Amazon Marketplace: Price comparison with Google Shopping? This is what sellers can do
The current market leader in the e-commerce world is hardly challenged by its competitors: Amazon has worked hard for this position and works just as hard to maintain it. The online giant is not only known for its reach and size but has also built a reputation for reliability, customer orientation, and speed. But how does one manage to consistently stay number one? Among other things, this requires Amazon to constantly adjust prices with, for example, Google Shopping, one of the largest competitors of the shipping giant not only in the German market. Because adaptability at all levels – especially in pricing – is a fundamental requirement to always stay at the top.
That Amazon adjusts prices on the platform with competitors to always offer customers the best deal has been speculated by professional sellers for some time. But what about the legality of this price adjustment (after all, Amazon is not an unknown company at the Federal Cartel Office) and, above all: How can sellers on such a platform still sell with the highest possible margin? We have the answers for you in this article.
How and on which platforms does the price adjustment take place?
In the USA, Amazon seems to frequently perform a price adjustment not only with Google Shopping but also with many other platforms. Sellers often find a message from the shipping giant in their email inbox suggesting that they make their prices more competitive.
In Germany, alongside Amazon, companies like eBay, Otto, and Zalando are the usual suspects with whom a price adjustment could take place. E-commerce sellers are always troubled by the price adjustment between different providers, and for good reason. This LinkedIn post makes it clear once again what influence price alignment has on sellers’ margins.
But what exactly happens during the price adjustment and how is it executed? This process can, of course, vary from company to company:
Meanwhile, Amazon also involves customers in the process of identifying lower product prices. Through the feedback section on a product detail page, these can be directly submitted to Amazon.
Is the price adjustment with Google Shopping legal in Germany?
In short: Yes, price adjustment is allowed in Germany as long as the companies involved do not violate any other laws. In particular, the Act Against Restraints of Competition, i.e., German antitrust law, comes into play here. As already mentioned, Amazon is well-known at the German Federal Cartel Office. Moreover, the shipping giant triggers all antitrust alarm bells solely because of the Buy Box concept, as the winners of the Buy Box capture over 90% of the sales – did someone say “monopoly position”?
Meanwhile, Amazon has countered: With a second Buy Box on the product detail pages, multiple shopping cart fields are now displayed for at least some products, allowing, for example, FBM offers to have a chance of being noticed by customers. What impact this has on sellers can be read here: Second Amazon Buy Box – Why everything could change for marketplace sellers.
As part of the “Big Four” – Apple, Meta, Alphabet, Amazon – the BKA is always involved with Amazon in some way, even if it’s just an overhaul of the laws that facilitate the control of these companies on German territory. Whether the BKA is monitoring Amazon due to the price adjustment may be the case. However, it is highly doubtful that Amazon would incur a penalty for this. The only possibility for legal action would be the existence of an actual price agreement between Amazon and another e-commerce platform.
Price adjustment versus price agreement
Price adjustment and price agreement are, however, very different concepts:
The first case does not constitute an abuse of a monopoly position to the detriment of the consumer. On the contrary, buyers benefit from the price adjustment, as they now receive the same low price on every platform. Therefore, a conviction and punishment of Amazon based solely on a price adjustment is legally only apparent if it occurs in combination with a price agreement.
This concept may be all well and good for Amazon, the consumer, and possibly also for the other e-commerce platforms. But there is one vital stakeholder in this construct who does not benefit here. And if you have read this text up to this point in the hope that price adjustment is illegal, then I unfortunately have bad news for you.
How do Amazon sellers benefit despite price adjustment?
Jeff Bezos once said a very nice sentence that perfectly summarizes the entire situation:
“We’re not in the business of helping people sell things, we’re in the business of helping people buy things.”
Jeff Bezos
What Bezos means by this is that marketplace sellers do not have priority at Amazon. First comes the customer, then profitability, then shareholders, … and eventually, the sellers. Therefore, as a seller, you need an ally who works with Amazon but prioritizes the interests of the sellers. In this specific case, sellers need companies that are well-versed in pricing and the application of effective pricing strategies.
As we have already established, it is legal in Germany for Amazon to perform a price adjustment with, for example, Google Shopping. There is nothing we can change about that. Sellers must therefore sometimes simply accept that they occasionally lose the Buy Box because they have not lowered their prices.
Effective pricing strategies for more sales and profit
An effective strategy to minimize the impacts of price adjustment is, in any case, to improve one’s own pricing strategy. This can be done, for example, with the SELLERLOGIC Repricer. Practical example:
Amazon sends you an email urging you to make your prices more competitive. If you do not do this, you risk – at least regarding the product – a loss of visibility and thus fewer sales. Because you are too busy and therefore cannot or do not want to manually optimize the price, you decide to use the SELLERLOGIC Repricer. The repricer first determines the price necessary to win the Buy Box for the product, automatically sets this price, and your sales increase.
Important: Users can define minimum and maximum prices in the SELLERLOGIC Repricer. These will never be ignored. This way, you can be sure that you will never sell below your desired margin. Additionally, the repricer offers the option to automatically calculate these price limits based on the costs you have for a product. This way, you can ensure that you are selling at profitable prices.
But that’s not all. Subsequently, the repricer gradually raises the price of the product. Only after the signal arrives via the Amazon API that the highest possible Buy Box price has now been reached does the repricer stop increasing the price.
This way, you not only sell at the Buy Box price but at the best possible price. The end result: a competitive price that Amazon is satisfied with and a margin that you are satisfied with.
Feel free to visit us and test the SELLERLOGIC Repricer for 14 days free of charge. You take no risk, as the trial period ends automatically. In any case, you will receive professional onboarding and advice from Amazon experts.
Image credits in the order of the images: © Koshiro – stock.adobe.com
