Here’s Why Amazon’s Prices Might Not Be As Good As You Think

Sometimes those discounts do seem too good to be true...

Amazon Holds News Conference
Getty Images | David McNew

Amazon is the online marketplace of our dreams. You can get anything on there, from capers to diapers to designer clothing. With a Prime membership, you can even get free two-day shipping and a host of other benefits. And all of this typically comes at a giant discount—or so the website claims.

But now, a new report is accusing Amazon of essentially falsifying these markdowns. The report says many are not as significant as the customer believes, and some are basically nonexistent. The report, which was written by Consumer Watchdog, says nearly 40 percent of the 4,000 Amazon products studied “used reference or list prices that are not charged by other retailers.”

Amazon Packaging
Flickr | William Christiansen

According to federal regulations, companies have to make sure that reference prices are in line with current market trends. They can’t just pick and choose the most expensive price from their competitors in order to look good.

How does this relate to Amazon? Well, despite the website’s Conditions of Use, which says that a product’s list price on Amazon “represents the full retail price listed on the product itself, suggested by the manufacturer or supplier, or estimated in accordance with standard industry practice,” Consumer Watchdog found this isn’t necessarily true in all cases.

Researchers say that of the 40,000 products examined, nearly 25 percent of them made comparisons to reference or list prices that were light years away from any reasonable interpretation of “prevailing market price.”

In one specific example, Consumer Watchdog found a Pneumatic brand drill on the Amazon website that was advertised at a price of $182.99—compared to a list price of $305. That’s a 40 percent discount, and seemingly a pretty sweet deal.

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Except for the fact that the researchers found the same exact drill at a number of other retailers at a price comparable to Amazon’s. Online commerce site Jet.com listed the drill for the same price of $182.99, Walmart priced it at $189.99. No longer such a good deal.

“In other words, the reference prices were an entirely bogus notional price that created the false impression that customers were getting a deal when they were not,” Consumer Watchdog said in a statement Monday.

In response to this statement, Amazon sent the website Consumerist the following:

“The Consumer Watchdog report is misleading. Manufacturers, vendors and sellers provide list prices, but our customers care about how the price they are paying compares to other retailers. We validate list prices against actual prices recently found across Amazon and other retailers, and we eliminate List Price when we believe it isn’t relevant to our customers. Using recent price history of the product on Amazon we’ve also introduced a ‘Was’ price to provide customers with an alternative reference price when we don’t display List Price.”

It seems customers will just have to wait and see whether those list prices start going down or not.

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