American businesses who sell goods on Amazon will closely examine an agreement that Amazon just reached with the U.K. government to end its policy of requiring that sellers offer goods at their cheapest prices on Amazon, and reserve higher prices for other retail outlets.
The policy pushed prices in Amazon’s favour, by ensuring that competing retailers were forced to charge equal or higher prices for any item being offered by a third-party seller on Amazon.
It also prevented sellers from offering their goods cheapest on their own web sites. You can see some of them complaining about that policy here.
The U.K. agreement, ending Amazon’s “price parity” or “general pricing” rule, appears to affect British sellers conducting business in any other competing European outlet.
Here’s what Amazon has been telling its sellers:
“Effective beginning August 30th, the provision in your seller agreement requiring price parity between your product listings on [EU amazon website] and your other sales channels will no longer be enforced. If we revise your agreement in the future we will remove this provision. Customers trust that they will find consistently low prices on Amazon Marketplace sites. We expect that sellers will continue to price their products competitively and we look forward to continuing to innovate on behalf of sellers and customers to foster competition and consistently low prices. Thank you for selling on Amazon.”
And here’s the rule as it stands on Amazon’s web site right now:
General Pricing Rule: By our General Pricing rule, you must always ensure that the item price and total price of an item you list on Amazon.com are at or below the item price and total price at which you offer and/or sell the item via any other online sales channel.
The new agreement gives British sellers the right to set prices how they want on both Amazon and any other outlet they use to sell goods.
American sellers, however, appear to remain bound by the old pricing rule: Sellers have no choice but to give Amazon the equal or cheapest price. Given that the U.K. agreement comes after the Office of Fair Trading received “numerous” complaints from sellers — Amazon has as many as 2 million third-party sellers worldwide — it seems like a matter of time before U.S. sellers begin levying similar complaints, in hopes of getting more flexibility in setting prices across multiple outlets.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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