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Author Mark Fairlie
It is the continuation of a trend, argues the newspaper, which first highlighted this concern over pricing in July 2016 in an article in which it stated that “Amazon has exaggerated the savings it offers on products by up to 500%.”
Tom Church of LateDeals told the Sun that Amazon’s daily lightning deals tend to be touted as the “biggest and the best”. Some of these deals advertise a discount of up to 75 percent however, Mr Church continues,
“when you look at the historical prices of the products, you find that the discounts may not be as big as you first think.”
How does Amazon make the discounts appear as big?
Amazon and its third-party resellers often advertise a product’s original price as that which is recommended by the manufacturer – the so-called “Retailers’ Recommended Price” (RRP) or the guide price.
Manufacturers often recommend to retailers that a product is sold at a certain price. There are many reasons for this. Many years ago, it was to keep prices roughly similar at all outlets so that retailers did not enter a price war and to keep the profit margin high on the product to encourage the retailer to continue stocking it.
In more recent times, RRP has been taken up by firms offering “deep discounts” to consumers. One area particularly prone to this type of practice is the sale of wrist watches. Former TV channel Auctionworld offered watches with a guide price of £14,000 which received an independent valuation of £500. It was eventually fined by regulators and then went into administration.
While Amazon and its third-party resellers have made no claims about the cash levels of discounts against RRP or guide price quite as large as Auctionworld, some of the advertised savings are however very substantial.
Examples of “deep discounting” versus “average price” on Amazon
Amazon’s prices change constantly – up to 2,500,000 times a day, according to Retail Wire.
On popular and in demand products, they keep prices low. For the rest, Amazon’s price is not always the cheapest. It’s on products where Amazon is not necessarily the most competitive where using the RRP or guide price as a point of comparison works out to its advantage and makes discounts appear greater than they are.
There are a number of companies which track the fluctuations of the prices at Amazon. The one used for this study was CamelCamelCamel.com.
Quoting CamelCamelCamel.com in its study, LatestDeals found an umbrella with a 66% “discount” fromits RRP of £29.99 to a sale price of £10.09. However, the price tracker found that over the two-and-a-half years it had been on sale on the website, the average Amazon direct price it was sold at was £11.59. One third-party reseller had the exact same product for sale at £5.99.
An Oral-B electric toothbrush was on sale for £33.99 against its RRP of £66.99 – a “saving” of 51%. However, CamelCamelCamel.com discovered that, over the previous two years, its average sale price was £33.52, slightly less than the “deep discounted” price.
Checking average sale prices for yourself
Amazon is not alone in using RRPs or guide prices to demonstrate value in an attempt to get consumers to buy a product from them.
Consumers can discover the price history at Amazon of individual items they are interested in buying using sites like:
Amazon and RRPs
Amazon told the Sun newspaper that it worked with product manufacturers to provide customers with a wide range of information including RRPs. After being contacted by the newspaper, Amazon “removed or corrected inaccurate list prices.”