Amazon.com’s prices beat Walmart.com on popular items
January 13, 2015 01:40 PM
The world’s largest retailer and the world’s largest online retailer are duking it out on pricing, with Amazon.com Inc. lower on the most popular products but Wal-Mart Stores Inc.’s Walmart.com beating Amazon on price in its core product categories, according to a study released today by Boomerang Commerce.
Amazon’s prices were 4% lower on average on the most popular products, and it was particularly aggressive in certain categories, including home audio, video games, phones and electronics. Amazon had a strong 3.5% edge in electronics in Boomerang’s newly released Price Perception Index, which compares product prices but gives extra weight to popular products that will particularly affect how consumers view a retailer’s prices.
Walmart.com undercut Amazon in such categories as automotive, pet, beauty, household essentials and home products. For example, Walmart.com’s Price Perception Index was 3.3% lower than Amazon’s on automotive products and 1.9% lower on home goods.
For 63% of the products studied, the two retail sites had exactly the same price in the Boomerang study of 39,122 identical products offered on Amazon.com and Walmart.com on Jan. 5. “This is significant, since it shows the two retailers actively and consistently seek to match each other,” Boomerang says.
The Boomerang results run counter to what Walmart.com’s own studies show about its price competitiveness, says a Walmart.com spokesman who had not seen the Boomerang Commerce report. “We’ve created sophisticated pricing tools and during the holiday season we doubled the number of items we were closely looking at,” he says. “We know what items are most critical for our customers, and more than four times out of five our price on those items is the same or lower than our online competition.”
Other studies have suggested that Walmart.com is cheaper on more items than Amazon. For example, RightBid, a provider of price-competiveness software for online retailers, tested 758 popular items on Amazon.com on Nov. 15 and found that several other retailers, including Walmart.com were cheaper on average.
Another study by Ugam, also a specialist in online price monitoring, found Amazon.com was less competitive on price in fall 2014 than it had been the prior year. John Boyd, CEO of ShopSavvy, which also monitors online prices, suggested last fall that Amazon’s less aggressive pricing may have contributed to more store-based retailers offering to match Amazon’s prices during the 2014 holiday season. Among them were Wal-Mart; Best Buy Co. Inc., No. 15 in the Top 500; Target Corp., No. 18; and Toys ‘R’ Us Inc., No. 34.
Amazon.com Inc., No. 1 in the Internet Retailer 2014 Top 500 Guide, did not respond immediately to a request for comment. Walmart.com is No. 4 in the Top 500.
The study by Boomerang Commerce, which offers technology designed to help retailers optimize their online prices, also noted that Amazon was particularly low in price on items it sold itself, 2.5% lower than Walmart.com’s prices on average. But the prices offered by outside merchants that sell on the Amazon Marketplace were 9.7% higher than Walmart.com’s, Boomerang says.
Boomerang’s study also gave an example of how Amazon tests and optimizes its own prices. In the six months leading to last year’s Black Friday (the day after Thanksgiving), Amazon frequently changed the price of a 32-inch Samsung LED TV, seeking to determine the best price for the holiday season, Boomerang says. However, on related products, such as HDMI cables needed to connect TV sets to set-top boxes, Amazon kept the price steady before the holiday season, then raised the price in November, taking advantage of the opportunity to raise profit margins on a product a consumer is likely to buy when he buys a new TV.