A lesson to learn, everything on Amazon is not always the lowest price. Amazon has Prime Membership, great service and an easy to use website, but it pays to be informed about the prices of the products you are purchasing.
Because of the way Amazon Marketplace works (vendors set their own prices and are charged a commission for using the Amazon platform), many times you can get products at a better price directly from the original merchant or at a store like Target or Walmart.
We recently had a customer experience this. They bought some peanut butter on Amazon. However, when their package arrived at our warehouse we were all shocked to see that it was shipped directly from Walmart.
How did this happen you ask? Many products sold on Amazon are sold via Marketplace sellers. Some of these sellers offer to sell brand name products on Amazon at marked-up prices (usually significantly to cover their costs to list on Amazon). Once the Amazon seller receives an order from a customer on Amazon, they place a back-to-back order on Walmart, the seller requests Walmart to ship the package directly to their customer and pockets the difference in the pricing as their own profit.
To share some details from our customer, they bought a 6 pack of peanut butter on Amazon for USD 25.31. A quick search on Walmart.com shows the price to buy 6 jars (2 packs of three) of the same peanut butter is only USD 14.18, which is almost an 80% mark up for the Amazon seller!
This brings us to another point since Amazon Marketplace sellers tend to be wholesalers, they generally only sell in large pack sizes (3 pack vs 6 pack). Given our limited storage space in HK, it is sometimes better not to have to buy such large quantities at one time.
A tip we can share with you when you are shopping with Amazon to prevent this from happening to you is as follows:
This will only happen if the seller ships themselves (the product listing will say “Ships from and sold by VENDOR)”. Instead, look for the words “Ships from and sold by Amazon”. The latter means the products are actually in an Amazon warehouse and can’t be shipped directly from Walmart. Of course, the seller could have bought the stock in advance from Walmart and stored it at the Amazon warehouse, but this would have been far less profitable because of the additional fees Amazon charges for using their fulfillment center.
This “bait and switch” type of practice, according to Amazon T&C, is not allowed. However, if caught, vendors just change their name and continue selling using this process since it is so profitable. Plus sellers have the advantage that there is a common misperception that products on Amazon must be cheaper since Amazon is so big. However, the high fees for sellers/merchants to use Amazon’s platform ultimately get reflected in the price they sell products at.
We had heard about this practice last year but thought it was rare and never experienced this personally or by one of our customers before. Now that it has happened so close to home we wanted to make sure all our customers are aware of the possibility. You can see more details on this practice in a post we did on our blog earlier this year.
Word to the wise shopper, if you are not familiar with the pricing of a product you are thinking of buying on Amazon, always check the prices on another website. Also, as we said above, many times everyday items (especially grocery items), are generally available for less money on other websites. Don’t get us wrong, Amazon is great for specialty or hard to find items.