Kantar Retail's Stephen Mader talks about Amazon's pricing strategy

Does Amazon need to price lead on everything?

Stephen Mader argues that the online retail giant is actually rarely the first mover on promotions…

A large part of my day is spent helping branded manufacturers navigate the world of large e-commerce retailers such as Amazon. We hear the pricing concern often from brands that have a premium positioning and are afraid that by selling directly to Amazon it will end up diluting their positioning in the market. The reality is that on everyday items, if another retailer discounts a specific product first, Amazon will match it within a few hours – Amazon is very rarely the first mover on promotions.

There are a few exceptions to this rule, such as heavy discounting on key items at Christmas, or when products are run through certain membership programs like Subscribe&Save, but on average Amazon’s pricing is automated.

Amazon’s loyal shoppers trust that Amazon may not necessarily beat, but will at least match, the best price available in the market. It is this trust that Amazon’s average basket will likely be the lowest over the long term which is one of the key drivers for increasing shopper loyalty, thus increasing traffic that Amazon can monetize in other ways – such as advertising media or digital content.

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