A recent Profitero study reveals Amazon offers the lowest price on over 13,000 products across 22 major online retailers, but price isn’t the only factor driving shoppers—profitability lies in leveraging Amazon’s broader appeal.
Amazon’s reign as the lowest-priced retailer, as revealed by Profitero’s latest study, solidifies its dominance in the retail price war. However, price alone isn’t the reason millions of shoppers flock to the platform daily.
While Amazon’s pricing strategy attracts customers, the fierce competition and slim margins leave little room for profitability. Many sellers are left scrambling to compete, unsure how to stand out on a platform where low prices seem to rule.
To thrive, sellers must shift focus from competing solely on price to leveraging other factors that attract Amazon shoppers, like convenience, variety, and value-added offerings. By understanding and capitalizing on these insights, sellers can stay competitive and profitable in the ever-evolving Amazon marketplace.
Amazon Offers The Lowest Price: Profitero Study Highlights
For the eighth year in a row, Profitero’s Price Wars study analyzed the pricing of over 13,000 items across 15 categories from 22 major U.S. online retailers, including Amazon, Walmart, Target, and specialty stores like Chewy, Best Buy, and Sephora.
Key Insights
- Amazon outperforms competitors in many categories like electronics, appliances, toys, and home improvement tools, with significant price gaps.
Impact of Pricing and Product Information on Consumer Buying Behavior With Customer Satisfaction in a Mediating Role (by Huiliang Zhao, Xuemei Yao, Zhenghong Liu, Qin Yang)Product pricing and packaging have a statistically significant relationship with the buyer’s decision process.
- Shoppers are increasingly using rebate platforms like Rakuten and RetailMeNot to access cash-back offers, sometimes exceeding Amazon’s pricing advantages.
Hawk Incentives ResearchAn increasing number of the shoppers we surveyed are finding deeper value in rebates than other promotions
- Despite its price advantages, Amazon emphasizes other benefits like vast product selection, fast shipping, and exclusive deals like Prime Day and Subscribe & Save.
Shannon Abel, The Fast and the Furious: Satisfying Need for Shipping SpeedDelivery timeframe is a vital factor in online purchasing decisions.
What Attracts Shoppers to Amazon Apart from Low Price
- Fast Shipping
Fast and reliable delivery, especially with Prime membership, is a strong draw.
- Wide Product Selection
Amazon offers a vast range of products, often described as “Earth’s largest selection.”
- Exclusive Bargain Events
Special events like Prime Day and Black Friday/Cyber Monday sales attract shoppers looking for deals.
- Subscribe & Save Program
Discounts for regular shipments of items provide long-term savings for loyal customers.
- Amazon Prime Benefits
Additional perks, like 5% back on purchases with the Amazon Prime credit card, enhance the value for Prime members.
- Convenience
The ability to shop for a wide array of products from a single platform with streamlined checkout and delivery.
How Sellers Can Stay Profitable
Offer Prime Exclusive Discounts
Prime Exclusive Discounts can be applied to both Prime (FBA and Seller Fulfilled Prime) and non-Prime (seller-fulfilled) offers, as long as they meet the following criteria:
- The product must be new and have a rating of at least 3 stars or no rating (may vary during special events like Prime Day or Black Friday).
- The discount must be at least 10% off the non-member price, which can also change for special events.
- The product must not be restricted or inappropriate.
- The discounted price must be lower than the lowest price for the ASIN in the last 30 days, including all deals and promotions.
- The product must comply with Amazon’s customer review and pricing policies.
- The discount must be at least 5% lower than the reference price (List Price or Was Price).
Additional criteria for FBA offers:
- The product must be eligible for Prime shipping across all regions.
For seller-fulfilled offers:
- The account must have a late dispatch rate under 4%, an order defect rate under 1%, and a pre-fulfillment cancellation rate under 0.5%.
- The disbursement reserve policy must be 7 days or more.
- Free shipping is required.
Watch this video to know how to set up Prime Exclusive Discounts
Offer Deals on Exclusive Bargain Events
To stay profitable during Amazon’s exclusive bargain events like Prime Day or seasonal holidays such as Black Friday or Christmas, sellers should focus on key strategies:
- Inventory Management
Ensure you are stocked on your best-selling items. If stock is low, consider raising prices temporarily to limit sales while still driving demand.
Prime Exclusive Discounts
Set up Prime exclusive discounts (15–20%) to attract Prime members. This makes your listings more appealing and can lead to better visibility.
Customer Loyalty
Review your customer data before and after Prime Day to understand shifts in audience behavior. This will help you plan future deals and adjust your marketing strategies.
Optimize Advertising
Increase bids on top keywords by 200-300% to stay competitive in a high-traffic environment. Prepare for intense competition by bidding more aggressively to maintain ad visibility.
Optimize Product Listings
Update product images, titles, bullet points, descriptions, A+ content, and brand story to align with specific events or holidays. Adding festive banners for Black Friday or Christmas can boost your listing’s appeal and encourage shoppers to buy.
Ensure your content is event-focused to stand out during the heightened traffic periods.
Offer Subscribe & Save
Sellers should consider funding the Subscribe & Save program to increase repeat sales and boost visibility, as offering discounts through this program can significantly improve conversion rates. By funding Subscribe & Save, you can secure consistent, long-term customers who pay for automatic deliveries, reducing reliance on PPC and driving more sales over time.
Get More Sales Through Subscribe & Save
In the video below, you’ll discover how to further grow sales from the subscription program.
Encourage customers to subscribe with enticing offers like 10% off on Subscribe & Save products or a one-time-use coupon for new subscriptions.
Subscribe & Save customers are less likely to shop with competitors, driving repeat business and improving customer retention. By offering an initial discount, you can hook customers into a subscription they’re likely to keep.
Thrive Amidst Amazon's Profitability Challenges
“Amazon offers the lowest price” in the online retail space. It is an opportunity that sellers should capitalize on with the right strategy.
Staying profitable on Amazon requires strategic planning and expert execution. Sellers can overcome these challenges by partnering with Amazon brand management professionals, like an Amazon Agency.
These experts assist with developing effective pricing strategies, optimizing product listings, setting up promotions, and monitoring the performance of deals to maximize ROI.
