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Amazon manufacturer/distributor of home and kitchen goods here - the rule of thumb is that if it's <$20 (and especially if it's <$10), Amazon's pricing structur
by binarysolo 8y ago
Amazon manufacturer/distributor of home and kitchen goods here - the rule of thumb is that if it's <$20 (and especially if it's <$10), Amazon's pricing structure to its third party sellers basically compels low dollar items to be more expensive than retail.
Basically we pay Amazon $1 or 15% of sale (whichever is higher + ~$2.50 for shipping before anything else, so after margins and what not that's a minimum of $4 going to Amazon for marketing and logistics. That's why low dollar 1-pack items feel like price gouging -- there's been years of A/B testing on the marketplace that shows a $4.99+free ship item is way more attractive than $1.99+$3 shipping.
Amazon itself sells stuff direct from manufacturer at a loss or breakeven-ish cost for items under $3 because they can, but even those prices aren't hugely sustainable and they play around with algorithmic pricing themselves over time.
Retail logistics for low dollar items is a Hard problem. :|
- zjaffee 8y agoIt's also worth noting that people don't think of the externalized cost of actually getting to the store verses getting these things shipped. If you have to drive a mile each way just to get that one extra item, the amount your saving from not ordering online is insignificant.
- strictnein 8y agoRetail price at Target, Walmart, etc on this is ~$2.89 a bottle. On Amazon it's the "Amazon Choice" for $13.97 for two bottles. https://www.amazon.com/Formula-409-Purpose-Cleaner-Bottles/dp/B06W2LP11M/ https://www.amazon.com/Formula-409-Purpose-Cleaner-Bottles/d... You can get the normal retail prices on all this stuff and still shop online. You just can't do that on Amazon any more.
- binarysolo 8y agoYep, Target.com is 2.89 with $25 free ship https://www.target.com/p/formula-409-powerful-all-purpose-cleaner-spray-bottle-lemon-32-oz/-/A-13162353 https://www.target.com/p/formula-409-powerful-all-purpose-cl... -- but for what its worth, the online stores are mostly loss-leaders for the big department/grocery stores trying to stay relevant against Amazon. https://money.cnn.com/2018/05/23/investing/target-earnings/index.html https://money.cnn.com/2018/05/23/investing/target-earnings/i...