Consumer

Amazon doesn't always offer the best deals: study

July 15, 2014 at 2:25 PM ET

It's a habit that many shoppers are guilty of.

When they want to buy something online for the cheapest price, they head directly to Amazon, not even bothering to extend their search to other sites.

But according to new research from Savings.com, more than 50 percent of the time consumers can find a better price elsewhere on the Web, resulting in $47.50 in savings, on average. The study compared prices on 1,500 best-selling Amazon products that cost more than $10 and are carried on other retailers' sites.

"[People] assume that Amazon has the best price, but it's just not always the case," said Seth Barnes, head of marketing at Savings.com.

The results highlight that traditional bricks-and-mortar stores are making headway in becoming more competitive on price, though it often comes at the expense of their margins.

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Best Buy has been particularly vocal about its need to be more aggressive in offering good prices, with the company's CEO Hubert Joly once calling it "table stakes."

"Our strategy is to be price competitive and that applies to the entire product lineup," Joly said on the company's most recent earnings call. "We'll continue in the next several quarters this year to make targeted investments, so that we can continue to align [our prices with competitors]."

But smaller mom-and-pop shops are also putting pressure on Amazon, particularly when they operate online-only and have lower overhead costs, Savings.com found. They also pose a larger threat when shoppers are looking for a specific item because they don't have to have the lowest prices across the board — just on a particular product.

The deal-finding site found savings tended to be highest in the photography and electronics categories. That's because these items typically cost more, meaning they have higher savings potential. On items that cost more than $100, the site was able to beat Amazon's prices more than 70 percent of the time, said Meghan Heffernan, communications director at Savings.com.

Amazon did not immediately respond to request for comment.

To highlight its findings, Savings.com on Tuesday is launching a new tool, called PriceJump, which compares Amazon's prices to about 5,000 other retailers on the Web. The company said the tool is designed to make it easier for shoppers to figure out whether the best deal is, in fact, on Amazon. It calls the process "Amazon Rooming" — a play off the industry term "showrooming," which describes shoppers' penchant for visiting a store to touch and test a product, but then buying it online at a lower price.

Despite Savings.com's findings, there's no doubt that Amazon continues to steal share from its competitors. Earlier this month, STORES Magazine and Kantar Retail reported that Amazon broke into the top 10 largest U.S. retail companies in 2013, raking in nearly $44 billion in domestic sales and becoming the first online-only retailer to crack the list.

According to comScore, Amazon had 248 million U.S. search queries in May, compared with 83 million on Google Shopping in the same month.

Other comparison research has made similar observations regarding pricing.

"We've seen Amazon's price competitiveness erode in several categories over the past year, notably electronics and sports and toys, relative to Best Buy, Target, Walmart, and Sears in particular," said Jennifer Markey, vice president of marketing for 360pi, an Ottawa-based retail price intelligence company, in an email.

Markey also noted that greater price transparency has led to products being priced within a much narrower range.

But sometimes for shoppers other factors matter more than price. Eric VanBeek, product manager at Savings.com, said the convenience of shopping on Amazon will likely cause shoppers to continue making purchases on the site, even if the same item is being sold for slightly less on another retailer's page.

Shipping costs, which are often a sticking point for shoppers, will also play a role, particularly among Amazon Prime members, who receive free two-day shipping on millions of products.

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