PSA to Ecommerce Business Owners Selling on Amazon

[TKDTyler]

I've been doing a bit of research lately into some strategies to reduce Amazon cannibalizing ecommerce sales and stumbled on some really interesting information I was not aware of.

Since the beginning of time, Amazon included a price parity clause in their seller ToS that stated that marketplace sellers must set their price the same or lower than any other outlet online - what this meant is that Amazon forced their own competitive advantaged incentivizing customers to purchase product through their own portal vs brand websites through the use of their unmatchable prime and distribution offerings. For sellers such as myself, between Amazon fees and FBA, it would eat up to 25% of my margin - for lower price point products, this is even more of an issue.

Up until today, I still believed that this was the case and was looking into strategies floating around to bypass this clause such as offering coupon codes, discounts, BYGO, and other incentivization to the customer buying on my website for better pricing vs Amazon.

What I have just discovered through my research was that earlier last year, Amazon quietly buckled under some political pressure due to some presidential candidates pushing investigation of Amazon’s seller contracts and anti-compete clauses - although it was not largely publicized, upon realizing this happened, I believe it is a huge win for commerce business owners.

What this means for us is that we retain the ability to control pricing across our various distribution channels and offer incentivization for customers to leave the safety of the Amazon platform to obtain better deals without us sellers having to skirt around these anti-compete clauses and risk being banned from the platform altogether.

Now sellers are able to realistically price their products up to 15% lower than their Amazon listings and drive sales, accelerate the growth, recognition, and authority of their own sales channel/website. We already know a large portion of the buyers on Amazon love that $15-$30 price range and are fairly cost sensitive - they will scrape for deals if they are easily available.

As long as we can match the benefits of Amazon Prime (free shipping, ideally free 2-day shipping) and retain our profit margin, there is a huge additional benefit of grabbing a sale on your own website vs Amazon - one of the biggest being that you can easily build your email list via sales which can make your future launches much easier so long as your create products that your target audience love. I would gladly take an extra $1 or $2 less profit to build a list of customers are proven customers looking for what I have to offer. That email list can serve as an easy source of Amazon reviews during product launches where you can deploy a multitude of release strategies to drive traffic, reviews, and sales where you want them to go.

 

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[AllenCrawley]

I've been doing a bit of research lately into some strategies to reduce Amazon cannibalizing ecommerce sales and stumbled on some really interesting information I was not aware of.

Since the beginning of time, Amazon included a price parity clause in their seller ToS that stated that marketplace sellers must set their price the same or lower than any other outlet online - what this meant is that Amazon forced their own competitive advantaged incentivizing customers to purchase product through their own portal vs brand websites through the use of their unmatchable prime and distribution offerings. For sellers such as myself, between Amazon fees and FBA, it would eat up to 25% of my margin - for lower price point products, this is even more of an issue.

Up until today, I still believed that this was the case and was looking into strategies floating around to bypass this clause such as offering coupon codes, discounts, BYGO, and other incentivization to the customer buying on my website for better pricing vs Amazon.

What I have just discovered through my research was that earlier last year, Amazon quietly buckled under some political pressure due to some presidential candidates pushing investigation of Amazon’s seller contracts and anti-compete clauses - although it was not largely publicized, upon realizing this happened, I believe it is a huge win for commerce business owners.

What this means for us is that we retain the ability to control pricing across our various distribution channels and offer incentivization for customers to leave the safety of the Amazon platform to obtain better deals without us sellers having to skirt around these anti-compete clauses and risk being banned from the platform altogether.

Now sellers are able to realistically price their products up to 15% lower than their Amazon listings and drive sales, accelerate the growth, recognition, and authority of their own sales channel/website. We already know a large portion of the buyers on Amazon love that $15-$30 price range and are fairly cost sensitive - they will scrape for deals if they are easily available.

As long as we can match the benefits of Amazon Prime (free shipping, ideally free 2-day shipping) and retain our profit margin, there is a huge additional benefit of grabbing a sale on your own website vs Amazon - one of the biggest being that you can easily build your email list via sales which can make your future launches much easier so long as your create products that your target audience love. I would gladly take an extra $1 or $2 less profit to build a list of customers are proven customers looking for what I have to offer. That email list can serve as an easy source of Amazon reviews during product launches where you can deploy a multitude of release strategies to drive traffic, reviews, and sales where you want them to go.

Could you link to any sources for this information?

 

[TKDTyler]

Could you link to any sources for this information?

Sure thing! The first article I read was from CNN. I cited a couple different sources as well

San Francisco (CNN Business)Amazon sellers just got a little more freedom.
The e-commerce company will no longer prohibit its third-party sellers from listing their products on other sites for less than they do on Amazon's US site.
The change comes amid concern that the stipulation, called price parity, could be in violation of US antitrust law.
Amazon (AMZN) confirmed the policy change, which took effect Monday, but would not comment on it.


Senator Richard Blumenthal had called previously on the Department of Justice and the Federal Trade Commission for an investigation into antitrust violations and how they could affect the prices that consumers pay for goods.
"Amazon's price parity provisions may raise prices for consumers both in the short term and in the long run," he wrote in letters to the DOJ and FTC in December. "Relatedly, Amazon's price parity provisions may work to block the emergence of more efficient online marketplaces that might offer consumers lower prices on their favorite goods."
In a statement to CNN Business, Blumenthal said he welcomed Amazon's decision, but that he is "deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers."
Amazon still faces scrutiny from legislators who want more regulation of large tech companies.
Senator Elizabeth Warren has called for tech companies to be broken up because they have too much power. She's singled out s everal companies, including Amazon, and has proposed a law that would mean, among other things, that Amazon wouldn't be able to sell its own branded products like AmazonBasics on its platform, which would mean lost revenue.
Amazon also recently backed out of its plan to build a massive campus in Long Island City, following backlash from local politicians and residents over the incentives it was receiving from the city.

Amazon will no longer dictate how sellers price their products

Amazon will no longer prohibit its third-party sellers from listing their products on other sites for less than they do on Amazon's US site.

www.cnn.com

You're No Longer Required to Sell Products for Less on Amazon. The Problem? If You Don't, You've Got Another Penalty Coming

The rule change would be a boon for third-party sellers if it weren't for another incredibly similar pricing rule.

www.inc.com

Amazon quietly ends its third-party pricing parity policy

Amazon quietly made the change amid an environment that's increasingly hostile to the outsized influence of large technology companies such as Amazon.

www.digitalcommerce360.com

 

[Entre Eyes]

I have been consuming every thing Amazon the past week what to do and also what not to do.

This article caught my eye should be helpful to a few peeps.

Lost $100,000 Amazon business but inspired a product to help others.

Amazon Affiliate Requirements – Disclosure and other Rules - Website Income

A few years ago I shared my story about my Amazon Affiliate Account getting closed and costing me a painful $100k in affiliate advertising program earnings!

authoritywebsiteincome.com

 

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