Is Amazon getting rid of list prices?

Andy Uhler Jul 5, 2016
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More than half the products sold on Amazon come from smaller companies. Justin Sullivan/Getty Images

Is Amazon getting rid of list prices?

Andy Uhler Jul 5, 2016
More than half the products sold on Amazon come from smaller companies. Justin Sullivan/Getty Images
HTML EMBED:
COPY

Amazon, the online retailer that’s a lot more than books these days, has begun getting rid of list prices for many products. That means consumers might not feel like they’re getting a bargain. Academics and psychologists have studied the excitement of bargains; consumers feel smart for buying something at a discount. But what if that high list price is just made up?

John Rand, senior vice president of market insights at Kantar Retail, said getting rid of list prices is overdue. 

“List price is a useful fiction that was designed to establish comparison.” he said. “Why bother when anyone who wants to can search a price, anyway?”

He’s right. Anyone can search for a price online. And if a company is making up its list prices, consumers can find evidence online and document it. That’s led to lawsuits for companies like J.C. Penney and Overstock. 

Sundar Bharadwaj, a professor of marketing at the University of Georgia, said if consumers feel like they’re getting tricked, they also might tweet about it or post it on a Facebook page.

“So, the consumers have a microphone now, it’s not like in the past,” he said. “And that might lead to bad pr for the firms.”

That’s a big deal especially for online retailers. Amazon is trying to be the one-stop shop for everything a consumer needs.

Richard Feinberg, professor of retail management at Purdue University, said for Amazon, getting rid of the list price is more about consumer loyalty.

“Consumers are just not going to break out of Amazon, go to Google and search for that price,” he said.

He said a lot of consumers are now buying things more out of convenience than for price. But, getting rid of the list price could just be an experiment. After all, Amazon has access to a lot of data. And it’ll be the first to see if that feeling of getting a bargain was the key to its success.

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