In another sure sign of intensifying holiday competition in the toys and games segment, Amazon is going to foot the bill for additional discounts on select merchandise sold through third-party sellers on its Marketplace.
RELATED: Amazon’s top holiday toys for 2017
Amazon’s latest play to discount holiday merchandise
Amazon has reportedly begun testing a quiet way to offer additional discounts on board games, gadgets and more to drum up higher volumes of business for itself and third-party merchants this Christmas.
The e-commerce giant is subsidizing an extra deep layer of deals with its stealth “discount provided by Amazon” program.
From a merchants’ perspective, the nice thing is they’ll get the same amount of money they would have if they sold their goods at full price. The difference in price they would otherwise lose out on will simply be made up by Amazon.
As a consumer, you’ll immediately know if you’ve stumbled on one of these deals when you see “discount provided by Amazon,” as you do in this screenshot provided by eSellerCafe.com:
Participation in the program is entirely voluntary for merchants and the discounts are being offered for a limited time only, according to Amazon.
“Discount good while supplies last or until withdrawn by Amazon,” the official verbiage reads.
So act fast if you see the “discount provided by Amazon” notation!
Law of unintended consequences
OK, so let’s recap: With Amazon’s latest pricing experiment, consumers can get a lower price from independent sellers on the Amazon Marketplace. And the sellers themselves don’t have to take a haircut on their products just because Amazon says so.
That sounds like a real win/win for everybody, right? Still, the move has caused a bit of debate among industry watchers.
What seems to be a great idea at first glance could have unintended consequences.
Here’s the thinking of the critics in a nutshell: Amazon’s plan might create an unrealistic perception about price that could wind up harming merchants who use the platform to sell.
Consider this: Amazon is artificially capping what holiday shoppers will pay with this latest move. But what happens when the subsidy goes away?
Suddenly, those independent merchants will seem a lot more expensive.
You might then shy away from those sellers on the grounds of price — but in reality, they’ve been charging the same price all along. It’s just that Amazon came along and decided to subsidize them.
This is a repeat of the same dilemma a lot of retailers and restaurants faced during the Great Recession; lowering their prices to get consumers to open tightening purse strings created the expectation that whatever you’re buying should always be discounted — all the time. And that’s just not always possible.
Subsidies like the one Amazon is offering to both consumers and merchants can’t last forever. And when the subsidy goes away, that could be bad for merchants’ businesses.
As PYMNTS.com puts it, “The discount might incentivize consumers to buy — but it also conditions them to demand items at an unrealistically (or just undesirably) low cost.”
Christmas toy shopping competition is heating up
Let’s take a break from esoteric debates about online pricing strategy for merchants and move on to something that impacts everybody!
And that is the news that Christmas 2017 is shaping up to be a four-way battle royale among Amazon, Walmart, Target and Toys R Us!
We hear so much about the death of retail and how sales are moving online — and it’s certainly true; Walmart’s offer of free two-day shipping on all orders that meet a $35 minimum and Amazon’s offer of the same on 100 million+ items with a $25 minimum order attest to that.
But those retailers that do have physical presences are taking the holiday fight to the aisles this year. Case in point: Walmart and how it’s leveraging in-store experience to try and win your toy dollar.
Walmart’s plan of attack was kickstarted by a “Toys that Rock” celebration at more than 4,700 stores earlier this month. The in-store event saw Santa Claus roaming the aisles to pose for selfies with kids.
Meanwhile, the nation’s largest retailer is also increasing the number of toy demos throughout the season to 165,000 this year.
On the other end of the spectrum, the weakest opponent in the four-way fight for holiday toy supremacy is definitely Toys R Us.
Money expert Clark Howard calls an environment like this “extremely promotional.” That’s a euphemistic way of saying retailers will be clobbering each other trying to pry the money out of your wallet with lower and lower prices this Christmas!
Here are Clark.com, we’ve got you covered through it all with advice on the six best days to shop leading up to Christmas if saving the most money is important to you.
Remember, when retailers compete, you as a consumer win!