How Amazon beats competitors with - Simon-Kucher & Partners
How Amazon beats competitors with - Simon-Kucher & Partners
How Amazon beats competitors with - Simon-Kucher & Partners
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Outdated assumption 4: After all, that’s what <strong>Amazon</strong> does(isn’t it?)We already know <strong>Amazon</strong> acts like a grocery store, but we do not know whichone. Is it more like Asda or Tesco (or even Waitrose)?The default assumption would be Asda given <strong>Amazon</strong>’s promise to “offerconsistently low prices on [its] entire catalogue.” 3 That assumption would onlybe partly correct.<strong>Simon</strong>-<strong>Kucher</strong> compared the prices of the top 100 <strong>Amazon</strong> bestsellers againstthe same titles sold online at seven other leading UK bookstores, includingAbe Books, Blackwell’s, Book Depository, and W.H. Smith.<strong>Amazon</strong> has the lowest price on best sellers ...... but not necessarily on less visible booksThe CasualVacancyJ.K. RowlingRank 7MSRP 20.00Price at <strong>Amazon</strong> 9.00Lowest alt. price 9.99Thinking,Fast and SlowDaniel KahnemanRank 53MSRP 8.99Price at <strong>Amazon</strong> 6.02Lowest alt. price 3.46Fifty Shadesof GreyE.L. JamesRank 19MSRP 7.99Price at <strong>Amazon</strong> 2.99Lowest alt. price 3.19Entwined<strong>with</strong> YouSilvia DayRank 76MSRP 7.99Price at <strong>Amazon</strong> 7.19Lowest alt. price 5.99Source: <strong>Simon</strong>-<strong>Kucher</strong> analysis; prices for <strong>Amazon</strong> and competors retrieved on October 30, 2012For titles in the top 20 <strong>Amazon</strong> is on average 6% less expensive than all other<strong>competitors</strong>. On the flip side, <strong>Amazon</strong> charges an average premium of 13%on books in its top 21-50 and 15% on books in its top 51-100 compared tothe competitor <strong>with</strong> the lowest price.<strong>Amazon</strong> still offers its customers competitive prices. But it is strategic aboutwhere it needs to be the absolute lowest price and where a ‘low’ price is sufficient.Missing puzzle piece: While other book sellers are sticking to the high-streetfashion model, <strong>Amazon</strong> is beating them <strong>with</strong> tactics from Tesco.3From <strong>Amazon</strong>’s website<strong>Simon</strong>-<strong>Kucher</strong> & <strong>Partners</strong> | <strong>How</strong> <strong>Amazon</strong> <strong>beats</strong> <strong>competitors</strong> <strong>with</strong> ‘Tesco’ tactics | December 2012 3
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