Amazon challenges retail on what a sale means

Consumers love sales, and yet the concept itself is oddly unclear

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Consumers love sales, and yet the concept itself is oddly unclear. It's generally based on a product being x% off some other price, but that "other price" is almost always meaningless. A meaningful price would be "x% less today than what out competitors are selling it for today." A meaningless price would be "x% off what we sold it for a month ago or x% off of a manufacturer's suggested retail price," a figure almost no one uses (other than perhaps Apple).

Amazon is trying to stand up for true sale pricing and lose meaningless comparisons — or so it would like us to think. This change was first noticed by The New York Times and that story pointed out that "now, in many cases, Amazon has dropped any mention of a list price. There is just one price. Take it or leave it. For example, Amazon originally promoted the Rave Turbo Chute as being discounted by 36 percent. Then, all mention of a discount was dropped and the 60-foot water slide was simply listed at $1,573.58, with an explanation that it used to be $1,573.59 — one penny more. Then, it dropped the old/new price comparison. Then it dropped the price to $1,532.01 and put the comparison back."

That sounds more as if Amazon is not clear on what it wants to do. In short, it's experimenting in real time on the live site. But it's a strategy debate worth having, and there is no one better positioned to lead that debate than Amazon.

This gets us back into the argument that e-tailers and brick-and-mortars must obsessively focus on what they do best and why people buy from them. This is part of the argument that physical chains need to focus on convenience, speed and experience. Bricks must offer what e-tailers can't and make the experience ultra-pleasant.

What, then, about e-tailers and price? E-tailers (and I include mobile commerce players in that) already have huge built-in advantages with speed, convenience and a remarkably deep inventory. In an online environment, price needs to be considered directly with shipping costs. It makes little sense to struggle with price-matching software to beat brick-and-mortars by $4.50, when you need to add on $8 for shipping. When shipping is an issue, your price discounts are solely there to make sure that the total beats (or at very least matches) physical pricing.

When an e-tailer is able to offer free shipping, that's great, and it needs to be stressed. By the way, please let me give a little commercial cost transparency. With many e-tailers today — Amazon included — a shipping-cost game is still being played. That game has the price being shown without shipping and shipping figures not visible until the very end of the transaction.

First, for many products, shipping is overwhelmingly determined by weight, much more so than by distance. That means that you can give an average shipping cost right there next to the price. If you're cutting it so close that distance could shave off a few pennies, then simply say something like "shipping to cost no more than $x." That change alone would help close sales, especially on larger items.

Secondly, for repeat customers that your system has already identified, you can get more specific, such as "shipping to cost, if it's being shipped to prior address." I am focusing on shipping costs here because this is all about perception. If you're discounting less than your cost of shipping, it's pointless. And if you're discounting more than your cost of shipping, you need to scream that from the first mention of price.

Let's set shipping aside for the moment. In terms of pure price, price-comparison bots make bogus comparisons worthless. Compare with realistic rivals or don't compare at all. A shopper at wants to know if you're less than and by how much. An Amazon shopper wants comparisons with the top pricing bots — and that's where things get interesting.

There is no current need for Amazon to charge less than the lowest price offered by a major competitor. Indeed, it doesn't even need to match the best price as long as it's close. Amazon saying, "The Google price bot has the best price for this anywhere at $18.95. Buy it right now with all of the security and customer service backing of Amazon for $19.50" would work well.

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