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The Vast Majority of Retailers Fear Being Outpriced by Amazon

Dominating nearly half online commerce, Amazon’s hold on the industry is indisputable. And for brands and retailers looking to compete, the fear of being undercut on pricing is palpable.

Price optimization firm ActiveViam released a report Wednesday revealing deep-seated fears among those in the retail industry when it comes to competing with online’s reigning superpower. The firm surveyed 500 senior pricing decision makers and executives at retail companies this spring, and nearly three quarters (71 percent) of respondents said they were concerned about being outpriced by Amazon.

Of those respondents, 41 percent said they were “very concerned” about Amazon’s ability to offer products at a lower price.

But Amazon isn’t the only competitor that has brands and retailers worried. Nearly half (49 percent) admitted that they were fearful of being outpriced by other brick-and-mortar retailers, while 42 percent said they were concerned about DTC brands and their impact.

“It is no surprise traditional retailers are worried about being outpriced by Amazon,” said Kathy Perrotte, ActiveViam’s managing editor and co-founder. “From its wealth of customer data to its vast product offerings, Amazon is able to fluctuate their prices very intelligently and very quickly.”

Being nimble when it comes to pricing strategy is an area of insecurity for many brands. More than half (61 percent) said that they felt that they were unable to optimize pricing quickly enough to take advantage of trends in the market.

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That’s because many of the retailers surveyed lack confidence in the tools they’re currently using to monitor their own internal pricing data as well as data from their competitors. Over half of respondents (55 percent and 54 percent, respectively) said that they feared their geo-pricing and price consistency programs provided inaccurate or incomplete data, and that they were concerned that the competitor pricing data they were receiving was sub-par as well. A third of respondents said their company has no price optimization tools in place at all.

These blind spots have created challenges for brands when it comes to creating and managing pricing strategies. Without confidence in their data, 23 percent of respondents said they lacked valuable insight into their competitors’ pricing activities and were unable to compare their businesses to other market leaders. Aligning pricing between in-store and online operations proved to be the biggest pain point for brands, with 40 percent stating that streamlining strategy was their biggest challenge.

“In such a competitive marketplace, retailers need to be equipped with the right tools to make accurate and precise decisions about their pricing strategy,” Perrotte said. “Additionally, achieving consistency between locations as well as online and in-store sales is essential to making sure that each channel is as optimized as possible to generate profits.”

To achieve that consistency, Perrotte said it’s imperative that brands invest in more effective pricing research tools to give them confidence when it comes to pricing. “The fact that so many retailers are not only worried about their external data quality but their internal data quality is quite alarming,” she opined. “Retailers really need to think about the infrastructure they have in place and invest in better tools and strategies to ensure they have the best quality data possible.”