Amazon US lifted the price parity policy last week, opening the door to changes in the way sellers allocate competitive product prices across their multiple trading channels. Sellers trading on Amazon.com can now manipulate their product pricing points on their websites or other marketplaces as a differentiating point.
Amazon previously required sellers not to charge customers higher prices on Amazon than they charge elsewhere. The mandate aimed to have cheapest prices online by prohibiting merchants from offering products with a cheaper fee on their own websites or other marketplaces.
Amazon’s price parity policy had also raised concerns over its anti-competitive nature in the UK. In 2013, Amazon ended the policy in the UK and EU after The Office of Fair Trading (OFT) launched an investigation into suspected anti-competitive arrangements by Amazon relating to online retail. Before the OFT had decided whether there had been an infringement of competition law, Amazon informed the OFT that they planned to end it.
The abolishment of the Amazon US price parity may also be a result of increased scrutiny over the imbalance of competition in the market. In December 2018, US Senator Richard Blumenthal filed a complaint with the Federal Trade Commission warning that Amazon could “stifle market competition“. It’s highly possible that the trade watchdog has leant on Amazon to ease up its restrictions to make for a fairer online market.
However, the change of heart from Amazon puts a question mark whether the move will make any difference at all to sellers. Judging by the fact that Amazon lifted the restriction across the US and EU markets six years ago it would appear probably not. Natural competition between multiple merchants for the same or similar products, means that market forces generally keep price keen.
In your opinion, how will Amazon’s US price parity U-turn impact your trading performance?