Member Exclusive   //   February 8, 2024

Amazon Briefing: Brands are running out of ways to combat false competitive pricing alerts

This is the latest installment of the Amazon Briefing, a weekly Modern Retail+ column about the ever-changing Amazon ecosystem. More from the series →

Recently, Amazon informed a supplement brand that it needed to lower its price or get its buy box placement removed. The original price was $49.99, but Amazon told the brand that it believed its most competitive price was $29.99.

This type of warning isn’t anomalous. Amazon constantly tracks how brands price their products and often changes the top buying choice if its detects what it thinks is an item that’s marked up. But in this case, said Daniel Lee, chief operating officer at the agency Proventus, what caused the loss of the buy box was perplexing.

After trying to get to the root of it, Lee said he believes that Amazon’s price-matching system — an opaque program that tries to keep tabs on the going price changes of every product on the marketplace — found another product with a similar description. In this case, it was the term “pre-workout.” That is, Amazon found another product listed as a pre-workout supplement that was cheaper. The problem is, Lee said the two items aren’t identical — they come from different brands and have different formulations.

“It’s [Amazon’s] AI going through and flagging something that shouldn’t be flagged,” Lee said.

This brand was forced to make a quick choice. Either lower the price and hurt margins (if not fail to make a profit entirely) or reduce sales by losing the buy box. Ultimately, this brand decided to take the financial hit and not lower the price. “They wouldn’t make any money on it [if the brand reduced the price],” said Lee. In the end, the brand saw a 25% drop in conversion rate, but the alternative of losing $20 on each purchase to retain the buy box would have had an even worse impact.

This isn’t a new problem but any means, but brands and Amazon specialists say that it is happening more frequently and in a more automated fashion. What’s more, it seems the criteria Amazon is looking at for price comparisons is changing. There have been instances, for example, where Amazon compares the price of similar that are selling different unit sizes. For Lee specifically, he’s currently working with multiple brands that have been impacted by competitive pricing alerts. What’s more, agencies and sellers have no clear way of trying to contest the ruling — at least not one that can be adjudicated in a timely fashion. Some of Proventus’s clients have been trying to fight the ruling over the last four months.

Modern Retail reached out to Amazon for comment on whether it has changed its enforcement with price matching and if there’s been a recent uptick in buy box suppressions. Modern Retail did not share specific brand instances, but rather generally described the circumstances to protect the anonymity of sources. “We were unable to verify the claims referenced by the reporter because he declined to provide specific data or cases for us to investigate,” wrote an Amazon spokesperson in a comment to Modern retail.

The statement went on: “We have not made any changes to our pricing notifications that would cause a meaningful increase in the volume of pricing alerts that sellers receive. However, we can confirm that third-party sellers set their own prices — and Amazon offers optional tools to support them in offering competitive, low prices, including the ability to choose to sign up for notifications when their prices are no longer competitive. Our selling partners are incredibly important to us and we work hard to help them grow their businesses. Every day, our global teams work to provide sellers with the strategies, answers, guidance, programs, and solutions they need to succeed in our store, and if sellers ever have an issue, our seller support teams are available 24/7 to help them over phone, chat, or email.”

“There’s been a recent uptick [in false buy box price changes],” said Chris McCabe, CEO and founder of ecommerceChris, an Amazon seller consulting firm. “January there has been a big surge.”

For him, it means more business. But it also points to a growing problem inside Amazon. “There are a ton of false positives,” McCabe said. “There aren’t enough checks and balances.”

What’s more, the process of trying to get Amazon to change its mind is akin to pushing a boulder up a mountain. “It’s not just the initial flag,” said McCabe. “The communication with these teams is so impossible and frustrating. You just get copied and pasted generic answers or you talk to someone on the phone [but] that team has no authority on the issues… [often] the agent has no idea what you’re talking about.”

McCabe’s expertise lie in his ability to get a response from Amazon. He used to work at the company and understands the various siloes that enforce competitive pricing rules. And he’s certainly not the only person in this space. A quick Google search will surface dozens of guides on tackling the problem written by different agencies, as well as individual specialists who claim to be able to help merchants regain the buy box. Some are e-commerce-focused attorneys, others tout Amazon selling and agency experience.

Many brands try a variety of ways to get results. There are private Facebook groups where executives can share notes about best practices; Lee and his agency’s CEO Daniel Proventus are in some Discord groups consisting of “seven-, eight-, nine-figure sellers.”

One seller has dealt with this issue for years and has implemented a variety of tactics. His products are somewhat different from most others on Amazon’s marketplace as they are considered collectibles, so the current value may be more than what an MSRP says. As such, he’s had multiple items’ buy boxes removed despite being the only merchant on Amazon selling the product. He said he’s figured out a way to correctly escalate issues so that it gets into the right hands, which involves casting a wide net throughout vast network of Amazon employees and teams that he believes responds best to inquiries and understands the root problem. If all else fails, he sometimes tries to get the ears of top executives via a direct email line.

This problem has radicalized him in some ways. “There’s a political problem here,” he said. “Amazon is so powerful, they can manipulate whether or not people even see something.” He went on, “I honestly think the only solution is to get a Democrat Attorney General to sue Amazon.”

Others aren’t going that far, but see it as a growing issue for more sellers. “I know it’s super frustrating for our brands,” said Proventus CEO Jacob Proventus. “It’s becoming a pain point for agencies as well — having an issue on the account for months on end.”

The story has been updated with a response from Amazon.

Amazon news to know

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  • Amazon is joining other tech companies with a new round of layoffs, Business Insider reports. This time, the teams impacted are reportedly One Medical and Amazon Pharmacy.
  • Amazon unveiled its latest AI assistant, Rufus. But it’s still unclear how the service will be further used to benefit Amazon’s ever-growing revenue streams.

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