Amazon recently started to provide discounts to items that are being sold via Seller Central (also known as the “third party” or the “3P” side of the selling platform). This functionality allows Amazon to fund a discount or provide a coupon to customers that lowers the original price set by the seller.
Why is Amazon Offering Discounts?
Amazon uses these discounts to continue their customer centric approach in ensuring their customers find items at the most competitive prices in the market regardless of who owns that inventory. This allows Amazon to clear any inventory taking up warehouse space that they believe could hold more profitable products. The side effect is Amazon’s discounts may violate pricing policies and reseller agreements in place with the manufacturer without the knowledge of the seller.
How Amazon Discounts Impact Pricing Policies
If a manufacturer has a Minimum Advertised Pricing (“MAP”) Policy or other pricing policy (“UPP,” “MRP,” “IMAP,” “EMAP,” etc.) in place, it may want to add language to the policy to address Amazon’s potential price disruption
The good news is that sellers can opt out of the Amazon funded discounts. Opting out must be done at the seller level and on all the products sold in that seller’s account.
How Amazon Discounts Impact Sellers
Amazon funded discounts create a problematic position for sellers. On one hand, opting out of discounts on their full catalog may lose them the buy box and limit sales velocity for the entire account; a lower price with a greater potential to be the buy box winner might otherwise accelerate sales and sales rank. On the other hand, the seller may be found violating pricing policies and reseller agreements for any number of business partners.
While the choices Amazon offers are an “all or nothing” approach it seems like sellers are presented with a “no win” situation if they are selling more than one brand through a single Seller Central account.
How TrackStreet Empowers Smart Business Decisions
TrackStreet now identifies when an advertised price is the effect of a discount funded by Amazon to give insight into which sellers are allowing their prices to be discounted by Amazon and provide the data you need to manage a pricing policy accordingly with online partners that sell on Amazon.
The new icon in the TrackStreet platform is now shown next to the merchant’s price in both the “Pricing Over Time” and “Violation” reports. This new icon indicates that Amazon has provided and funded a discount on the item, possibly without the seller’s knowledge or consent. The new icon provides the opportunity to make a business decision on the next best steps to address the infraction; whether it is flagging the violation and escalating enforcement activities against that seller as per standard protocol, or, as TrackStreet would recommend, reaching out to the seller, encouraging them to opt out of the Amazon funded discounts and retracting the prior violation once the discounting ability from Amazon has been removed.
As we continue to evolve our platform to reflect the ever-changing eCommerce landscape, TrackStreet is delighted to offer this new functionality to our clients and shed light and awareness on Amazon’s funded discounts.
Please feel free to contact us for more information, or to discuss your specific MAP or price enforcement challenges.