By: Brendan Sullivan
I am sure we have all bought a product off Amazon before. It is simple shopping and you can buy just about anything you want. Around Christmastime Amazon changes their prices. In fact, they changed the price on over $80 million products in one day in 2014. Other companies such as Walmart, Best Buy, and Toys R Us will not be undersold. With Amazon’s pricing strategy it is hard to compete with them.
Shopping online is a different kind of shopping for customers because of the fact they need to try products beforehand. Best Buy has an advantage with this because customers can try the products in their stores and buy them online with their online shopping deals. Best Buy’s policy on pricing is that they will match any one of their competitors’ prices. By matching their competitors’ prices, Best Buy can start bringing in more customers. Toys “R” Us is also matching competitors prices. More companies are starting to match their competitors’ prices so they can compete with Amazon.
How can Amazon do this and still compete with other companies during this busy shopping season? Well, there is a high demand and they do a tremendous job with their pricing strategy.
Amazon plans to continue expanding in the competitive online shopping arena. Their plan is to continue offering online shopping deals. By eliminating brick and mortar stores, Amazon has a huge advantage. They already have a great distribution system set up. Honestly, in my opinion, this is probably their best skill. I have never had a problem receiving or returning a product. It involves a lot of organization and long term planning. Another thing they do well is offering great deals for customers. Online shopping during the holiday season has been huge for Amazon. There were 50 billion dollars in sales on Black Friday in 2014. On Black Friday, Amazon offered huge deals on smartphones, diamond rings, and Wrangler jeans. Younger people shop almost exclusively online and the online shopping market has continued to grow. In 2013, there were 263.3 billion dollars in online sales. That is an increase of 16.9%. They are expecting by the end of 2014 there will be over 300 billion in sales. Everyday Amazon adds new sales or a new deal on certain products. They are the leader in adjusting prices to promote more shopping. For example, in 2013 Amazon changed their prices on almost forty million products in one day. They changed these prices so that customers looking for a deal can find it on Amazon. Forbes showed how on one day Sears was selling an HP printer for $160 while Amazon was selling it at $120 and B&H was selling it for $110. Sears then responded by dropping the price to $155. B&H upped their price to $130. It is incredible how these companies change their price depending on the competition. They are constantly trying to outdo one another and offer the best price. After 2:00 PM the deal ended; Sears changed their price back to $190 and Amazon raised it to $130.
|$160||$130 (After 2:00 PM)||$130|
|$190 (After 2:00 PM)|
In one day, Sears changed their price four times on this printer. Which is a lot of time to put into just one product. That shows how competitive online shopping has become. Price changing is a great way to sell a few extra items at a discounted rate for a limited time. When there are less people shopping online that would be a good time to offer a special deal. On Black Friday, Amazon had nearly three thousand price changes on a variety of products. The closest competitor on that day was Walmart with just over nine hundred. On cyber Monday, Amazon had over three thousand price changes that week with most of them occurring on that Monday. Again, Walmart was the next closest with almost a thousand. This is a great strength for Amazon and they are outperforming all their competitors in the price changing market.