Whether or not you realize it, Amazon is doing all it can to make you believe that it has the lowest prices around. And while that may be true of some very popular products they’re selling, it’s certainly not true across the board. But they rely heavily on a smart tactic that can make you believe otherwise.
Basically, what Amazon will do is identify those products that are most popular in the online shopping world. Then they will consistently price those products under the competition:
In one example, Boomerang observed Amazon testing price reductions on a $350 Samsung TV — one of the most popular TVs on Amazon — over the six months leading up to Black Friday. Then, on Black Friday, it dropped the price to $250, coming in well below competitors’ prices.
Then, when it comes to the accessories that people would buy with those popular products, Amazon will charge as much as 33% more than their competition. Amazon knows that they’ll make a profit on accessories like these (that aren’t as popular) because their customers won’t price compare on them as carefully as they would with those popular big ticket items.
This tactic that Amazon uses utilizes the power of price perception. Here’s why it works:
“Amazon may not actually be the lowest-priced seller of a particular product in any given season,” [a] report reads, “but its consistently low prices on the highest-viewed and best-selling items drive a perception among consumers that Amazon has the best prices overall — even better than Walmart.”
Moral of the story? Don’t be lulled into a false sense of low-price security when you see great prices for big ticket items on Amazon. Always comparison shop if you want to save as much money as possible. Even if you buy a TV at Amazon, shop around for any other cables and hookups you may need.
Thanks to CNBC for the heads up and the info on this!