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FTC Probing Allegations of Amazon's Deceptive Discounting (reuters.com)
An anonymous reader quotes a report from Reuters: As part of its review of Amazon's agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe. The FTC is probing a complaint brought by the advocacy group Consumer Watchdog, which looked at some 1,000 products on Amazon's website in June and found that Amazon put reference prices, or list prices, on about 46 percent of them. An analysis found that in 61 percent of products with reference prices, Amazon's reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6. Amazon said in a statement that Consumer Watchdog's study was "deeply flawed." "The conclusions the Consumer Watchdog group reached are flat out wrong," Amazon said. "We validate the reference prices provided by manufacturers, vendors and sellers against actual prices recently found across Amazon and other retailers."
I keep hearing this from crazy people, and it keeps not being true. I've worked in retail, but that doesn't matter; what matters is I've actually looked at prices for things, piled up loads and loads of shit I wanted to buy but didn't want to go $4,000 into credit card debt for, and so have frequently been watching when the prices drop for holiday sales and other bullshit.
The truth is they think a $5 flash drive that actually costs $15 and usually retails for $20 will get you in the store to buy a $500 TV that actually costs $400 and is marked down from its typical price of $529.99. They're still operating on the same NOP margin (in retail, that's often like 5%-8%); they're using seasonal hype and a loss-leader model to induce you to buy more so they can profit by volume.
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I think Mike is talking about what some major chains used to do with jewelry sales during Christmas. They'd have a pin for $100. They'd raise the price to $200. And then have a 50% off sale. In several states this is majorly illegal and considered fraud. The TV news program 20/20 did a piece on this back in the 1980's. A year later they did a follow-up and again the some of the same retailers were caught. Before this they were threatened with 'fines per discovery'. After this they were fined with 'fines per instance'. So if they sold 50 of them in one store, they'd be fined 50x not just once. Now with the internet we have this crap happening all over again.
Care killed the cat, but satisfaction brought it back.
It's almost as if when the supply of something goes down the price goes up. If only economists had realized this earlier...