Amazon Price Gouging - How to Avoid a Seller Account Suspension
Updated: May 30, 2020
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How to avoid Amazon price gouging
Amazon price gouging has been a hot topic throughout the current Coronavirus pandemic, making headlines in all corners of the world. The latest suggestion is that over 6,000 Sellers have been kicked off Amazon, some indefinitely.
It’s an issue that Amazon, understandably, continues to give significant importance to for several reasons.
So what is price gouging, why are Amazon so keen to stop it, what happens if I am caught price gouging and how can you avoid doing it as an Amazon Seller? Thompson and Holt’s managing partner Craig Gedey breaks down all four key issues to analyse one of the most talked about practises in Amazon’s history.
What is price gouging?
Price gouging occurs when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock, such as the current coronavirus pandemic.
Price gouging is also covered in Amazon’s fair pricing policy, which states: “Amazon regularly monitors the prices of items on our marketplaces, including shipping costs, and compares them with other prices available to our customers. If we see pricing practices on a marketplace offer that harms customer trust, Amazon can remove the Buy Box, remove the offer, suspend the ship option, or, in serious or repeated cases, suspending or terminating selling privileges.”
Thompson and Holt’s Gedey adds: “What is considered as price gouging can vary, although a 10 percent rise in prices is seen as excessive in some areas. Once you start vastly inflating the price of a product - especially those in high demand - alarm bells will start ringing with Amazon.”
Why are Amazon so keen to stop price gouging?
“Amazon is, and always has been a hugely customer focused business,” Gedey explains.
“So rapidly inflating a product’s price, especially in times of a crisis, goes against everything they try and stand for. The coronavirus pandemic has caused significant disruption to business and daily life, which in turn has impacted on how we all shop and sell online. During these difficult times, Amazon is focusing on essential products and increasing its efforts to ensure the ethical pricing of them.
“It’s important to accept that price gouging isn’t just limited to the headline-grabbing coronavirus-related products like masks and other personal protective equipment. But it has brought the issue to the forefront of Amazon Sellers’ attention, and its lessons should be applied once the current situation ends.”
What happens if I am caught price gouging?
“For a start price gouging can be illegal in some places,” Gedey explains. “Charging too much for products, especially during a crisis, is illegal in over 30 states in America and many other countries have laws that prevent it. If found guilty of it in those areas, you can receive signifiant fines or in extreme cases even be jailed.
“Then specifically related to Amazon, there are several measures they can and will take if you are found to be price gouging. They are:
Removal of the Buy Box for the product
Removal of the product listing from sale.
Suspension of shipping privileges.
Suspension or termination of a seller’s account.
“Beyond that, price gouging can significantly damage a Seller’s reputation, impacting on future business sales, and you could get to a stage where you are ‘named and shame’ by local groups or media. While there might be short-term gain, this is a poor long-term practise.”
How can I avoid price gouging on Amazon?
“Put simply, don’t charge over the odds for your products. If you’re doing that during the time of a worldwide crisis it is unethical - taking advantage of what for many is a desperate a situation, to force people to pay more. And although it may be very tempting for short-term gains, long-term it won’t help your Amazon business both through customer loyalty and trust, and the potential of being suspended.
“It’s important to add at this stage that price gouging can actually happen accidentally, particularly if you are using repricing software, as many Amazon businesses do. That can allow you to stay competitive with rival sellers, but if you don’t set a reasonable maximum price, the repricer could continue to increase it beyond what is considered reasonable. That could land you in trouble - so it’s important that you set sensible maximum prices if you are using a repricer, and continue to monitor your products at all times.”
Have you been suspended for price gouging?
If you have found yourself with a price gouging suspension while selling on Amazon and want to get back selling in the quickest time possible, contact Thompson and Holt for a free Amazon suspension consultation either by email, LiveChat or WhatsApp +447818020777.