Amazon is changing tactics this holiday season.
While the retail giant previously only provided discounts on merchandise it sold directly to consumers, it is now cutting prices on third-party merchandise and will be covering the cost difference itself to ensure sellers still get full price, Reuters reports.
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Amazon has been lowering prices by as much as 9% over the last few weeks, which is positive for consumers but could put a strain on Amazon’s relationship with brands, manufacturers and merchants, the Wall Street Journal reports.
Third-party sales have become a bigger part of Amazon’s offering in the last few years and are expected to account for an estimated 70% of the $340.7B worth of merchandise that was purchased on Amazon in 2017, the WSJ reports.
The discounts could lead to a higher volume of sales for the seller, but it could also lead to inventory being exhausted faster than anticipated. The lower prices may additionally put third-party sellers in an awkward position with other brands if they have agreements to keep certain products within a price range.
By providing the merchandise at a discount, Amazon could be inadvertently violating these terms, Reuters reports.
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