Amazon: Why You Can’t Trust All the Discounts

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Amazon prime box | Justin Sullivan/Getty Images

You probably turn to Amazon with increasing regularity when you need to buy something online, whether you’re shopping for household essentials, electronics, media, clothing, or any of the other countless things stocked on the website’s virtual shelves. And you’ve probably shelled out for a Prime membership — or are considering doing so thanks to all of the annoying policies that Amazon uses to make a subscription seem like a necessity — in order to take advantage of the great bargains on the site.

But you shouldn’t believe all of the bargains and discounts on Amazon. David Streitfeld reports for The New York Times that in the “bizarre world of Internet ‘discounts,'” retailers and brands routinely assert that you’re getting a great deal because someone else, somewhere else, is being charged much more for the same item that you’re buying at a bargain — in this case, on Amazon. Streitfeld notes that the root of some of those discounts is a phenomenon known as list price, or the manufacturer’s suggested retail price.

“List price,” he reports, “is a largely fictitious concept, promoted by the brand or manufacturer and adopted by the retailer to compel the customer into pushing the buy button.” The Times cites examples like a cat litter pan with a list price of $2,159 and an Amazon price tag of just $28, a bag of dog treats that “normally” costs $822 and is available on Amazon for just $8, or a windshield wiper blade that presumably costs $1,504 somewhere but has been marked down 99% by sellers on Amazon.

Streitfeld reports that the question of whether sites like Amazon deliver on the low prices they promise is a particularly significant issue as “Internet retail shifts from being mostly about price to being largely about convenience.” That’s a shift that will make it much more difficult for customers to accurately judge whether they’re really getting a deal, or are just being encouraged to think that they are.

Deceptive pricing is at least as pervasive online as it is offline, and list prices on Amazon (and elsewhere) seem to have no connection to reality. Retailers offering items at the same retail price often list wildly different list prices, using artificially deep discounts to convince buyers that they’re getting a great deal. On Amazon, list prices are displayed right alongside the retail price on each page of search results, and just about every Amazon customer can identify with being enticed by an item with a low retail price and a high list price. A big discount is often eye-catching, even if you know that no one is really charging the list price for the item in question.

Ripen eCommerce, a company that helps third-party clients to get their Amazon listings on the first page of consumers’ search results, analyzed 746,000 product searches on Amazon and determined that a little more than 44% of products were billed as discounted. “It’s less than I expected, actually,” Dave Rekuc, Ripen’s director of marketing told the Times. “Considering you can basically name your own list price.” Vendors enter the list price into their own Amazon data, and the system can be characterized as a “self-regulating” one.

Streitfeld also spoke to Daniel Green of CamelCamelCamel.com, which tracks Amazon prices. Green posits that while the process “can seem dishonest to consumers,” it’s better for retailers to use the list price as a benchmark than alternatives like the most recent price, which would enable vendors to “just jack the price way up before the sale.” Retailers and even legislators have alleged that there aren’t any victims when it comes to large MSRP-based discounts, even ones that hinge on fantastical list prices. But others think that such discounts are a violation of e-commerce’s promise of transparency.

The Times notes that the only real safeguard is to laboriously compare prices across websites. But even that is far from straightforward, with programs like Amazon Prime encouraging customers to buy as much as possible from a single company, and the effects of shipping costs, promotions, coupons, and loyalty rewards further complicating the situation.

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