In a major shift for online commerce, Amazon has quietly dropped any mention of a list price, changing how it entices people to buy. There is just one price. Take it or leave it.
The retailer built a reputation and hit $100 billion in annual revenue by offering deals. The first thing a potential customer saw was a bargain: how much an item was reduced from its list price.
For example, Amazon originally promoted the Rave Turbo Chute as being discounted by 36%. Then, all mention of a discount was dropped and the 60-foot water slide was simply listed at $1,573.58, with an explanation that it used to be $1,573.59 — one penny more. Then, it dropped the old/new price comparison. Then, it dropped the price to $1,532.01 and put the comparison back.
Larry Compeau, a Clarkson University professor of consumer studies, comments
“When Amazon began 21 years ago, the strategy was to lose on every sale but make it up on volume. It was building for the future, and the future has arrived. Amazon doesn’t have to seduce customers with a deal because they’re going to buy anyway.”
That is why stores love big discounts: they work. In studies by Mr. Compeau and others, the perception of a deal is often what makes the purchase happen.
Big brands slapped with fake-discount suits
J.Crew, Macy’s have been slapped with law suits for displaying bargains online and offline that are not real bargains and are breeding “fake-discounts suits”, much of it using a tough California law against deceptive advertising. Amazon itself was the target of a fake-discounts suit — an unexpected development, because all Amazon customers agree to go to arbitration instead of court. A judge dismissed the complaint but the plaintiffs are now appealing, saying the arbitration clause is “unconscionable” and should be invalidated. Amazon declined to comment on the suit.
In Amazon’s third decade, with its complete domination of the ecommerce landscape, there are signs it is beginning to emphasize the value each customer brings. Amazon also appears to have stepped up its monitoring of a vendor system that allowed some sellers to insert data that listed their products as 99% or even 100% off.
Mr. Kovarik of Rout said his analysis indicated that Amazon was regularly eliminating more list prices. “In early May, about 29% of the products we saw were missing list prices, but now the number is up to about 70%,” he said.
As Amazon prepares to enter Indonesia, it is vital the ecommerce behemoth takes the necessary steps to sway Southeast Asian shoppers who have recorded one of the lowest interpersonal trust indexes in the world.
A version of this appeared in New York Times on June 29. Read the full article here.