Quote:
Originally Posted by fjtorres
Non competitive prices?
Not for long.
Remember, Amazon is all about data mining and maximizing the utilization of their infrastructure.
If a product's price means it's not pulling its weight they haggle a better price or drop it. (And they do drop products from their catalog regularly.) One way they do it is by letting one of their affiliated vendors get the sale.
They can always drop the price and take a loss just to get it out of the system.
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They are also familiar - as are all competent retailers - with the concept of "loss leader." you sell something at, or below, cost, to draw people in, in hopes (well founded, if you know what you're doing) that they'll buy other stuff at the same time, at full price. You don't make anything on the loss leader, but you get sales on everything else you never would.
Take, for example, the real life example of a hot water heater. Its' a big ticket item, and people shop, and shop
hard on the price of it. So everybody who sells them, and I do mean
everybody, sells them at, basically, cost. But when you buy it, you'll need other stuff to install it - the flexible lines to hook it up, a gas line, short pipe nipples, telflon tape, etc. And those install kit items, people do not shop around on so much. And once they're in a given store to buy the heater, they're not going to go somewhere else on the off chance the install kit will be cheaper. And the install kit stuff is not only at full price, it's probably priced as a high margin item, to make up for the lack of margin on the heater itself.
I suspect Amazon gets less benefit from that kind of approach, but I'll bet it's not zero.
(And yes, this is a standard retail business practice, and has been for a century or so. Everybody does it, because those who don't, don't last long.)