An online shopper from Rhode Island, A. Cemal Ekin , Ph.D., has filed a class action lawsuit against Amazon over its Prime Shipping program. Ekin paid $79 for Amazon Prime annual membership in order to receive free shipping on Prime-eligible goods, but alleges that Amazon induces sellers who participate in its Fulfillment by Amazon (FBA) program to mark up prices of Prime-eligible items to include shipping charges.
According to the lawsuit, “Dr. Ekin and other Prime Program Members were harmed and deceived by Amazon’s activity because they paid the $79 annual Prime Program membership fee solely for the benefit of free shipping. However, the prices of FBA items offered to them as Prime Program Members were routinely inflated to include shipping charges.”
“The routine inclusion and encouragement of inclusion of shipping charges in the prices of FBA Prime – Eligible items constitutes a breach of Amazon’s promise to Prime Program Members that shipping charges would not be included in the prices of items offered for sale as FBA Prime – Eligible, and violates Amazon’s agreement that shipping would be “free.” As a direct result of Amazon’s breach, Plaintiff and the Class members were harmed by Amazon’s conduct, and Amazon was unjustly benefited at the expense and to the detriment of Plaintiff and the Class members.”
Unless you’re an Amazon seller, you might be confused about the claims in the lawsuit. In fact, some FBA merchants do employ a pricing strategy to raise prices of their FBA-fulfilled products to factor in shipping. Chris Green, cofounder of ScanPower.com, explained the strategy in this blog post on SellYourBooksOnline.com.
Green told EcommerceBytes that since items sold through FBA are eligible for Free Super Saver Shipping and Amazon Prime – and since merchants don’t have to pay shipping costs – some FBA sellers choose to raise their prices to match their competitor’s total price (price plus shipping). If a non-FBA seller lists a book for $10 with $3.99 shipping, an FBA seller may choose list the same title for $13.99.
Since Amazon sorts items by price plus shipping, there’s no penalty for raising that title to $13.99 in terms of search exposure, and in fact, Green says in his blog post, “the FBA seller will show first because FBA is the tie breaker.”
Green said not all sellers employ this strategy. He told EcommerceBytes he could see how it could cause some consumer confusion when an item has high priced FBA offers, low priced merchant fulfilled offers, and they view the offers sorted by FBA/Prime offers only. “That could potentially cause a buyer who is unfamiliar with Amazon shipping programs and FBA to think that Amazon is pushing or faving higher priced offers and even give the impression (while false) that Amazon is trying to increase prices.”
“Some buyers are willing to pay a premium for FBA shipping speed but some buyers are not,” he said.
Comment on the EcommerceBytes Blog.
