retail news in context, analysis with attitude

USA Today reports this morning that an investigation by the nonprofit news organization ProPublica says that "the 48% of Amazon customers who don't subscribe to its Prime service may not always be shown the lowest price for products unless they do careful research on the site."

According to the story, "Amazon's price comparison tool works for Prime members, most of whom who pay $99 a year for free shipping and a host of other perks, and for people ordering over $49 worth of products who get free shipping. But for the rest of Amazon's customers, Amazon's price comparison ranking doesn't necessarily result in the lowest prices coming up first, making it necessary to laboriously drill down into the search results to get the best deals, ProPublica found."

USA Today goes on: "ProPublica analyzed 250 commonly bought products over several weeks, watching to see which were placed in the 'buy box,' the highlighted, clickable box that appears at the top of an Amazon product search page. The study found that about 75% of the time, Amazon products or those sold by companies that paid Amazon to store and fulfill their orders were in that top slot, even if cheaper options were available from other sellers.
For non-Prime customers with orders under $49, finding the best prices was possible but involved clicking through on multiple options to do true cost comparison."

Amazon responded to the criticism by saying that "its sorting algorithms are designed for items where shipping costs do not apply. The company said that about 90% of items ordered on its site don't have shipping costs because they're either ordered by Prime members or by people using Super Saver Shipping, which requires no membership and ships orders above $49 for free."
KC's View:
As long as Amazon is not deceiving anyone, I think the company will be perfectly happy if customers realize that Prime members get the best prices and the best service. In fact, Amazon might be willing to argue that this is one of its differential advantages in the marketplace - that it, maybe more than any other retailer, is able to be relevant to its shoppers - and more relevant to its best shoppers - because of the data it accumulates and actually uses.

Sine Amazon knows than non-Prime customers spend an average of $500 a year, and Prime customers spend an average of $1200 a year, it makes good business sense to do more for its best shoppers and try to convert as many to the Prime category as possible.