Can anyone explain Amazon's business model ??

[Mavic-Markie93]

I know this might be slightly off-topic but I was looking to buy batteries for my M2Z on Amazon and they have the lowest price at $119 w/Prime. Most of the other vendors have them at $139 w/Prime.

Why does Amazon even have 3rd-party vendors if they are going to undercut them all by a wide margin? What's the point?

And if the next lowest price is $139 --- shouldn't Amazon raise their price to $130 and still be the lowest price but yet make an extra $11 in profit per battery? This seems like the kind of question posed in your typical Business 101 class at the local community college.

Jeff Bezos is the world's richest gazillionaire right now so this quirky model works for him. I'm just trying to make sense of it !!

 

[laurens23]

could be that they (there 'quirky' model) expect to sell a lot more units at this significantly lower price:
for example, selling 100 batteries at 119 with a profit of 19 per battery is better than selling only 50 at 130 per battery.

could also be that the model is quirky, but paying someone to fix it will not be worth it, or it will impact other products. messing with these models is very very complex.

could be a special price deal/agreement/arrangement between DJI and Amazone.

could be a genuine mistake.

could be something else.

 

[Kilrah]

It's a common marketing trick to cut prices on an item just to get people to your shop, since once you're there you're very likely to then buy other, non-discounted stuff from them either at the same time or later after having recorded a good shopping experience.

Since you found the best price here for an m2 battery you're likely to then check Amazon first or at least earlier in the queue for future purchases.

The $20 marketing expense is likely to earn them much more than that in the long run.

 

[Mavic-Markie93]

It's a common marketing trick to cut prices on an item just to get people to your shop, since once you're there you're very likely to then buy other, non-discounted stuff from them either at the same time or later after having recorded a good shopping experience.

Ahhh yes, the ole "loss leader" marketing trick --- pretty much the reason Black Friday got started.

 

[Mavic-Markie93]

could be a special price deal/agreement/arrangement between DJI and Amazon

This could very well be the case.

I use to sell some new electronic items on Amazon between 2010 and 2016. During that time period, Amazon became increasingly aggressive toward beating prices on every vendor for a particular item. It got to the point where I would be making literally a few cents in profit on an item because Amazon was willing to go at or below wholesale cost. I basically had to give up on selling on Amazon by last year because of this nonsense.

 

[Eugenious99]

Guys looks a like you still believe in miracles and fairytales , DJI battery cost around 10$ , they selling it to dealers for 50$ , dealer sells for MSRP 139 $ Why Amazon cannot sell it for 119 $ ????? No profit or what ???

 

[swooshdave]

Guys looks a like you still believe in miracles and fairytales , DJI battery cost around 10$ , they selling it to dealers for 50$ , dealer sells for MSRP 139 $ Why Amazon cannot sell it for 119 $ ????? No profit or what ???

That's not the exact markups but people forget there are many steps in the supply chain.

 

[swooshdave]

I know this might be slightly off-topic but I was looking to buy batteries for my M2Z on Amazon and they have the lowest price at $119 w/Prime. Most of the other vendors have them at $139 w/Prime.

Why does Amazon even have 3rd-party vendors if they are going to undercut them all by a wide margin? What's the point?

And if the next lowest price is $139 --- shouldn't Amazon raise their price to $130 and still be the lowest price but yet make an extra $11 in profit per battery? This seems like the kind of question posed in your typical Business 101 class at the local community college.

Jeff Bezos is the world's richest gazillionaire right now so this quirky model works for him. I'm just trying to make sense of it !!

Make sure you post the links of the specific items are you talking about. Amazon is not just one entity selling product. They have both models, product sold BY Amazon, and product sold THROUGH Amazon. So what you are seeing may not be Amazon setting the prices, and even worse may be an unscrupulous dealer.

 

[SteelFlyer]

Amazon’s business model has always been about being the dominant seller of EVERYTHING. For years they didn’t even make money and today the still make most of their money from Amazon Web Services, not the retail business. They have always priced in order to develop a huge number of captive shoppers and put brick-and-mortar stores out of business. Once they do that, they will essentially be the only place where most people shop. This volume also gives them huge buying power with manufacturers. This is what Walmart has done for years. They get wholesale prices much better than anyone else so they can undercut everyone else’s price while still making decent profit. The lower prices drive more shoppers to them which increases their market share which allows them to negotiate even better wholesale prices. And so it continues.

 

[Thealien]

Bad business model? Bezos isn't hurting one bit!

 

[swooshdave]

Keep in mind that authorized resellers of some brands (DJI being one of them, I believe) agree to MAP (Minimum Advertised Prices) in which they agree to not advertise a price lower than what the manufacturer wants. So if you see everyone showing the same price for an item and all of a sudden you see a lower price they may not actually be an authorized reseller. If this matters to you. Buying from an unauthorized reseller may void your warranty. Just some things to think about.

 

[jwischka]

It's also worth noting that Amazon's most profitable divisions are AWS and advertising. People don't think of Amazon's cloud services, but they are basically the underlying "utility company" for a huge portion of the internet.

 

[Garritynet]

They're also the only one that currently has to charge state sales taxes. In Texas that adds another $9.82 so its really only about $10 cheaper which is right where you said you think it should be.

 

[mavicn00b]

Isn't the $119 the pre-price-jack RRP of the battery? Perhaps Amazon didn't get the memo? Some retailers here price-jacked even before DJI announced the price increases in anticipation while others have yet to increase prices weeks later..

 

[DanMan32]

It is also possible Amazon received a shipment that was ordered before the markup.
B&H lists $119 and coming soon.

 

[Mr. Salty]

Sometimes Amazon is out of stock and third-party sellers are your best option if it's an item you need right away. You also frequently don't pay sales tax with third-party sellers, which can help make up part of the difference.