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Amazon Giving Stiff Competition to Offline Retailers with Price Cuts

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Published on : Nov 18, 2014

In a bid to boost retail business across key consumer goods categories, Amazon.com Inc. has been gradually lowering its prices in order to compete with offline vendors, states the latest Bernstein Research.

The Bernstein price trends analysis states that Amazon is lowering prices to “achieve scale” in categories such as personal care, consumer health, baby products, and pet care. Products right from shampoos to diapers are being purchased by people across the site. This means offline retailers such as Wal-Mart Stores, Target Corp., and Walgreen Co. could be faced with serious challenges in terms of industry margin, needing them to adapt themselves to a vibrant and deflationary online pricing environment.

Pricing trends across 150 SKUs or stock keeping units were analyzed within Amazon.com Inc.’s 10 wide consumer goods categories. Analysis showed that prices across 50% of the company’s stock keeping units dropped over the last year. While prices across 26% SKUs increased, prices across 24% SKUs remained flat. 

Walgreen, Amazon, and Target spokespersons were not available for comment but a Wal-Mart spokesperson had a comment to make. The spokesperson stated that the Bernstein Research report has left out the fact that with an estimated US$10 billion in global sales in 2013, Wal-Mart was and is one of the largest e-commerce companies across the globe.

An important fact that the Bernstein report highlights that although consumer packaged goods are high on the overall retail market list, consumers still prefer to buy day-to-day household items from brick-and-mortar outlets

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