Amazon Price Battle: How It Clashed with Walmart in the E-commerce Arena

Amazon Price Battle: Amazon.com Inc (AMZN.O) found itself in hot water as the Federal Trade Commission (FTC) accused the e-commerce giant of resorting to questionable tactics to maintain its dominance and limit Walmart’s online reach.

In addition to Amazon’s secret algorithm, dubbed “Project Nessie,” which allegedly inflated prices for U.S. households and generated over a billion dollars, the company may have also played a role in thwarting Walmart’s ambitions in e-commerce.

Back in 2014, Amazon felt threatened by the arrival of Jet.com, fearing that it could potentially offer lower prices to online shoppers. In response, Amazon devised a strategy to remove sellers’ offers from the Buy Box (the button that enables direct purchases from a seller) if shoppers found the same products at lower prices on Jet.com.

This was Amazon’s way of countering the competition, but not a surprising move considering its immense size, analytical prowess, and a history of not turning a profit on Amazon.com for its initial two decades, noted retail consultant Burt Flickinger.

Also Read: Amazon Earnings Surge: A 13% Revenue Jump Defies Expectations

Both Amazon and Walmart operate third-party online marketplaces, featuring products from thousands of independent sellers. However, Jet.com, before being acquired by Walmart in 2016, posed a unique challenge to Amazon. By not collecting seller commissions, Jet.com was able to offer prices that were 10% to 15% lower than what Amazon advertised, potentially leading sellers to pass on those savings to customers, as per the FTC’s claims.

In response, Amazon decided to clamp down on Jet.com, removing some third-party sellers’ offers from its Buy Box. Amazon even employed what the FTC referred to as anti-competitive algorithms targeting Jet.com’s most popular products. This pressure prompted Jet.com to revise its strategy to match the lowest prices offered elsewhere.

Amazon spokesperson Tim Doyle contended that the FTC had grossly misrepresented the pricing tool, stating that the company discontinued its use several years ago. Walmart, which shut down Jet.com in 2020 and integrated it into its broader e-commerce operations, declined to comment, as it was not involved in the FTC’s litigation.

This episode sheds light on the fierce competition between e-commerce giants and the measures they are willing to take to maintain their dominance in the market.

Our Reader’s Queries

What is the Amazon price war?

Amazon Price Wars refer to the intense competition among sellers on Amazon to lower their product prices in order to gain better visibility and increase sales conversion rates. While it may not always be apparent, this phenomenon occurs frequently in the highly competitive Amazon marketplace. As multiple sellers vie for the attention of customers, they resort to lowering prices in an effort to stand out from the crowd. This can lead to a price war, where sellers continuously undercut each other in a bid to win the sale.

How do I compete with Amazon prices?

Discovering ways to outdo Amazon’s pricing can be a daunting task, but it’s not impossible. Here are six simple methods to help you achieve this feat. Firstly, scrape Amazon’s product prices. Secondly, import your competitors’ price lists with ease. Thirdly, receive automated reports on your competitors’ insights on Amazon. Fourthly, gain a comprehensive overview of your competitors selling the same products as you on Amazon. And there’s more!

Will Amazon match a price drop?

Amazon’s customer service site states that the online giant is committed to providing low and competitive prices on all its products. However, it’s important to note that Amazon does not offer price matching. So, if you happen to find a lower price for a product on Walmart after purchasing it from Amazon, Amazon will not match that price.

How do you get strike through price on Amazon?

To enable strike-through pricing on Amazon, head to your Seller Central dashboard and choose the product you want to promote. Adjust your final offer price to display it as a deal to potential customers. It’s important to strike a balance between competitiveness and profitability. Ensure that your price is attractive enough to entice customers, but still allows you to make a profit.