Ready to Talk? Click here





Entrepreneurs and Business BLOG

Why Amazon’s “Make an Offer” button is a mistake

Bargain hunters and hagglers gathered this week to rejoice in the birth of the Amazon “Make an Offer” button, which from now on will enable customers to negotiate prices on an initial 150,000 one-of-a-kind items before rolling out more widely to “hundreds of thousands” of goods in 2015. Someone ring the bell as eBay and Amazon roll their sleeves up for another round in their never-ending fight to the death.

But while the giants battle it out, I can’t help thinking that Amazon has been blinded by the rivalry (although it insists the idea was launched in response to requests from its sellers) and is heading down the slippery slope to disaster should – as it appears – it take the button to the masses.

Here are a few thoughts to consider:

Bric-a-brac is a difficult image to shake

Ten years ago, my parents had a very successful eBay shop selling antique books and porcelain. And while eBay has evolved significantly since it began in 1995 – 79 per cent of items listed on eBay are now sold at a fixed price, while 80 per cent are brand new – I still remember the vintage copies of Jane Eyre and would go straight to eBay if I wanted one.

Despite eBay’s best efforts and investments – launching a new logo and several website features – the company would be the first to admit that its efforts to shake its past life and assure both brands and consumers of the quality of its marketplace hasn’t been the easiest task. So why would Amazon want users to question the fairness of its sellers’ prices? Surely that would be regression?

Consumers are being encouraged to haggle with Amazon's new button - but is it a good idea?

Consumers are being encouraged to haggle with Amazon’s new button – but is it a good idea?

Discounting creates more problems than it solves

The recession hit Britain hard and both families and retailers alike struggled to make ends meet, meaning discount stores flourished and prices were dramatically slashed across the high street.  But while as a nation we’re slowly making our way out of the red, recession habits continue to persist and retailers are giving in to penny-pinching demands.

You need look no further than the madness that unfurled on Black Friday to know that retailers are playing a “dangerous game in spoon-feeding their customers an addictive diet of discounts” and undervaluing their products. Or indeed this weekend to see the damage forcing low prices on small businesses can cause when Amazon sellers saw their goods snapped up at a mere penny due to a technical glitch. There are very few brands that seem to command customer loyalty nowadays, so businesses can only hope that a competitor hasn’t undercut them.

For high-ticket items – say original artwork, housing or memorabilia – being able to negotiate the price reassures the buyer that they’re getting value for their money. But expand that to mass-produced goods, and you can watch your margins disappear into oblivion.

Another high street bites the dust

Not only would Amazon be taking away its own sellers’ margins by enabling people to haggle – it would also be pitting them against the already flailing high street. And with fewer overheads, as well as a generation of digital natives flocking online for their shopping as it is, the high street would take yet another hit.

Maybe I’m exaggerating – the high street has, after all, survived thus far… but then again, how many independent stores can you think of near you?

I’d be lying if I said I don’t use Amazon – having the weird, wacky and wonderful conveniently available at the click of a button is something I enjoy as much as the next person. Nor am I saying that the “Make an Offer” button doesn’t have its place in the market, because how can you possibly put a price on a painting by Monet or an original lightsaber? But, as the saying goes, with great power comes great responsibility. Amazon needs to wield its influence carefully and think about just how ‘wide’ it rolls this service out, because if we start bartering on one of the largest internet marketplaces in the world, we risk ending commercialism as we know it.

Leave a Reply

Back to Entrepreneurs & Business