Amazon Rings in Discounts for Sellers and Buyers

Amazon is hoping to improve its prospects ahead of the holiday season by shouldering more costs: the retailer is cutting select grocery seller fees in a bid to improve its offering, and has begun lowering prices of key items from third-party marketplace sellers to boost its value perception.According to a report from Recode, manufacturers of non-perishable groceries priced $15 or less get the fee deduction. Those sellers will owe only 8% on sales of the inexpensive goods, down from the 15% that Amazon previously charged on sales of all grocery items."To help you list more products and keep prices competitive, we are offering you a limited-time referral fee discount on grocery products," Amazon said in an email to affected businesses that was obtained by Recode. The change kicked off on Oct. 15 and will remain in place for at least one year.The move undercuts competition, with Walmart also charging 15% for grocery items sold through its online marketplace, and its Jet subsidiary charging 10% for most packaged foods, according to Recode.It also acknowledges the difficulty of making a profit when selling inexpensive groceries online, which has many sellers only listing more expensive bulk packs in lieu of single items. Others sell their products at a wholesale price to Amazon, which then funnels the low-priced items into membership programs such as Prime Pantry or Amazon Fresh — the latter of which the retailer recently downsized as another adjustment to its grocery strategy following the purchase of Whole Foods Market.Meanwhile on another front, Amazon is entering the price war. The Wall Street Journal reports that the retailer is covering third-party marketplace item discounts of up to 9% out of its own pocket in an effort to ensure competitive pricing. A new "Discount provided by Amazon" tag marks the items, which include board games, gadgets and toys from sellers using Amazon's fulfillment services.According to the story, the move lets Amazon compete more fiercely with low-cost rivals including Walmart and Dollar General just as the all-important holiday season gets under way. By determining prices for its sellers, Amazon also could hurt their brand equity and force them to lower prices themselves on other marketplaces.

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