Amazon.com, Inc (AMZN) Battle With Wal-Mart Stores, Inc (WMT) Gets Dirty: Cuts Prices From Third-Party Sellers

Amazon.com, Inc (NASDAQ:AMZN) is giving discounts on items from third-party merchants sold on its website in an effort to divert traffic from other e-commerce sources. The move aims to lure customers and help the company continue to thrive amid the fierce competition in the retail and e-commerce businesses, and is namely a shot at rival Wal-Mart Stores, Inc (NYSE:WMT), whose online presence has been picking up steam lately.

The discounts from Amazon.com, Inc (NASDAQ:AMZN) apply to goods such as gadgets and board games offered by third-party sellers as the holiday season comes near. However, the world’s biggest retailer still pays the full price to the product’s sellers. The Wall Street Journal wrote that Amazon is providing discounts of up to 9% on those products.

According to an Amazon spokeswoman, the discount benefits both sellers and customers. People can buy products they want at a price they’ll love, while small business owners will be able to boost their sales thanks discounted prices, without it actually coming out of the sellers’ pockets.

Joe Ravi / Shutterstock.com

However, not all merchants are happy with Amazon’s aggressive practices as it tries to monopolize online selline. In particular, selling products at the lower-than-usual price may trigger the ire of Amazon’s resellers, who may be forced to move to other online shops to sell (or re-sell) their goods. Amazon.com, Inc (NASDAQ:AMZN) has been slammed for discounting vendors products in the past. Resellers stated that the retail giant’s decision would undervalue their items and hurt their sales.

Moreover, merchants have argued that the lower prices offered on the retailer’s website may actually break their agreement. Many are only allowed to sell their products after agreeing to a minimum rate for that product, which Amazon itself may now be undercutting, giving them no way to compete. It’s no surprise that resellers have been venting their anger on the Amazon Resellers forum.

According to the Wall Street Journal’s analysis, the discounts don’t exceed 10% and only apply to merchants using Amazon’s in-house fulfilment option. However, merchants are sometimes not notified in case there is a change (e.g., when the offers suddenly disappear from the website).

Amazon.com, Inc (NASDAQ:AMZN) reported a 34% increase in third-quarter sales last month, to $43.7 billion. The figure was better than the company’s estimate of $42.1 billion. The online retailer’s CEO Jeff Bezos said that he planned to sell the stock starting on November 1, 2017. Amazon shares are now valued at over $1,100, thanks to 8% gains following the company’s latest earnings report.

Disclosure: None