NEW YORK, Nov 17 (Reuters) – Makers of everything from toys to tortillas are increasingly offering lower prices on their products to preserve profits and lower prices as retailers such as Walmart Inc ( WMT.N ) and Amazon.com Inc ( AMZN.O ) try to take sales from to each other online.
As a result, consumers face fewer discounts on everyday purchases at a time when inflation is around 8%, and as retailers look to unload hundreds of billions of dollars of surplus goods. read more
Over the years manufacturers have set a very low price that retailers can advertise on other big-ticket items like TVs. They wanted to prevent consumers who buy a product at a showroom, then go online to find it advertised by another retailer at a lower price, from buying it there.
Now, as consumers follow the trend of buying more household products online, companies such as Colgate-Palmolive Co ( CL.N ) have in recent months used what is known as a low-cost marketing strategy for low-cost products such as its Optic White Pro. Series toothpaste on Amazon, a person familiar with the matter said.
The Pro Series toothpaste, which now sells for about $9.96 on Amazon, is a high-end product that Colgate wants to protect its profits in the face of rising costs. read more As a result, buyers have been struggling to find lower prices for advertising elsewhere.
Toymaker Hasbro Inc ( HAS.O ) requires retailers to maintain any promotional prices above its levels of $6.99 to $33.99 on Monopoly, Twister, Chutes & Ladders and 21 other games and toys, except during holiday shopping, according to the company. memo seen by Reuters.
Online shopping for consumer staples, including fierce competition from Amazon and Walmart Inc ( WMT.N ), has prompted many grocery makers to cut prices on low-cost products, e-commerce consultants said.
Mr. Tortilla, which makes tortillas sold online by Walmart and Amazon, decided to set lower prices as it expanded sales, in an effort to keep prices high in e-commerce, said Ron Alcazar, the company’s chief executive.
“We’re seeing categories taking up (these floors) that haven’t been there before, like food and beverage,” said Jack Gale, account executive at PriceSpider, which has seen 120% year-over-year growth in the number of companies using its products. which helps to set these prices from 2018.
NOT LEGAL IN EUROPE
Although legal in the United States, these policies are illegal in many countries, including most of Europe.
Price-fixing agreements between retailers and manufacturers are also illegal in some states including California and Maryland.
Amazon’s share of these prices comes from its promise to offer products as cheap as, or lower than, competitors like Walmart. This forces brands that sell a lot of products on Amazon to set, and then enforce, a lower price. Otherwise, they get less profit.
Amazon sellers and sellers on its platform could be penalized by poor placement on Amazon.com, among other things, if the company finds lower prices for products elsewhere, e-commerce consultants said.
“We have no role in creating or maintaining them,” an Amazon spokeswoman said when asked about the low-price policy. “Like any store, we reserve the right not to display prices that are not competitive with other major retailers. We always set our prices independently.”
The lawsuit filed by California against Amazon claims that sellers must accept the rules set by Amazon that ultimately lead manufacturers to adopt and implement advertising pricing policies.
US Representative David Cicilline, who is working on antitrust laws aimed at lowering prices, said, “Amazon abuses its monopoly power to pressure retailers and sellers, preventing them from offering lower prices elsewhere.”
Amazon said in response that it does not prevent sellers from offering lower prices elsewhere.
The United States Supreme Court’s 2007 decision to allow “reasonable” sales price agreements between wholesalers and retailers helped set the stage for the expansion of these pricing policies.
Jessica DiNapoli reports; Edited by Vanessa O’Connell and Chris Sanders
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