Amazon Cuts Prices Of Sellers' Goods To Compete With Low-Cost Rivals
Amazon is changing tactics this holiday season.
While the retail giant previously only provided discounts on merchandise it sold directly to consumers, it is now cutting prices on third-party merchandise and will be covering the cost difference itself to ensure sellers still get full price, Reuters reports.
Amazon has been lowering prices by as much as 9% over the last few weeks, which is positive for consumers but could put a strain on Amazon’s relationship with brands, manufacturers and merchants, the Wall Street Journal reports.
Third-party sales have become a bigger part of Amazon’s offering in the last few years and are expected to account for an estimated 70% of the $340.7B worth of merchandise that was purchased on Amazon in 2017, the WSJ reports.
The discounts could lead to a higher volume of sales for the seller, but it could also lead to inventory being exhausted faster than anticipated. The lower prices may additionally put third-party sellers in an awkward position with other brands if they have agreements to keep certain products within a price range.
By providing the merchandise at a discount, Amazon could be inadvertently violating these terms, Reuters reports.
