Amazon are starting to see the same issues with brands as eBay have in the past. Brands are starting to complain that their goods are being sold at knockdown prices on the Amazon site.
According to Reuters, brands have stopped complaining about such goods being counterfeits, their complaint with Amazon isn’t regarding whether or not the goods are authentic, it’s purely about the price they’re being sold at.
Whilst the reports are concentrating on Amazon.com, it’s likely that brands and manufacturers will also turn their attention to other Amazon sites around the world. Many manufacturers set minimum advertised prices and it would appear they’re not averse to cutting off distribution channels if prices aren’t held. The Reuters article even cites manufacturers making test purchases and tracking serial numbers to identify which distribution channel products came from.
In Amazon’s case it’s not just third party merchants who are slashing prices – Amazon themselves have been accused of selling too cheaply, and in an unusual twist their defense is that Amazon themselves are facing stiff competition from their merchants who are driving down prices.
Do you think manufacturers should have the right to set minimum pricing or should retailers who access their products be able to resell them at whatever price they see fit? Whilst a race to the bottom on price cuts margins meaning only those with the leanest operations can afford to operate, it’s definitely good news for consumers who can snag a bargain. But does buying that designer pair of in season jeans at a knock down price significantly lower the brand appeal for other consumer happily paying top dollar in high street shopping malls?
3 Responses
I don’t understand why manufacturers/brands are having palpitations over this (disclosure: I’m a 3rd party merchant on Amazon but the goods I re-sell are primarily out-of-production). American business is a free-market system. Trying to control prices sounds a little bit like, um, Soviet-era Russia. To the manufacturers/brands, I say, get competitive: find a way to give the end purchaser value that we 3rd-party merchants can’t match. God forbid you replace bullying these merchants with a little ingenuity and entrepreneurial thinking, what a concept!
No surprise its not Amazon’s fault, nothing ever is they are American! Funny how we receive weekly emails from Amazon informing us our products may not be the cheapest on Amazon and yet they are not guilty of driving prices down?
My suggestion is ditch European rules and bring back RRP’s and let customers decide who they buy from based on seller metrics like Seller Performance or the dreaded eBay DSR’s.
We have had a supplier recently make us agree to a minimum markup on all their lines on any online venue, seems highly questionable to me but I can see that they want to protect all their business interests (be it helping the b&m stores along or whatever)