You’re probably already familiar with the Star Shower — the contraption that covers large surfaces with colorful points of light — but you may never have realized how an online price war over this sort of gadget tells us much more about the relationship between Amazon and the rest of the retail world.
This year, Amazon sold the Star Shower directly to consumers to the first time. The list price for the Shower is $49.99, but the online retail giant was selling the device at a price for almost exactly what it paid to the manufacturer at wholesale.
The Star Shower is now a top seller on Amazon, thanks to customers happy to pay Amazon’s price ($33 as of right now) rather than the $49.99 list price. Other stores have also lowered their prices to stay competitive with Amazon, including Bed Bath and Beyond, Walmart, and Target. The device’s marketer, infomercial company Telebrands, still sells it for fifty bucks, though.
Here’s the thing: Telebrands chief executive A.J. Khubani told the Wall Street Journal that the company sells its devices at wholesale for around $30, and Amazon’s price has dipped under $31. The price war that Amazon set off has led prices to settle at least $10 under the suggested retail price.
That’s normally just called capitalism, but Amazon’s approach is aggressive, making it clear that making money on any given item doesn’t really matter to Amazon.
“Amazon chooses to erode some of their own pricing to grab share,” a retail strategist with analytics firm 360pi told the WSJ. In English, Amazon cuts its prices to convince you to shop at Amazon, since earning a profit on any given item isn’t especially important to the company.
Price wars like these have made companies reconsider selling their items through Amazon. In past years, Telebrands sold its products (other brands you may recognize: the Ped Egg and Pocket Hose) as a third-party merchant, letting it control the price, and this year it’s selling the Star Shower for the first time. The device is more affordable, but Telebrands is not very happy about Amazon’s pricing or the overall price war.
Telebrands’ Khubani tells the Journal that his company will have to think about where it sells the Star Shower and other products next year. “We need to consider everything that happened this year and see what we want to do.”
by Laura Northrup via Consumerist