then they will remove ALL of your products from Amazon.

    As for using Amazon as a marketing tool, to re direct someone to your web site, that is a total no no. Amazon strip out your e-mail address in any communication, you are expressly forbidden to put any marketing information in your parcels, and you must never never direct any customer off Amazon. All perfectly reasonable.

    Sellers on Amazon, who have their own web sites, have to treat them as separate. You are effectively competing against yourself. Worse, as Amazon has such a good reputation for being secure and pro customer, the vast majority of customers would buy from Amazon when the price is the same.

    So by enforcing this price rule, they eliminate yet another way in which sellers can compete. They are using their dominance in the market to bully sellers. Leaving sellers with the choice of either playing by the rules and crippling their own web site, or leave the playing field and loose perhaps a significant selling channel.
     
    Posted: Jan 30, 2012 By: kulture Member since: Aug 11, 2007
    #20