Amazon.com, Inc. (NASDAQ:AMZN)’s pricing strategy has always been aggressive and this was recently shown in a documentary on the company’s growth by CNBC during the last weekend.
Bob Kohn, the founder of eMusic.com was on CNBC and he discussed about Amazon.com, Inc. (NASDAQ:AMZN)’s pricing model and how it impacted the other market as a whole. He not just spoke about the book industry but about most of the products that Amazon.com, Inc. (NASDAQ:AMZN) sells currently. He was speaking about the documentary and he looked concerned about the problem that markets might face due to the aggressive pricing strategy of Amazon.com, Inc. (NASDAQ:AMZN).
“I think what’s happening with Amazon is that they’re taking advantage and trying to break some rules in order to win this ‘win or take all’ game.” Kohn Said
According to Kohn, the predatory pricing strategy was a major issue and its definitely something to be looked into. He also explained how Amazon.com, Inc. (NASDAQ:AMZN) purchases a book for $13 and sells it for $9.99. So this is $3 below market cost and and if a company gets above 90% of the market share and still sells below marginal price, Kohn thinks that it is predatory pricing under the US Supreme Court case.
However a consumer would not usually complain about the lower prices and Kohn said that though the consumers don’t complain, they would need more books and they won’t be able to get quality content without paying the minimal price to keep the market healthy. He also said that Amazon.com, Inc. (NASDAQ:AMZN) is treating other industry in the same way as it does to the book publishing industry. The eCommerce giant has the monopsony to reduce the prices and Amazon.com, Inc. (NASDAQ:AMZN) can reduce the price to as low as zero by just throwing it into Amazon Prime without paying anybody for those digital goods.
Kohn said that the Copyright Act would help the authors; producers of content give what they are due and compensate them properly. He also feels that the model Amazon.com, Inc. (NASDAQ:AMZN) is running on currently won’t work for the company as well as the consumers over a long time.
Disclosure: None
