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Amazon has now excluded around 4,000 traders from its online platform because they have called for far too high and therefore unfair prices during the Corona crisis. However, specific exclusion criteria were not mentioned.

How Amazon is combating unfair prices during the Corona crisis

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“Readers of our Pricing Newsletter know what unfair prices are (see Newsletter No. 23 – Unfair Prices): they are at the expense of the customer relationship. This seems to be Amazon’s motivation at the moment. The online retail giant has excluded almost 4,000 traders from their platform because they are calling for disproportionately high and therefore unfair prices from Amazon’s point of view during the Corona crisis”, says Pricing Expert Prof. Hans-Christian Riekhof. “What Amazon unfortunately does not reveal are the specific criteria that lead to exclusion”, Riekhof criticizes.

On its own homepage, Amazon has announced that the group has blocked thousands of seller accounts for price gouging during the coronavirus pandemic. The operator of the largest US online marketplace said it had obtained well over half a million offers and blocked more than 3,900 sales accounts in the US for violating its fair pricing policy. A dedicated team was used to identify and investigate “unfairly priced” products that are in high demand, such as protective masks and hand sanitizers.

The online medium Bloomberg quotes an Amazon statement that was issued on Monday: “We also proactively exchange information with the attorneys general and federal authorities about sellers we suspect have committed an outrageous price robbery on products related to the COVID-19 crisis.”

Since the outbreak of the coronavirus has escalated, there has been a rush on hand sanitizers, toilet paper, paper towels, meat, and canned soups, among other things. Some people have tried to sell cleaning products and other accessories at inflated prices on Amazon, EBay Inc., and other websites.

The original message at Amazon / company news:
https://blog.aboutamazon.com/company-news/price-gouging-has-no-place-in-our-stores?tag=amazon-sso-21?tag=amazon-sso-21?tag=amazon-sso-21

The message at Bloomberg:
https://www.bloomberg.com/news/articles/2020-03-23/amazon-suspends-almost-4-000-seller-accounts-over-price-gouging

Photo: Amazon Homepage

Is it permissible to make a profit out of fear of the Corona epidemic? US online retailers who offered masks at a massive overprice have now been punished by Amazon. What's behind this?

Corona-Virus, Price Gouging and Amazon

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Is it permissible to make a profit out of fear of the Corona epidemic? In the USA, online retailers have massively increased the prices for the currently highly demanded respiratory masks. According to a report by the news magazine Spiegel, Amazon is currently punishing overly audacious retailers and even banning them from its online platform. The company justifies this with a violation of price guidelines.

Pricing expert Prof. Hans-Christian Riekhof points out an essential aspect: “Anyone who regularly reads our Pricing Newsletter knows the concept of good and bad profits: bad profits are those that come at the expense of the customer relationship. A very sensible and plausible definition, but it is not used in this form in many companies.”

Interestingly, Amazon is different in its approach to such retailers on its platform who have multiplied the prices for the protective masks in the face of the Corona crisis, sometimes by four to five times the regular price. “It seems that bad profits are feared here. After all, in this case, it is not the Amazon profits that are to be waived, but the contribution margins of the retailers on the Amazon platform”, says Riekhof.

According to the US magazine “Wired”, which the Spiegel report refers to, the online retailer has warned several sellers and deleted some overpriced offers from its platform.

Read the US original message that the Spiegel refers to:
https://www.wired.com/story/covid-19-amazon-curb-face-mask-price-gouging/

Photo: Sunyu Kim/Pexels

Amazon is increasingly promoting its own brands - with a new aggressive tactic in the USA: An Amazon own brand is now displayed to customers above the purchase button as an alternative to the selected product. This makes Amazon increasingly a threat to its marketplace sellers.

Amazon’s aggressive private label strategy

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Amazon is increasingly promoting its own brands. As the Lebensmittelzeitung now reports, the world’s largest online retailer is operating in the US market with a new aggressive tactic: An Amazon own brand is now displayed to customers above the purchase button as an alternative to the selected product. This clearly demonstrates that Amazon is increasingly competing with its marketplace sellers. How fair is such behavior?

Already in 2018, the “New York Times” reported that Amazon is increasingly breaking with its original business concept, namely democratizing trade by offering a platform to even the smallest retailer. Amazon is now often in competition with these very retailers. This is what Business Insider writes, referring to this article in its report. Amazon started very slowly with its own brands, but is now gradually working on directing customers away from competitors towards its own brands.

Successful marketplace sellers are being “amazonized”

The fact that Amazon is pursuing a consistent private label strategy in more and more product ranges has been observable for years, explains Dr. Hans-Christian Riekhof, Professor of International Marketing at the Private University of Göttingen. “Price and assortment strategically, this is of course highly attractive for Amazon, especially to oppose a cheaper private label product to the bestsellers of the brand manufacturers in the Amazon assortment. Especially since this usually has significantly more attractive margins.”

Amazon learns a lot from the sales figures of the sellers on the Amazon Marketplace. When bestseller products are then replaced by Amazon products, this is called “to be amazonized”, explains Riekhof. The fact that Amazon displays an Amazon alternative directly above the “Buy” button in the offers of its marketplace sellers in the USA means for the customers that they can decide what they find more attractive. “Whether the Amazon Marketplace remains attractive for the strong sellers in the long term is another matter”, says the marketing expert. “And whether they perceive this strategy as fair, likewise.”

Photo: Simon Steinberger by pixaby.com

 

Further links:

Lebensmittelzeitung (Paywall):
https://www.lebensmittelzeitung.net/handel/Produktplatzierung-Amazon-rueckt-Eigenmarken-in-den-Fokus-142348?crefresh=1

Stern (2017):
https://www.stern.de/wirtschaft/news/amazon–die-geheimen-eigenmarken-des-onlineriesen-7577786.html

Im aktuellen Newsletter lesen Sie u.a., warum Preistests wichtig sind, erfahren von Unternehmen, die dies erfolgreich anwenden, und erfahren, wie man eine Abteilung für Preistests aufbaut.

Pricing-Newsletter No. 7 (2017): Why Price Tests are Essential for Many Companies

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Im aktuellen Newsletter lesen Sie u.a., warum Preistests wichtig sind, erfahren von Unternehmen, die dies erfolgreich anwenden, und erfahren, wie man eine Abteilung für Preistests aufbaut.

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