The Evolving Amazon Price Match Strategy

Last Updated on August 8, 2023 by ScreenPush

Amazon has been the major trendsetter in retail, influencing the way the retail industry functions, both online and offline. The online retail giant guarantees the best prices and used to provide a long window for price change refunds. However, things have been changing in the last few years regarding the Amazon price match strategy.

What is Price Matching Strategy?

Price matching is a marketing and sales strategy where a retailer or seller agrees to match the price of a product offered by a competitor. The idea behind price matching is to retain customers and remain competitive in the market by assuring shoppers that they will get the best price available for a particular product without having to shop around at multiple stores.

How Price Matching Strategy Works

  1. Price Matching Policy: The retailer sets a clear price matching policy that outlines the conditions under which they will match a competitor’s price. This policy may include specific requirements, such as the product being identical in brand, model, size, and specifications.
  2. Eligible Competitors: The retailer specifies which competitors they will price match against. This list might include local brick-and-mortar stores, online retailers, or both.
  3. Verification Process: In order to request a price match, customers usually need to provide proof of the competitor’s lower price, such as a website link or a printed advertisement. The retailer verifies the price and checks if the product meets all the specified criteria.
  4. Price Adjustment: If the customer’s claim is valid and the product qualifies for the price match, the retailer will adjust the price of the item to match the lower price offered by the competitor.

However, price matching also has its challenges. Retailers must be careful not to engage in a price war that could negatively impact their profitability. They need to balance providing competitive prices with maintaining healthy profit margins. Furthermore, implementing a price matching policy requires careful monitoring and training of staff to ensure consistency and avoid abuse of the policy.

Amazon Price Match Policy Changes

Ever since Amazon blazed the trail for online retail, it has created new rules for retail. One of the major factors is the pricing. Amazon has always strived to provide the best prices for the products it sells. A dynamic pricing algorithm results in prices for all products changing frequently in response to price changes by competitors, and changes in price on its own site. For products sold and fulfilled by Amazon, sellers try to keep prices at the lowest.

These dynamic price changes gave Amazon a huge advantage, and the e-tailer could make up for the low prices with the sheer volume of the sales it makes each day. Many online and offline sellers soon began to implement their own dynamic pricing tools and even brick & mortar retailers were forced to try and match Amazon’s prices. Price matching is the process of a retailer matching the lower price offered by a competitor on a product if a customer points this out and asks for a price adjustment. On Amazon though, there was a difference, Amazon only price matched for a reduction in price on their own website, they did not offer price match with competitors. However, this still made sense for customers because, for most products, Amazon offered the lowest prices.

Amazon Price Match Refunds

Initially, Amazon used to offer a huge window for price match refunds. Customers had a 30-day window to see if the price for an item they bought fell further on the site. If it did, customers could contact Amazon customer service, point out the price change, and ask for a refund of the difference. These requests were honored because Amazon has always been a customer-focused company. That is how they built their brand and customer loyalty.

However, that large window resulted in a huge number of refund requests, and some of them fraudulent. Amazon then revised the price change refund window to seven days of purchase. As per its stated policy, Amazon only offered refunds on those products sold and fulfilled by Amazon, not the products sold and shipped by third-party sellers. Still, many customers also managed to get Amazon Price Match refunds even for products sold and fulfilled by third-party sellers.

Back in 2016, this policy changed again. Amazon openly declared that they no longer offered price match refunds on anything but televisions. Amazon stated that it strived to provide the best prices for its customers, but price match partial refunds will not be available anymore, not even with the seven-day window, on any products other than television. Why this change?

The Reasons for the Changes in Amazon Price Match Policy

Amazon built its business on providing the best service, and the best prices to its customers. It did this by focusing on huge volumes of sales rather than on large profit margins. This assured customers that Amazon mostly offered the lowest prices on the products sold on that site. The price match refunds further strengthened that assurance. Amazon also provided a liberal returns policy.

Over the years, some customers began misusing those liberal returns and price match refunds.  Moreover, many apps came into the market that had the sole purpose of monitoring the prices of products. This ensured that customers did not have to keep watch on the prices. They just installed the app and the app would keep track of the products bought. It alerted the users to price drops, encouraging more price match refund requests. Even this retail giant began to feel the impact of these refunds.

According to the National Retail Federation, 11% of sales end up as refunds, and of these, 11% are fraudulent requests. This may not seem like much, it works out to about 1% of fraudulent refund cases. However, when a retailer operates on a low profit, huge sales volume model, even these small amounts can affect the bottom-line. So, Amazon revised its price-match refund policy.

While many customers have been put off by these changes, some industry experts point out that these decisions also benefit the customers. Honoring fraudulent returns and partial refunds would eventually force the retailer to increase the price of the products. By limiting the partial refunds and the returns, Amazon and other retailers like it are able to maintain their promise of low prices, product quality assurance, and other policies.

Besides this, Amazon still honors price match refund requests for many customers. They just have to work a little harder and limit their Amazon price-match refund request to cases where the price drop happens within a week and the change really makes a difference. Unofficially, the Amazon price match policy is still in place. It is now granted on a case-by-case basis.