Amazon: Price gouging complaints arise amid coronavirus pandemic

Julie Cazaux

Marketing Director, Jellyfish

As the coronavirus pandemic continues to spread, people are stocking up on food, hand sanitizer, toilet paper, and other supplies. As most people know, these products, which are not only increasingly hard to find but also considered “essential goods” in the current times that we are going through, can also be found for sale online on Amazon as well as other ecommerce retailers.

However, Amazon is subject to scrutiny for the way its users have been turning its marketplaces into a price gouging playground.

What is price gouging?

For those who aren’t familiar with price gouging, it’s a term for a seller pricing items much higher than is considered reasonable or fair. It can also refer either to prices obtained by practices inconsistent within a competitive free market, or to windfall profits.

Basically, price gouging is a violation Amazon’s Fair Pricing Policy (FPP).

How to avoid price gouging on Amazon?

Sellers are responsible for setting their own prices on Amazon marketplaces. Amazon regularly monitors the prices of items sold on its platform, including shipping costs, and compares them with other prices available to customers. Remember that Amazon’s ultimate goal is to satisfy customers with the largest selection at the lowest price and the fastest delivery.

If Amazon sees pricing practices that harm customer trust, it can remove the Buy Box, the offer, suspend the shipping option, or, in serious or repeated cases, suspend or terminate a Seller’s account.

Amazon states that pricing practices that harm customer trust include, but are not limited to:

  • Setting a reference price on a product or service that misleads customers.
  • Setting a price on a product or service that is significantly higher than recent prices offered on or off Amazon.
  • Selling multiple units of a product for more per unit than that of a single unit of the same product.
  • Setting a shipping fee on a product that is excessive. Amazon considers current public carrier rates, reasonable handling charges, as well as buyer perception when determining whether a shipping price violated its fair pricing policy.

Which items are overpriced on Amazon?

Over the last month and a half, nearly 3,900 merchants on Amazon have had their accounts suspended for what the ecommerce platform called “seeking to profit off the COVID-19 crisis” in a recent statement on its Sellers Central forum.

Also, more than over half a million offers have been taken off for violating Amazon’s fair pricing policies, the retailer said.

“Amazon strictly prohibits Sellers from exploiting an emergency by charging excessively high prices on products and shipping,” the company said in a blog post. “We have deployed a dedicated team that’s working continuously to identify and investigate unfairly priced products that are now in high demand, such as protective masks and hand sanitizer,”

the company added

Face masks were being sold for as much as five times their usual average price, while one merchant was forced to donate over 17,000 bottles of hand sanitizer after being banned by Amazon for selling each bottle between $8 and $70, according to the NYT.

Other examples include a digital thermometer, which was sold for $27 but had an average price of $17.99 over the previous 180 days. Some N95 masks were sold for $239, or $3.98 per mask, compared with a normal price of $1 per mask. Toilet paper was sold for $98 a box, nearly three times its normal price.

What’s Amazon’s response ?

The message is clear: Amazon’s reaction to Sellers and items violating its FPP policy has been strong as the ecommerce giant vows to continue vetting its marketplaces. Overpriced items will be removed and the owner’s account will be suspended.

Amazon will also keep an eye out on its marketplaces for the use of false advertising over the effectiveness of items that claim to cure or defend against coronavirus (COVID-19).

“Amazon has always required sellers to provide accurate information on product detail pages and we remove those that violate our policies,” a spokesperson for the company said in a statement.

Amazon is also no longer accepting applications to sell products considered “essential goods” such as face masks, gloves and hand sanitizer. The company has made its Sellers aware of the new policy by sending the message below:

“You are receiving this message because you are currently selling, or have previously sold, products such as disposable face masks, hand sanitizers, disinfecting wipes/sprays, isopropyl alcohol, or related products. We have implemented more stringent requirements to sell these products in our store, and as a result, your offers have been removed. We are not accepting applications to sell these products at this time.”

Three tips to avoid account suspension

In a bid to avoid being sucked into Amazon’s crackdown, here’s a list of advice for Vendors and Sellers:

  1. Even if the chances of getting your account suspended by Amazon are low and only for extreme reasons, we recommend you think about the long term and to ask yourself if it’s worth risking your entire business to gouge the price of your product. Play within the rules of Amazon to keep your business thriving, even during these tough times.
  2. Set realistic minimum and maximum prices (floor and ceiling prices) to avoid price gouging on Amazon, there are multiple price tracker options available online to view the history of product pages.
  3. If you’re selling medical supplies and cleaning products that could be related to COVID-19, spend time coming up with the right maximum prices, just as you would with your minimum prices. Minimum prices will protect your profit margins and maximum prices will protect you from accusations of price gouging and possible Amazon account suspension.