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Amazon Price Parity - Bullying?

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edmondscommerce

edmondscommerce

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Nov 11, 2008
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UK
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
 
Interesting that they do not demand that retailers reduce their price to match the other outlets!
 
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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.
 
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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.
 
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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
 
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downsouth said:
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
Click to expand...

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.
 
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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.
 
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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.
 
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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
 
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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
 
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TotallySport said:
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
Click to expand...

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.
 
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TotallySport said:
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.
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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.

TotallySport said:
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.
Click to expand...

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.
 
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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.
 
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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 ;-)
 
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LuckyNo8 said:
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 ;-)
Click to expand...

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.
 
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Amazon have broken the law hence the UK government should chuck them out of the country and allow people to purchase for cheaper prices.

Not going to happen as there is a distinct lack of Bollux in governments.

No good saying UK jobs will go most of there depots are fully automatic and employ very few people.

Earl
 
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sirearl said:
Amazon have broken the law hence the UK government should chuck them out of the country and allow people to purchase for cheaper prices.

Not going to happen as there is a distinct lack of Bollux in governments.

Earl
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lol, they have just given them a grant to open a distribution center in scotland so that aint gunna happen soon,
 
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TotallySport said:
lol, they have just given them a grant to open a distribution center in scotland so that aint gunna happen soon,
Click to expand...

yup more example of corruption ,one law for the rich and hundreds for the less well off.

I wonder if they have tried this in the US with there stricter laws ( alleged ):|

Earl
 
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Tried Amazon Marketplace myself once, waste of time. The 15% fee wipes out any profit unless you price higher to counteract. And indeed you are not able to link out to your own site either. I'll be interested to see if this does have any effect on the off-Amazon products of my competitors who want to remain with Amazon as well. Meantime for the products I sell I beat Amazon in Google listings for the main keywords at least, and do get occasional click-throughs from Adsense ads on Amazon too. Ultimately if you can compete on price Amazon is fine but for me I'd rather compete on service.
 
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The main point here I think is the fact that entrepreneurs running their own businesses are being forced to do things with their business that they do not want to do on pain of losing the amazon sales.

Yes they can do this, no it probably isn't breaking the law but it is aggressive, domineering and perhaps even bullying. And I suspect it is a taste of worse to come.
 
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I am confused, what has Tesco selling on amazon cheaper than on their own site got to do with amazon stopping sellers undercutting them. Tesco, by being more expensive on their own site, have not breached amazon's rules.
 
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Method Man said:
Is price fixing, cartel operation etc not a criminal offence in this country?

I thought it was?
Click to expand...

Not if you're Amazon!!!<BR>They seem to have the OFT in their pocket judging by their decision on Amazon's takeover of bookdepository which increased their maket share of UK online book sales to 75%. An educated guess would be that they're applying some grease to the wheels that are supposed to regulate them.<BR>They already have this policy in the US where it seems to have been unchallenged for quite a while.
 
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edmondscommerce said:
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?
Click to expand...

Write to the OFT - they're already investigating it but will probably find in Amazon's favour if they don't get enough complaints that give detailed information about how Amazon manipulates everything to its advantage, trying to stamp out competition.
 
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downsouth said:
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
Click to expand...

It may not be illegal to have different prices across different selling channels but if you do have different prices and you sell on Amazon it will be in contravention of your legally binding agreement with them. So actually they can dictate the price you sell at elsewhere because you agree to make it their business by agreeing to their terms for selling on Amazon (which of course they can change at any time).

This is being investigated by the OFT but sellers will have little chance to be represented in that process. Amazon will be represented by big shot lawyers who get paid huge amounts of money because they have a proven track record of being able to do things like, for example, getting the OFT to believe that there's nothing anti-competitive about price parity even though it would be plain to a five-year-old thats its an attempt to stitch up the market.
 
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TotallySport said:
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.
Click to expand...

That's a form of price fixing. They want to be able to dictate the price that you sell elsewhere rather than allowing you to set prices according to the cost of the marketplace you are selling in. Market dominance requires a lot of marketing/advertising investment. That should be a downside, but Amazon want to remove that downside by forcing you not to pass on savings that you make on a cheaper marketplace to the customer.

Amazon want to have their cake and eat it. They are introducing a policy that they don't follow themselves. In media products such as books you will find Book Depository, owned by Amazon, selling in Amazon marketplace at prices far below Amazon's normal prices.
 
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Amazon call me on a regular basis, even though I've told them not to bother on countless occasions.

I'm not having them dictate to me what I can sell my own products for. That way craziness lies!
 
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I emailed the OFT after reading this forum and I was surprised that they got back to me and also arranged a conference call to get all the details from me.

They said that they had a lot of complaints about this and were trying to decide whether the investigation needed prioritising or not.

They were very helpful and sounded like they were on my side, but only time will tell. They did say that it is very important that anyone else being threatened with this policy gets in touch with them so that they have as much information as possible and are aware of the scale of the problem.

Today however Amazon have suspended my account - obviously on the same day that payment was due so they can hold onto my money for another 2 weeks - and as I cannot afford to loose Amazon as a selling channel and cant afford to put prices down on Amazon (I would lose money) I have had to raise over 1000 prices on my website. How is that good for the consumer Amazon?

I don't know what this is going to do to my website sales, or for my company in general so we will have to see how it goes. All I know is that I cannot afford to lose Amazon sales overnight or have my money tied up while we dispute it. Just a typical case of big retailers using their power to bully small companies and also using the thousands of pounds that they owe me as blackmail - they hold all the power.

Please anyone worried about this email the OFT. (Contact us on their website)

Ben
 
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We have now had 4 policy violations on Amazon for price parity but on the last 2 occasions the 3 examples they gave were questionable.
On our website (which is what they were comparing to) there is a postage charge on orders under £50, and free shipping over £50. On Amazon we offer free shipping on all orders, so we have adjusted the prices so that the total price is the same (or slightly cheaper on Amazon) once the postage has been factored in.
The 3 examples were all the same or cheaper once the postage was calculated. My interpretation of their rules (S-4 in the seller agreement) is that it's the total price that must be on par with the other channels.
I feel we are walking a tightrope of being suspended therefore tried to contact Amazon Seller Performance (not an easy task). You can't communicate with that department directly and if you contact seller support they pass on the message. All I get back each time is a canned response (see below) which conflicts the other T&Cs.
Can anyone offer their input on this?
Dan

According to your seller agreement, both the item prices and total prices you charge customers for products that you choose to list on Amazon must generally be at least as favourable as the item prices and total prices you charge customers via other sales channels.

- The "item price" of a product generally means the price of the product itself.
- The "total price" of a product generally means the total amount payable by a customer for a product, including discounts, rebates, promotions, and shipping.

For more information, please refer to Section S-4 ("Parity with your Sales Channels") of the Amazon Services Business Solutions Agreement, which is available in the Policies and Agreements section of seller Help.

Our previous email was intended to bring this policy to your attention. If your listings comply with the terms of your agreement, no further action is required on your part.

However, continued failure to abide by the terms of your seller agreement may result in the removal of your selling privileges.
 
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Dan Healthcare4all said:
We have now had 4 policy violations on Amazon for price parity but on the last 2 occasions the 3 examples they gave were questionable.
On our website (which is what they were comparing to) there is a postage charge on orders under £50, and free shipping over £50. On Amazon we offer free shipping on all orders, so we have adjusted the prices so that the total price is the same (or slightly cheaper on Amazon) once the postage has been factored in.
The 3 examples were all the same or cheaper once the postage was calculated. My interpretation of their rules (S-4 in the seller agreement) is that it's the total price that must be on par with the other channels.
I feel we are walking a tightrope of being suspended therefore tried to contact Amazon Seller Performance (not an easy task). You can't communicate with that department directly and if you contact seller support they pass on the message. All I get back each time is a canned response (see below) which conflicts the other T&Cs.
Can anyone offer their input on this?
Dan

According to your seller agreement, both the item prices and total prices you charge customers for products that you choose to list on Amazon must generally be at least as favourable as the item prices and total prices you charge customers via other sales channels.

- The "item price" of a product generally means the price of the product itself.
- The "total price" of a product generally means the total amount payable by a customer for a product, including discounts, rebates, promotions, and shipping.

For more information, please refer to Section S-4 ("Parity with your Sales Channels") of the Amazon Services Business Solutions Agreement, which is available in the Policies and Agreements section of seller Help.

Our previous email was intended to bring this policy to your attention. If your listings comply with the terms of your agreement, no further action is required on your part.

However, continued failure to abide by the terms of your seller agreement may result in the removal of your selling privileges.
Click to expand...

To me, it reads that they're saying that BOTH the item price and total price needs to be cheaper or the same on Amazon. This is fairly pointless, as 99% of customers will need delivery to be included. It sounds like you're being penalised for sticking with Amazons "free shipping" policy.
 
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But this is what it says in the S-4 section they are pointing us to:

You will maintain parity between the products you offer through Your Sales Channels and the products you list on the a particular Amazon Site by ensuring that at the applicable Selling on Amazon Launch Date and thereafter: (a) the Purchase Price and every other term of offer and/or sale of Your Product (including associated shipping and handling charges, Shipment Information, any “low price” guarantee, rebate or discount, any free or discounted products or other benefit available as a result of purchasing one or more other products, and terms of applicable return and refund policies listed on such Amazon Site) is at least as favourable to users of such Amazon Site as the most favourable terms upon which a product is offered and/or sold via Your Sales Channels (excluding consideration of Excluded Offers);

-- I interpret this as the total price needs to be the same. Confusing?
 
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Dan Healthcare4all said:
-- I interpret this as the total price needs to be the same. Confusing?
Click to expand...

Everything needs to be the same or cheaper on Amazon.

e.g. with all taxes and postage as the total price of the product deliver to the customer.

Amazon Price: £4.95 + free shipping

Your Site Price: £3.95 + £1 shipping

It needs to be at least that for them to stop hassling but you'd probably need the products at £4.25 + £1 shipping on your website.

They're being a bit picky because we've not had this problem with them yet.
 
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