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Amazon sellers have been left frustrated after their participation in a rival retailer’s promotional deal inadvertently caused a dramatic drop in online sales shortly ahead of Prime Day 2024.
Retailers looking to boost sales with discounts during Target’s promotional Circle Week found deals on that site inadvertently caused them to lose the coveted Amazon’s “buy box” spot – a massive sales driver for Amazon. The “buy box” is the listing that pops up first when a shopper clicks on a particular product, giving them the first look to consumers.
Winning and maintaining the “buy box” is necessary for success on Amazon, as it reportedly accounts for nearly 98 percent of sales on the platform. Without it, products are less visible.
However, Amazon requires sellers to offer the lowest price on its site and not competitors as part of the deal to be in the “buy box” spot. If Amazon finds a lower price on another site, the buyers could lose the valuable spot.
That is what happened to some sellers this year during Target’s Circle Week discounts. Target’s promotion offers steep savings a week before Amazon’s annual Prime Day sales, which are set to start on July 16. However, a glitch with Target and how items’ sales were listed impacted sellers, who used to be in the top spot on Amazon.
Brandon Fishman, founder of gourmet coffee and tea brand VitaCup, listed coffee at $13.43 during Target’s Circle Week – about $1.50 less than its Amazon price. This caused the buy box to be passed to a reseller - and not him the direct manufacturer - which drastically affected his Amazon sales, which generate around $20 million annually.
“I’ve had to purposely lose the buy box all week because of this Target issue, and my sales went way down on Aazon,” Fishman told CNBC.
The prices were flagged to the Amazon algorithm due to a change in pricing on Target’s online site. This year, Target has listed the actual sale price instead of a percentage discount, which inadvertently triggered an alert with Amazon’s algorithm that ensure it has the lowest prices.
Amazon’s algorithmt has raised concerns among lawmakers and prompted a lawsuit from the Federal Trade Commission.
The FTC has argued the practice stifles competition by discouraging lower prices on rival platforms. Amazon has rejected these claims, saying that sellers are responsible for their pricing.
Fishman shares the sentiment saying that the company is quick to penalize sellers, who look to utilize competing promotional offers, thus stifling competition.
“Their whole point is we always want to have the lowest price,” Fishman told CNBC. “As a brand, if I want to have a sale on Target for a week, I should be allowed to. I shouldn’t have to be on sale everywhere.”
