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July 11, 2016

Amazon Finally Drops Deceptive List Price Comparisons

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 6:11 am

For two decades, Amazon.com has compared its current selling price to an often illusory “list price” — a price often set by the manufacturer that few if any retailers actually charge. This comparison made consumers believe they were getting a great deal and saving a bundle. We have shown you in the past how often grossly exaggerated list prices at Amazon made a bad problem worse.

More recently, on April 1 this year, Amazon advertised a memory module claiming a whopping 65% savings.

Amazon comparison

*MOUSE PRINT:

According to CamelCamelCamel which tracks Amazon’s prices, Amazon never charged that list price of the memory module. And it has been two years since prices for that item even approached the list price.

price history

The New York Times now reports that Amazon has finally had a change of heart, and is dropping list price comparison for as much as 70% of their inventory. Here for example is that same memory module as of last week, with no savings claims made.

Amazon's price today

Why is Amazon dropping list price comparisons? Many retailers have been the subject of recent class action lawsuits alleging that customers were deceived by these false price comparisons, and they have been awarded millions of dollars. The question is will Amazon’s sales be affected because there are no savings claims? Remember what happened to J.C. Penney when their new president decided to play it straight and drop phony sales? Their revenue plummeted.

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5 Comments

  1. I have made sure to pay attention to the list price scam ever since JC Penny made it clear that their listed prices didn’t have any meaning beyond fooling consumers into thinking items were on sale.

    Comment by wayne — July 11, 2016 @ 10:34 am
  2. For several years now I have been comparing prices on amazon with other retailers.

    Sometimes Amazon’s price is lower, sometimes it isn’t.
    When the price is the same, I consider if I need the item now or can wait a few days.
    If I can wait, I order from Amazon simply for the convenience.

    Comment by Tim — July 11, 2016 @ 11:39 am
  3. List Price??? Is that the same type of thing as the Compared At pricing TJ Maxx got called out for?? July 27, 2015 post at this site on it.

    Comment by richard — July 11, 2016 @ 11:52 am
  4. Don’t the manufacturers have a suggested sales price? Automobiles have the window sticker, which is not usually the sales price. But it is a reference from which to start.

    I don’t know where Amazon got its list price but it should have a basis in fact. It costs the manufacturer a certain amount to design, build, and market the item. They decide that they need to make xx% profit on the item, and sell it to a distributor for that total amount (costs plus profit). The distributors then sell it to the retail outlets for their cost plus their profit. Then the retailers sell the item to the consumer and include their operating costs, item cost, and profit. The manufacturer can estimate what the distributor and retail costs might be and suggest that total to be the MSRP.

    Anyone in that chain can decide to increase, or decrease, their profit margin (markup) depending on demand. A slow moving item may get a lower markup to keep the price low and encourage the end customer to purchase the goods. A popular item will higher markups because the end consumer is willing to pay the higher prices.

    Maybe Amazon us using the MSRP as a list price, which might be a valid place to start. you may never see the item listed or sold at that amount or even find it in a brick and mortar store at that price, but that may be what the manufacturer calculated for a MSRP.

    Edgar replies: Bob, so you know, states often have advertising laws or regulations that prohibit the use of list prices or MSRPs unless a reasonable number of sellers in the trade area actually sell the goods at that price. Reference pricing is inherently deceptive if no one ever sells it for that price.

    Comment by bobl — July 11, 2016 @ 3:00 pm
  5. You just need to take a few minutes to check prices elsewhere. 6pm had a purse on sale. Googled it.sale price was regular price in 2 other places. Groupon had a childs scooter marked down to $70. That is the regular price at Target. Just takes a minute to check. Not always a bargain.

    Comment by Joyce Uramkin — July 25, 2016 @ 10:09 am

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