Amazon Dominates Holiday Price War, Causes Retail Ripple Effect

The holiday shopping season is in full swing, although many customers are finding  higher prices on products in the market. They're also witnessing an ongoing price war between various retail giants. 

According to the data analytics company Profitero, Amazon.com, Inc AMZN is the first retail firm to increase its prices.

Profitero tracks almost 20,000 popular items in the online retail sector. It finds that Amazon’s prices on those products increased by 7.5 percent last month compared with October 2020.

Walmart Inc’s WMT prices grew by 3.1 percent during that period, and Target Corporation TGT  raised prices by 3.6 percent. 

However, even with the price increases on Amazon, Profitero found that Walmart’s prices on the 20,000 items are 4 percent higher than Amazon’s prices, and Target’s prices are 15 percent higher.

According to Harvard Business School economist Albert Cavallo, Amazon plays a major role in influencing prices across the web. 

“Online competition is a force for price uniformity, and therefore also inflation equalization. And as retailers get better at bringing online pricing, with its frequent swings, to their physical stores, the Amazon Effect becomes an even greater force,” the Washington Post quoted Cavallo saying.

Retailers are facing a post pandemic supply-chain crunch, affecting sellers worldwide, amplified by the domestic labor shortage and related costs. 

Amazon plans to spend $4 billion to attract seasonal workers in the fourth quarter, with the goal of hiring 15,000 workers during the busy holiday period. 
Related Link: Why This Analyst Thinks Amazon Can Surpass Walmart As The Largest US Retailer In 2022