Amazon sellers get dinged after Target discount snafu

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sellers get dinged after Target discount snafu

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driver delivers packages in Washington, D.C., on Aug. 27, 2023.

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When Brandon Fishman ran a discount on his vitamin-infused coffee for Target’s weeklong deals event, he wasn’t worried about how it would affect his business on

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. He certainly didn’t expect his sales there to “fall off a cliff.”

Fishman was in for a rude surprise. During Target’s sales event this week,

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’s automated systems detected his bag of

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coffee was available there for $13.43, about $1.50 cheaper than his listing on

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.com.

One of

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’s key tenets is that it offers “the lowest prices across Earth’s largest selection.” It’s up to

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merchants to fulfill that promise, and those who sell their items for a lower price on a competing website risk losing perhaps the most valuable virtual real estate in e-commerce: the buy box. That’s the listing that pops up first when a visitor clicks on a particular product, and the one that gets purchased when a shopper taps “Add to Cart.”

Even though Fishman is the owner of the VitaCup brand, he said he lost the buy box to a reseller of his coffee products.

“I’ve had to purposely lose the buy box all week because of this Target issue, and my sales went way down on

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,” said Fishman, who has been selling VitaCup coffee on

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since 2017, pulling in roughly $20 million in annual sales on the site.

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has long relied on algorithms that continuously scan the internet to match or beat the price of products listed elsewhere. Other marketplaces, including Walmart, use similar systems in a bid to offer the cheapest prices.

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’s algorithms have attracted scrutiny from lawmakers and regulators who claim the system is anti-competitive. The practice is at the center of a lawsuit filed in September by the Federal Trade Commission that accuses

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of using an “anti-discounting strategy” and a “massive web-crawling apparatus that constantly tracks online prices” to stifle competition.

The company has rejected the FTC’s claims, and said the pricing tool is part of running a good business.

“Just like any store owner who wouldn’t want to promote a bad deal to their customers, we don’t highlight or promote offers that are not competitively priced,” David Zapolsky,

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’s general counsel, wrote

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after the lawsuit was filed.

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third-party sellers set their own prices.

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spokesperson declined to comment on the concerns raised by sellers.

The importance of the buy box

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launched Prime Day in 2015 as a way to attract new members to its currently $139-a-year subscription program, while also showcasing its own products, notably its electronic devices, and other services. The promotional event has turned into a big revenue driver for other retailers, which often hold competing sales timed around Prime Day.

Analysts at JPMorgan forecast total revenue for Prime Day, which is set to kick off on Tuesday, will reach $7.9 billion this year, up 11% from 2023, according to a note to clients on Friday.

Target began running discounts across its site on July 7, as part of its Circle Week promotional event. Circle Week is typically held in the lead-up to

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’s bargain bonanza.

The problem for Fishman and other sellers resulted from a change in how Target promoted deals for Circle Week. In the past, the company would would show the percentage discount off the regular price to avoid tipping off

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’s pricing algorithms, Fishman said.

But this year, instead of listing his item as 25% off, Target showed the item’s actual ***** price. That meant it was indexed by

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’s pricing algorithms, Fishman said, causing him to lose the buy box.

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Rivian electric delivery van on Interstate 87 near Harriman, New York, US, on Thursday, April 11, 2024.

Angus Mordant | Bloomberg | Getty Images

Winning the buy box is paramount to a seller’s success on

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. Without it, shoppers can still find a seller’s product, but they have to take the extra step of clicking into a separate window, where all the offers available are listed. Nearly 98% of sales made on

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go through the buy box button, the FTC alleged in its suit.

Mason Arnold’s experience last week was similar to Fishman’s.

Arnold said that after Target launched Circle Week, sales of his

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herbal tonics and powders started plummeting on

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because he lost the buy box to resellers.

“The only way to get back the

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buy box is to lower our price on

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,” Arnold said.

Sunwink did just that, cutting the price of one of its products to $19 from $23. Sales have since started to pick up, but Arnold is doubtful he’ll be able to make a profit at that level.

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retail is already a low-margin business due to pricing competition and all the fees for fulfillment, advertising and other services.

“We lowered our prices so we’re currently losing money until it gets fixed,” Arnold said. “We don’t know what the total is going to be, but for us at a minimum it’s hundreds of thousands of dollars” in losses, he said.

Arnold said some resellers buy his products from offline discount retailers and sell them at a markup on

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, forcing him to compete selling his own brand.

Fishman said that he and other sellers in his network took their concerns to Target. The company then adjusted the Circle Week discounts on some listings to say, “See price in cart,” meaning shoppers would have to add the product to their cart in order to see the price, Fishman said. The change skirted

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’s pricing algorithms, he added.

Target disputed the claim and declined to comment further.

Third-party sellers like Arnold and Fishman are the heartbeat of

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’s dominant e-commerce business. Since about 2017, they’ve accounted for at least half of all goods sold on the site. In the first quarter of this year, that number swelled to 61%.

Still, Fishman says the company is quick to penalize sellers, who are just trying to make a living. In so doing, the company is stifling competition, he says.

“Their whole point is we always want to have the lowest price,” Fishman said. “Well, me as a brand, if I want to have a ***** on Target for a week, I should be allowed to. I shouldn’t have to be on ***** everywhere.”

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#

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#sellers #dinged #Target #discount #snafu

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