In the battle of retailers vs. Amazon, price-matching is often a first tool used to compete. But whether in-store or online, the race to the bottom isn’t sustainable for non-Amazonian retailers. Don’t play those away games.
360pi’s pricing analysis of 1000+ household goods based on Amazon’s own assortment relative to Kohl’s, Walmart, Target and Macy’s provides an excellent example. As reported by 360pi between March-June 2014:
- Kohl’s was consistently 30-60% above Amazon’s pricing for this sample, but also reported the healthiest financials of the group.
- In the same category and timeframe, Macy’s was consistently 20-40% above Amazon until April 2014, then appears to have been drawn into the “price wars” with Target, Walmart and Amazon – which likely contributed to missed Q2 expectations.
- Walmart has consistently been underpricing Amazon in this category since mid- January 2014. Together, Target and Walmart have closed the pricing gap with Amazon to within a 5% range in July, compared to a 30% spread last fall. At the same time, however, Walmart and Target have both experienced under-performing sales and financial losses, while Amazon is under mounting pressure to improve profitability.
Retailers will learn this one way or the other: straight up price matching with Amazon is a losing proposition. Beyond turning (loyal) customers into discount-seeking zombies, the financial implications simply aren’t sustainable. Copycat practices won’t help you beat Goliath – innovation will.
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