Amazon selling products below cost prices
Has anyone come across products whereby amazon are actually selling the products for less than what they cost the seller or even amazon in some cases?
I know of certain products where amazon have paid X amount to buy them from the supplier but then they are selling it for less than the cost price? Why would amazon do it? I
I understand one of specials like a Black friday or some other special deals but i don’t understand what amazon gain from it? Is it amazon looking after their customers ? Or not helping other sellers of the same product (who by the way are also amazon customers).
Anyone know what amazon business strategy is when it comes to selling products themselves?
Amazon selling products below cost prices
Has anyone come across products whereby amazon are actually selling the products for less than what they cost the seller or even amazon in some cases?
I know of certain products where amazon have paid X amount to buy them from the supplier but then they are selling it for less than the cost price? Why would amazon do it? I
I understand one of specials like a Black friday or some other special deals but i don’t understand what amazon gain from it? Is it amazon looking after their customers ? Or not helping other sellers of the same product (who by the way are also amazon customers).
Anyone know what amazon business strategy is when it comes to selling products themselves?
15 replies
Seller_hC0hNVDuILaKO
Are you sure that these are not items that an FBA seller sent in, but which got lost, so Amazon reimbursed them and have now found the stock so are selling it themselves?
And how do you know that the price that you were told Amazon paid the supplier is what they actually paid?
Seller_8XO2tpVvj0ZaV
In a previous job a company I worked to done that occasion for one of the following reasons.
- Products not selling off the shelves so reduced to clear (even at a loss)
- Deliberate loss leaders to attract sales to other products
- Distributor/manufacturer clearance lines on sale can appear to be selling at a loss
Not knowing the lines means people can only speculate
Seller_JB8wPCk9zkyad
It’s called LOSS LEADING and many major companies indulge in it.
They have various reasons.
One is to build a monopoly by putting rivals out of business, at which time they become the sole seller and jack their prices up.
The supermarkets have done it on CDs, DVDs and Video Games for years. The then head of entertainment for Tesco gave an interview to the computer game trade industry magazine where he openly admitted losing 6 to 7 pound per copy on Fifa and Call of Duty …
Seller_uW20o0j61TkN3
Amazon use all the seller sales statistics they gather from our good selves. They look at the market and potential for them to open in that area. Usually undercutting the main sellers to force them out of the way/make them go bust and hey presto - the market share is theirs…and up goes the price a little. They can then talk to the suppliers in terms of new pricing. I’m thinking that they aren’t too fussed about us - They are interested in getting the most profitable items, or a good share of that market. After all we are competing in the same game as they are - it’s just they have all the data available to hand.
Seller_RKNG9uFDlYnAU
If the item is: “Dispatched from and sold by Amazon” it means in the most cases the seller has got a AMAZON VENDOR ACCOUNT. I dont know how it works regarding their FEES but they must be much lower. Thats why they can offer a very good price. In some cases our fees are higher than the product Amazon sale themselves. To get a VENDOR ACCOUNT you must be a manufacturer or a big distributor. By the way, you need to be invite by Amazon.
In my opinion it is not fair against “normal” seller. You can spend money on advertising etc and than Amazon comes and hijack your product with the lower price……… and your business goes down.
Seller_PMw736PRhtWvx
They do this all the time especially with their own products such as Kindles and Alexa.
In fact Amazon as a whole has only just started to turn a profit in the last few years, loss leading is a core part of their business model. They do it to increase market share and prevent new businesses from entering the market. At some point they will put their prices up and rake in huge profits.
In this case they are likely trying to squeeze out sellers of similar products. Once sellers have given up and decided they can no longer compete with Amazon they will likely put their prices and begin to turn a profit.
Seller_G1PKKllhFr07V
As a vendor, you have to pay a certain percentage of the invoice amount for “Advertising” - this money is pooled and used by Amazon for rebates, promotions or reducing random items in price.
Another thing is to speed up sales (or test sales) for slow selling inventory.
Seller_74ijaPS0pKj8Q
As a buyer who gets a lot of bargains on amazon I have noticed something interesting:
Sometimes an item that has not sold in a while, which is sold and dispatched by amazon, will drop a few pounds in price day by day with seemingly no minimum price set. Once somebody purchases it at a knockdown price the cost jumps back up again almost immediately. A boost of interest or lots of people clicking on the item (even if not buying it) CAN influence this and make the price creep back up a little. I sometimes keep an eye on items and put them in my basket but don’t checkout and see the price drop with each day it remains unsold. Usually I grab it when I’m no longer able to resist.
I presume that this is part of their algorithm and set up to keep their products rising to the top of the popular search results. If not selling well, drop the price until you get a sale, it jumps higher up the results, and then goes back to full price. Sometimes this also happens for items for which Amazon only have 1 or 2 left before their next shipment.
I can give you numerous examples of this happening, mostly furniture as that’s what I’ve been actively seeking out. For example in the past few months I’ve purchased a L sofa for £196 which usually ranges between £400-700, a TV unit knocked down to £45 from £180, an glass end table for £33 knocked down from £122, bed frame £31 from £200, rugs for £10-25 which usually retail at over £100 and a bunch of other smaller things like pet toys and supplies, or home accessories.
I’m not saying this is the case with all Amazons stuff that they let go at silly prices, but it can explain why sometimes you see prices that seem crazy low.
