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BizReport : Ecommerce archives : November 09, 2017

What Amazon's 3rd party discount move means for marketers

Recently, Amazon announced plans to begin offering discounts on items listed in their system from third party sellers. What impact might this have on smaller merchants and marketers? One expert explains.

by Kristina Knight

Kristina: In your opinion, what is behind Amazon's latest move in discounting items priced out by third party sellers?

Bardia Dejban, CTO, Volusion: Amazon is making a move to own the customer/buyer, since 70% of transactions on Amazon are third party sellers that are likely using the site as an additional marketplace. But this new discounting decision, along with the sites selling policies, are perhaps the strongest reminders that selling on Amazon is a privilege, like driving, and not guaranteed. [I.E. Amazon policies including, 'if we have removed your selling privileges, you may not open a new selling account'.]

Kristina: How could this impact third party sellers?

Bardia: This is bad news for third party sellers with their own ecommerce website because they are now competing on price against Amazon and other marketplaces. If you sold a widget for $29.99, and Amazon reduced the price to $24.99, consumers will likely buy that channel and reduce effectiveness of others (like eBay, Direct, etc). Plus, a third party seller never 'owned' that customer that purchased their product on amazon. In fact, they can't communicate with them outside of the tools provided within the Amazon ecosystem. [I.E. Amazon policies including, 'any advertisements, marketing messages (special offers) or 'calls to action' that lead, prompt, or encourage Amazon users to leave the Amazon website are prohibited'.]

Kristina: What do you expect to see from this policy change going forward?

Bardia: The good news is, Amazon is covering the cost difference for third party sellers this time - but [it] makes me wonder if they'll use the data collected to change their terms of service and pricing policies next year...or sooner?

Tags: Amazon, ecommerce, ecommerce trends, marketing trends, third party selling trends, Volusion

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