Deal Breaker For Amazon - Some Prime Discounts Are Misleading Customers, Study Finds

  • For the first time, Amazon.com, Inc AMZN hosted a version of the Amazon Prime event twice a year for Prime subscribers, dubbed the "Prime Early Access Sale." 
  • However, some prices posted on Amazon that look like they are marked down or labeled as discounted reflect the item's regular price, a study revealed, according to Bloomberg.
  • In some circumstances, the authors found, a discount might reflect a price increase. 
  • It works because many products sold on Amazon have a "list price" as a baseline to highlight the discount shoppers are receiving.
  • The researchers tracked prices for nearly 15,000 products in 2016 and 2017, focusing on things like vacuum cleaners, blenders, and digital cameras that people purchase infrequently and where the price varies widely.
  • With vacuums, in particular, they discovered that in one out of five cases where they introduced list prices to highlight a discount, the discounted price was more than the usual item cost.
  • JCPenney and Kohl's Corp KSS retailers have paid millions of dollars to settle class-action lawsuits alleging they inflated the size of discounts by advertising bogus original prices. 
  • The researchers found that introducing a list price with a price increase and fake discount usually only stayed online for about a day.
  • Even the study's authors admit a certain visceral appeal to a discount.
  • The author found it difficult for regulators to catch because they can change prices quickly and frequently.
  • "This is a very effective way to mislead consumers," the study found.
  • Amazon said it expects-third quarter net sales to be in a range of $125 billion to $130 billion, up 13% to 17% year-over-year against the consensus of $126.4 billion.
  • Price Action: AMZN shares traded lower by 0.42% at $113.19 in the premarket on the last check Tuesday.
  • Photo by christian-wiediger via Unsplash
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