Amazon.com’s Prices Not The Lowest
Amazon.com’s Prices Not The Lowest, The online retailer is still playing catch-up to one of its biggest rivals, a new study says. In an era of serial comparison shopping, Amazon.com Inc. (AMZN) has seemed unassailable. Yet for many kinds of merchandise — the first-season DVDs of “Glee,” say – - shoppers can get a better deal at Wal-Mart Stores Inc., both online or at a superstore.
A study conducted by Kantar Retail, a London-based research firm, compared prices on a wide range of 36 items and found that on average they’re 20 percent more expensive at Amazon than at Wal-Mart. The “Glee” DVDs? At $38.99, they were about $14 pricier at Amazon than Wal-Mart when the study was conducted in April. On goods such as food, Amazon’s prices were almost 60 percent more, though some items are cheaper, the study said.
Consumers “trust Amazon will have a low price,” said Anne Zybowski, a Kantar analyst who co-wrote the study. “On many items, they do have competitive prices. That’s how Amazon has won millions of customers one shopper at a time.”
Still, when it comes to controlling prices, Amazon is playing catch-up with Wal-Mart (WMT), which has been building its supply base, wringing costs from its vendors and amassing buying power for 50 years. Amazon is working on bringing in new vendors and lowering costs in its supply chain, Zybowski said.
Last year, the Seattle-based company’s sales grew 41 percent to $48.1 billion. Bentonville, Arkansas-based Wal-Mart, the world’s largest retailer, increased U.S. sales at its namesake stores 1.5 percent to $264.2 billion. Wal-Mart shares have climbed 27 percent in the last 12 months, compared with a 14 percent gain for Amazon.
Sally Fouts, an Amazon spokeswoman, didn’t respond to several requests for comment.
Wal-Mart has never tried to advertise its price advantage against Amazon or other dot-com players, David Tovar, a spokesman, said in an interview. The retailer has advertised its price advantage on certain goods against local retailers in select U.S. metro areas, he said.
“We’ll leave it to Kantar to talk about prices,” he said.
Kantar did the study for the first time after watching Wal- Mart’s core shoppers moving to the Web at a faster clip, said Robin Sherk, who co-authored the study. Five years ago, only about a quarter of Wal-Mart’s customers shopped at Amazon, according to another Kantar survey. Now half say they do.
Kantar pulled together a basket of 36 goods across four categories — including edible grocery, non-edible grocery, health and beauty aids and general merchandise. They looked at Walmart.com and visited a Supercenter in a New Hampshire suburb that Kantar declined to identify, chosen because it’s not in the middle of nowhere and it’s not in a city and therefore was deemed representative of a typical Wal-Mart store.
The prices don’t include shipping because both companies offer a variety of options that can significantly vary in cost. Amazon will adjust prices if it discovers Wal-Mart or Target Corp. (TGT) are running special deals.
Many consumers are drawn to Amazon’s convenience, free shipping and customer service. One frequent customer is David Washburn, who rarely compares the online retailer’s prices with Wal-Mart or other stores.