Amazon: OK, OK. We'll let traders flog tat more cheaply elsewhere Amazon has agreed to stop forcing third-party traders to offer their cheapest prices on its online marketplace within the EU, Blighty's Office of Fair Trading has announced. The online bazaar had been banning traders from selling their products at a cheaper price elsewhere using threats of Amazon account suspension and payment …
I expect it will be the same price on Amazon as before, but there will be the possibility of cheaper prices elsewhere.
It costs traders quite a bit to list stuff on Amazon, and that is reflected in the price, but it gives them a lot of exposure and extra business, so it is worth paying the money. However, they would like to be able to list the stuff on cheaper platforms as well, and pass on the savings to their customers. Now they will be able to do that.
Spot on. The net effect of this policy was a global increase in retail costs to the public. This is because retailers were forced to bump their "own" prices up to match the "Amazon price" if they wanted to list on Amazon, and the Amazon price was necessarily higher because AMZ takes a significant percentage fee from each transaction. This is good news for customers and for small retailers, and it's very good to see the OFT actually doing something to protect the UK economy from an aggressive tax avoiding "global megacorp" here.
It's a shot in the arm for every third party seller, regardless of if they sell via Amazon or not.
Amazon is a bit of a tyrant in the marketplace. The price parity thing essentially hosed sellers, as you have to inflate you Amazon price to maintain a margin in order to pay the costs... which then -due to the force parity- tended to make the prices on your own website too high to compete with. And those costs aren't small. I seem to recall 30% for books and 15% for a lot of consumer electronics.
Amazon were using this to gain more traction in the marketplace and monopolise. It essentially was making Amazon the central hub of all internet shopping. And punters aren't getting the prices because Amazon are scraping off 5% or more of the price.
Another problem is the number of duplicate entries. Look for something fairly generic like a card reader and you'll see the same picture many times in the search results, with a slightly different description each time, maybe with just a different brand name. It's usually Amazon which is the cheapest because they do free delivery, but finding the Amazon entry, or whether they even have the product, is a PITA.
I am finding more often recently that Amazon's catalogue is truly awful.
For many items there just isn't appropriate specialisation or categorisation to make it possible to filter effectively. In many cases it is unclear which category items belong in. Then there are pages and pages of duplicate listings.
For some things the market is overwhelmed with counterfeit goods. Even when you filter specifically by brand or manufacturer all the fakes are still shown. I have been frustrated on several occasions recently actually trying to distinguish a genuine product from amongst all the trash. This is false advertising and should be dealt with.
For others the results just blatantly ignore your search terms. For example, if I searched for a 64GB SD card then why am I being shown 16GB and 32GB ones?
A final beef I have with Amazon is in regard to the 'subscriptions' facility. Despite recently cancelling such a subscription I have just received three more bottles of shampoo that I don't need. I had to take time off to go to the depot and pick it up as well!
A lot of small traders have no choice but to be on Amazon if they want to make a living. And Amazon can set the price of doing business to those small traders at any level they choose. What this ruling does is stop Amazon from blackmailing traders into offering the lowest price on their platform even if it has a high cost (to them) associated with it.
"We are pleased that sellers are now completely free to set their prices as they wish, as this encourages price competition and ensures consumers can get the best possible deals."
Am I being slow or have I missed something? Weren't consumers getting the best possible price under the old rules (on Amazon)? Amazon only required the price to be the same or lower than anywhere else, meaning you were unlikely to find it cheaper from the same seller.
Confused...
If I had, say, my own online store then I'd've been forced to use the same price as Amazon - even though selling direct may involve less costs to me (such as Amazon's cut). So it meant that ALL of my prices would have to account for that commission, when I might be able to undercut them on other platforms or my own store.
"Am I being slow or have I missed something? Weren't consumers getting the best possible price under the old rules (on Amazon)? Amazon only required the price to be the same or lower than anywhere else, meaning you were unlikely to find it cheaper from the same seller"
You're missing the fact that sellers couldn't offer less than their best price PLUS Amazon's cut if they were to stay in business - so you weren't getting the lowest price they could offer if they were selling through their own website or a cheaper marketplace than Amazon, say. Price fixing isn't good for consumers, no matter how it's dressed up.
Exactly what the guys above said. I work in an online retailer, in an industry where margins are typically low (10% difference between retail and cost price typically). If we wanted to list on Amazon, we (formerly) had to bump up the price on our own store to include the 'Amazon tax' if we wanted to list a product on Amazon.
This change means that we can now list our products at our own prices on our own site, and also list them on Amazon with the 'Amazon tax' built in to the Amazon listed prices. So the prices will be cheaper on our own site than on Amazon, with the benefit to the customers of Amazon of course being that it provides a single marketplace/comparison site - but those customers might now have the option of finding the product listed cheaper elsewhere by cutting out the middle-man, which is of course exactly what Amazon were trying to prevent.
Note that this only applies in the EU, so they can still do this in the US, apparently without penalty. Yet they somehow remain unsued, even though Apple was given a massive penalty for doing the same thing on a more limited class of products. I guess Amazon bought better politicians.
In some ways this is good news to hear as a seller both on the Amazon Marketplace as well as our own Ecommerce site and having received such warnings of account suspension from Amazon due to our pricing. The fact is, however, the only reason our prices on our own site are so much lower than that on Amazon is due to the extortionate commission/fees Amazon collect from each sale. Had this figure been set at a more reasonable level I would imagine sellers wouldn't have found it anywhere near as difficult to keep there Amazon prices the lowest.
This was never a competition issue. Retailers are free to list goods at a cheaper price elsewhere if they like - they just can't list it on Amazon if they do.
There is no reason for Amazon to not protect it's customers by asking retailers to ensure that they are not charging more on Amazon than through another outlet. If we are going to declare this as anti-competitive, then we also have to stop any retailer from price matching it's rivals. Which is plainly ridiculous.
@Graham Triggs
What you are failing to take account of there is the completely dominant position of Amazon in the e-commerce marketplace. You say "they just can't list it on Amazon if they do" as if that's a non-issue, however for many small companies (not the one I work for thankfully, as we have a brand and a long-established customer base of our own) selling on Amazon is the only way to stay in business; not selling on Amazon is effectively not an option if they wish to continue to pay the Mortgage.
"There is no reason for Amazon to not protect it's customers by asking retailers to ensure that they are not charging more on Amazon than through another outlet"
There is a very good reason for Amazon to not do this: this is price fixing. Don't just take my word for it, the OFT seems to agree.
And if you think that this activity s 'to protect the customers' you are hopelessly naive. For reasons explained several times throughout this discussion, the end result of this activity is higher prices for the consumer, because smaller retailers are basically having to build the Amazon tax into products even when selling them elsewhere than Amazon.
When ordering from the Republic of Ireland (and I imagine other EU countries), orders that are fulfilled by Amazon themselves qualify for free delivery, once the order totals more than 25 GBP. But marketplace stuff is a total pain in the arse - some vendors will only deliver to the UK, some charge (pick a number between 5 and 20) quid minimum for deliver to "Euro Zone 1", so for low value items the prices listed bear no relationship to the actual final cost that a customer will be charged if they go ahead an order it. And there's no way to filter out "Seller won't deliver to your country" items, or sort by "price plus delivery".
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