Amazon’s new strategy to provide discounts to its customers while paying sellers full price has been launched, as the Christmas season nears and the company aims to compete with ‘brick and mortar’ stores for customers.
“When Amazon provides a discount, customers get the products they want at a price they’ll love, and small businesses receive increased sales at their listed asking price,” an Amazon spokeswoman said in an emailed statement, noting that businesses can opt out at any time.
But the move has angered some sellers who see the “discount provided from Amazon” devaluing their products.
A discount pricing strategy is a common business strategy used to help increase traffic and sell greater volumes of product in a competitive environment.
A discount strategy normally will help gain new customers and encourage repeat or high volume buyers.
But there can be some disadvantages with customers becoming expectant of sales and discounts (if used regularly) and as a result devaluing product.
Consumers often associate low pricing with low quality, so the fear from third party sellers on the site is a valid concern.
And while the discount strategy can move large quantities it is normally a short term boost to sales and profits.
The problem most third party sellers will face is after the Christmas season when Amazon remove their “discount offer” and the prices are raised to normal retail price that sales will slow.
And this will be the concern for third party sellers affected by the offer.