posted July 13, 2009 8:05 AM PDT

Fuck you Amazon

I'm sure that a lot of you guys buy stuff from Amazon. Hell, I do. Because they've usually got the lowest prices, right? Well, we sell a 3rd party product on our site that Amazon also sells. I won't get into details, because I don't want this popping up on Google searches. What's important is that it cost us $120/unit to purchase 200 of them a little bit over a year ago.

We signed a MAP (minimum advertised price) Agreement with the manufacturer, saying that we wouldn't list the product for less than $169.99. In return, they would link to our site as a preferred retailer on their website and also try to control the prices elsewhere in the retail stream so that it's not a big risk. Now, a MAP agreement doesn't mean that we can't sell the product for less... it just means that if we do, we can't list that price on our site, and we won't get the link from them. For a smaller online retailer like us, the linking is actually more important than the profits derived from the sale of the device, because it drives traffic to our site and exposes our own products (that we net more profit from) to a new audience. So we followed the MAP agreement for some time. In return, we got linked, and prices of the device at other sellers were the same.

And then Amazon basically said "Fuck this MAP agreement" and started to list the product in Google Product Base for $15-$20 under MAP. So when you would do a product search on Google, they would always come up as the lowest price. When you would go to Amazon's site, the price wasn't listed on their page, which is how they got away with it. You had to add it to the cart to see the price.

Needless to say, both our sales and traffic originating from the manufacturer's site completely dropped. This all happened a few months after we purchased 200 units. Prior to that purchase, we had been selling them pretty regularly. At least one a day. After Amazon started to undercut everybody, we barely sold any. So after arguing our way out of the MAP agreement with the manufacturer, we started to match Amazon's pricing, just so we could unload this stock. Do the math: 200 x $120 = $24000. Not a fun number if it looks like you'll be sitting on that inventory for a while.

We went back and forth with Amazon until we finally settled on $139 for the past few months. We're down to about 40 units in stock... Not bad. So what do I see today?

Amazon is selling the product for $126 with free shipping.

We also offer free shipping, however the shipping cost can be anywhere from $6-$12, plus another dollar or two for materials. The lowest we could feasibly sell the product for and not loose money is $133. They've got us backed into a corner. I just think it's fucked up that a company would be willing to take a loss on a product just to take a small competitor out. Amazon is basically the Walmart of the internet.

last updated July 13, 2009 11:38 AM PDT