The Supply Side: Amazon remains low-price leader online against competitors

Amazon continues to beat its major online competitors in the low-price game, according to a recent pricing study by Boston-based e-commerce analytics firm Profitero. Walmart may claim to be to the low-cost basket leader in brick-and-mortar, but Amazon wears that crown in e-commerce.

Analysts with Profitero surveyed prices across 12,500 products and 16 categories on Amazon, Walmart.com, Target.com and other retailers. Data was collected over 12 weeks ending Sept. 30, and daily prices were averaged over the three months.

Profitero found Amazon’s prices generally beat other retailers, making it the everyday online price leader versus Walmart, Target and Jet across all 16 categories including baby, beauty, electronics, grocery, pet supplies, sporting and outdoor, tools, home improvement, toys, games, health and wellness and pantry items.

The study focuses on prices of like products. There are other metrics such as membership and delivery fees, personalized promotions, marketplace incentives and subsidies for third-party sellers that continue to evolve and impact overall value prices. The study said retailers appear to have abandoned the item-by-item price competition that controlled the market in recent years.

Walmart’s prices were 4.1% higher than Amazon, while Target’s prices indexed 10.6% higher. Jet’s prices were higher at 11.3%. While Walmart was the closest to Amazon’s overall prices, the Bentonville retailer was competitive in the baby category, with prices just 0.2% above Amazon.

The study found Amazon had the biggest price gaps over Walmart.com, Target.com, and Jet.com in the home furniture, home storage and pantry categories. Walmart appeared to have the second-lowest prices over Target, Jet, Walgreens, Best Buy, CVS, Newegg, Staples, Instacart, Wayfair, Bed, Bath & Beyond, Petco, Dick’s Sporting Goods and GameStop in many categories.

Walmart is the nation’s largest grocery chain and has invested heavily in online pickup and delivery services in the U.S. Despite the push from Walmart to get more traction in online grocery, the retailer was not the second-lowest leader in this category. Kroger took that place. Walmart was not the third lowest, either.

Profitero found Kroger’s prices averaged 1.6% higher than Amazon during the 12 weeks. The study matched and compared 156 exact products between the two retailers. Jet came in third to Amazon on the lowest grocery prices, averaging 3.5% more expensive than Amazon on 133 exact products compared.

Walmart fell in the middle of the pack in the grocery category, despite the retailer’s efforts to keep prices low in recent quarters. The study found Walmart was 6.2% more expensive than Amazon on 172 exact product comparisons during the survey period. Instacart was fourth on the list with grocery prices averaging 10.7% higher than Amazon on 137 products compared in the period. Target was the most expensive over Amazon with the average prices of 153 products costing 11.6% more.

The pantry category, closely associated with grocery, also showed Amazon considerably less expensive than Walmart. Walmart had the third-least expensive pantry prices in the category averaging 8.5% higher than Amazon on 83 products compared. Target was less expensive than Walmart in the category with average prices 6.6% higher than Amazon on 121 products.

While Jet fared well in grocery, it was the most expensive in the pantry category, averaging 33% more costly than Amazon on 121 products compared. Walgreen’s also averaged 32.3% more expensive than Amazon on 235 pantry items compared during the period.

The study indicates Walmart is not the lowest cost retailer in other categories. In the pet category, Chewy is a leader averaging just 0.4% more expensive than Amazon on 182 products compared to Walmart, which averaged 1.3% more expensive than Amazon on 177 products evaluated. Target was 6.6% more expensive than Amazon, and specialty retailer Petco was 21.2% more expensive on 176 products evaluated.

Other areas where Walmart averaged higher than Amazon include beauty, a higher-margin category in which Target and Amazon have the lower overall prices. Target’s prices on 161 beauty products compared to Amazon were just 2.2% more expensive. Walmart’s beauty prices averaged 7.7% more costly than Amazon. The study compared 172 products sold at Amazon and Walmart to find the 7.7% price gap. Walgreens was 34.8% more costly on 183 products compared against Amazon and CVS was the most expensive at 52.3% higher on 130 products evaluated.

In the sporting goods and home improvement categories, Walmart is also in the middle of the pack with low prices. Jet fared better than Walmart on sports and outdoors products averaging 1.3% more costly than Amazon on 93 products compared to Walmart was 5.5% more expensive on 179 product evaluated. Target was 6.9% more pricey than Amazon on 173 products in this category. Dick’s Sporting Goods was the priciest of all the retailers in this specialty category at 22.9% higher than Amazon and 17.4% more costly than Walmart.

Tools and home improvement is also an area where Walmart does not compete closely with Amazon’s prices. Home Depot was the closest to Amazon’s prices at 5.8% higher on 180 products matched. Walmart’s prices were 7.7% more expensive in this category on 180 products evaluated. Target and Lowes averaged much higher at 16.3% and 17.4%, respectively, more costly than Amazon on the 100-plus products compared.

Categories where Walmart’s average prices compare close to Amazon include toys (1.7%), music CDs (0.5%), household supplies (3.5%), home furniture (3.6%) and electronics (2.8%). Walmart is the second closest in price to Amazon in each of these categories.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.