If you sell your products on Amazon, you're now free to offer lower prices on other websites--but you might want to hold off on celebrating just yet.
On Monday, Amazon quietly eliminated a policy that barred third-party merchants in the U.S. from offering products at a lower price outside of its marketplace, Axios first reported. The policy, known as "price parity," has been the subject of scorn among Amazon third-party sellers for years, as it required them to reduce their prices on Amazon every time an outside retailer discounted their products. In effect, keeping that parity cut into third-party sales.
It's not yet clear what prompted the e-commerce giant to make the change. Amazon declined to comment for this article. In 2013, the company removed this requirement for sellers in the European Union after regulators opened an investigation into whether the policy was anti-competitive. In the U.S., Amazon faces continued pressure from lawmakers regarding a variety of allegedly unfair practices.
Last week at South by Southwest, Senator Elizabeth Warren (D., Mass.) called for breaking up big tech and proposed blocking Amazon from both owning and participating in its own marketplace. "Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version," Warren wrote on a Medium post published Friday.
Separately, in December, Connecticut Senator Richard Blumenthal, also a Democrat, asked the Federal Trade Commission to examine if Amazon's price parity requirement violated U.S. antitrust law.
Despite caving on its parity policy, the company will retain control of its pricing in another way. A separate, albeit very similar rule known as the fair price policy still stands, according to Amazon sellers posting in online groups.
The fair price rule states that if your products are sold at a higher price on Amazon than elsewhere online, the company can remove the one-click-to-buy button--known as the buy box. It can also suspend shipping options and terminate selling privileges. Simply put, the price parity policy prohibited sellers from offering cheaper deals on other websites, but the fair price rule penalizes merchants who sell more expensive products on Amazon. The latter policy is designed to protect customers from predatory pricing practices, according to Amazon's terms, but it can essentially create the same effect as the now-removed price parity rule.
"I almost did a back flip in the hotel gym," says David Simnick, co-founder and CEO of Soapbox, a Washington, D.C.-based soap and shampoo maker. Then he learned the other pricing rule is still in effect. The company sells some of its products at Target for $1 less each or $3 less for a bundle of three. Soapbox sells only bundled items on Amazon. Even so, Simnick's company currently has about six different products for which the buy box option has been removed.
Simnick previously told Inc. his sales plunge as much as 40 or 50 percent a day when his listings lose the buy box. Soapbox can reclaim the buy box if it tweaks its pricing either at Amazon or at the cheaper retailer, so that both offerings are priced equally. Amazon has provided no indication whether eliminating the price parity rule will affect its fair price policy.