Profitero Study: Amazon is low price leader with holiday sales

Amazon has established clear price separation from its major competitors – including Walmart – in many categories as the holiday season approaches, according to a report from Profitero.

The report found Amazon beat major competitors in 21 categories. That included Walmart, except for the beauty category, where the Bentonville-based retail giant tied Amazon prices. The study also found Chewy.com was the low price retailer in the pet category.

Profitero found Amazon’s average prices were 15% below other online retailers on identical items. Walmart tracked close to Amazon with an average price gap of 4% on identical items, an improvement over the 8% average price gap in last year’s report. Profitero said Amazon faces stiff competition from Walmart.com this year as the omnichannel retailer came in second to Amazon in 15 of the 21 categories.

“Walmart is among Amazon’s top price competitors for the holiday gifting categories,” the report stated.

Walmart was close to Amazon’s low prices in appliances, home furniture, and toys and games. Amazon was just 2% to 3% cheaper than Walmart in the categories. The price gaps widened in other key holiday categories like electronics and fashion as Walmart was 6% and 10% more expensive, respectively, than Amazon. In the popular video game category, Walmart prices were 14% higher than Amazon’s on like products.

Target opted to take Amazon on in the appliances and toys and games categories this year. Target was within 4% of the Amazon prices in appliances and within 3% in toys and games. Home Depot also took on Amazon in the appliances, home furniture, sports & outdoors and toy & games categories. Home Depot was 4% more expensive than Amazon on appliances and within 2% of Amazon prices in home furniture. Home Depot narrowed the price gap with Amazon in sports and toys to 3%.

Profitero also found Wayfair and Macy’s have opted not to try and compete with Amazon this holiday season. Wayfair prices on home furniture were 37% more expensive than Amazon, while tools and home improvement items were 50% more costly on Wayfair compared to Amazon.

Macy’s held its appliance prices higher than any of the other retailers at 34% more expensive than Amazon. Fashion was 13% more expensive and home furniture was 118% more expensive. Electronics giant Best Buy also didn’t compete well with Amazon this holiday season with a 13% price gap in the key holiday gift category.

Profitero cautions buyers to beware of promotional holiday discounts. Profitero analysts said there is plenty of noise about deals and discounts, but unless consumers know how to track online promotional prices against everyday prices at low-cost retailers the so-called discounts can be misleading. Getting 20% off a product that is priced 50% higher than at Amazon or Walmart is not a deal, the report stated.

Profitero said brands like Wayfair and Best Buy have opted to compete on service and personalization and not all retailers will want to play the pricing games with Amazon especially if they do not have the weapons.

“Amazon can subsidize low prices with its other businesses, such as advertising which grew 51% in the third quarter. Walmart has a footprint of 4,500+ stores as a bargaining chip to pressure vendors on pricing. Few specialty retailers can match these advantages,” analysts noted in the report.

Adding that in a COVID-19 world, retailers also differentiate themselves through the quality of the click and collect offerings. Target and Home Depot have been standout retailers in this respect during the pandemic, according to the report.