December 10, 2014
Amazon invites customers to ‘make an offer’
Amazon wants to bring out the haggler in its customers. Yesterday, the company announced a new program called “Make an Offer" that allows customers to negotiate with sellers on more than 150,000 items sold in its marketplace.
Currently, the program covers items sold in sports and entertainment collectibles, collectible coins and fine arts. Next year, Amazon said the feature will be expanded to hundreds of thousands of items.
According to Amazon, sellers who want to give customers the ability to negotiate will enable the "Make an Offer" feature. When selecting a product, the customer can enter and submit a price to the seller. The seller will receive the customer’s offer via e-mail and decide to accept, reject or counter the offer. The two parties will continue to negotiate through e-mail until a deal is made or abandoned. Once an offer is accepted, the customer can enter the agreed upon price and compete their purchase.
Amazon has pointed out that it is not engaged in an auction. All items are negotiated on a one-to-one basis.
"In a recent survey of our sellers, nearly half of the respondents told us that the ability to negotiate prices with customers would be important to drive more sales on Amazon. ‘Make an Offer’ delivers that functionality and makes customers feel confident they are getting an item they want at the lowest price possible," said Peter Faricy, VP for Amazon Marketplace, in a statement.
"The negotiation experience will hopefully get more communication between us and our customers to help us better gauge the price for certain items," said Steven Costello, executive vice president of Steiner Sports Memorabilia. "We love the ‘Make and Offer’ program, and it is only going to get bigger. Once customers know this is an available feature more offers will come, leading to more sales."
While Amazon has created the program for sellers in its marketplace, there is no indication that it plans to offer the same feature on the products it sells directly to consumers.
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Recent Discussions
Discussion Questions
Will “Make an Offer” be a success for Amazon and participating sellers in its marketplace? Do you see negotiated prices becoming more commonplace on e-commerce sites going forward?
Poll
“Make an Offer” seems like a clever way to introduce the thrill of haggling often found in independent brick-and-mortar channels to online retail—and, as TechCrunch rightly notes, keep the negotiation within the Amazon marketplace platform.
I see the most potential for categories that are typically sold by independent dealers/merchants and have speculative value or relatively high resale value.
There are also third-party services like Greentoe that have brought a similar mechanism to big-ticket, new items like electronics and appliances.
I think they have potential but expect some merchants may pass unless the negotiation can be automated (a la Priceline).
This will likely be a BIG win for Amazon—especially relative to customer engagement. Although “haggling” may have some negative connotations such as to bargain in a petty, quibbling and often contentious manner, the idea of “make an offer” puts customers in the driver’s seat. Prior to 1865 there were no selling prices for goods, simply asking prices which then allowed customers to negotiate with merchants to make a purchase at a price they deemed fair. Welcome back to the 1800s and bravo to Amazon for putting customers first. I believe other e-commerce sites will follow. And remember, some restaurants have already paved the way.
This will be interesting to watch because Amazon doesn’t control the pricing, the actual seller on Marketplace does. If the majority of them try to drive hard bargains, then this likely won’t take off. And 150K items or eventually hundreds of thousands of SKUs is still not the majority of items sold on Marketplace.
If negotiated prices emerge as more mainstream, I believe it will take a while as this requires a change in consumer behavior here in the U.S. Not saying it can’t become more commonplace, but it’s a significant change from how consumers operate today so it will take time to learn. And it’s worth noting that eBay has been emphasizing more fixed-price sales over the last several years.
In and era when consumers want the lowest price and haggling has become the norm, it seems natural for Amazon to offer this option to its sellers. In a way, Amazon is doing a reverse eBay. eBay started with buyers bidding for an item, then went to a Buy it Now strategy.
The fact that Amazon will not make this feature available on its own sales is telling. It can sit on the sidelines and collect more fees from sellers without potentially sullying its reputation with consumers.
For the seemingly growing percentage of the shopping population that loves to haggle and negotiate prices, this new Amazon option will provide a platform to attract a new niche of shoppers to Amazon and online shopping in general. Personally, this seems like a lot of work for just a chance to get a good deal, as I loathe adding steps to the buying process.
How big this becomes will be dependent upon the breadth and quality of the merchandise that is presented for bidding as well as the ultimate deal the shopper receives through this process.
Not all auctions produce great deals on in-demand merchandise, but certainly “Make an Offer” is worth offering to shoppers, and Amazon will surely refine the process as it matures.
For the types of goods being offered, this seems like a great fit. These items are pretty unique and price setting can be very arbitrary. I see this as a real win.
Negotiating prices for other categories of items? Not so much, but maybe some. If there ever was a race to the bottom on pricing, I would say this is the starting gate.
… And that’s my two cents.
Negotiated pricing has a long and successful history in market economies. Wall Street and exchanges like the CBOT discover price/value daily. “Make an Offer” should open an important dialogue about pricing in retail. We assume manufacturing, with its fixed costs to recover and significant investment in assets, require stability in pricing. But as any commodity based organization knows, when pricing accurately reflects supply and demand, you learn to adapt. Case in point industries such as oil and energy, or meat and corn. Prices clear to move out surplus or reward production. So why not for consumer goods? In a legacy world, changing pricing meant physically changing shelf or product tags. In the online world, it is an instantaneous process, in real time. We have to step out of the box and re-imagine every aspect of retailing. This one could be a game changer.
Amazon’s “Make an Offer” price negotiation platform makes great sense for items that are one-of-a-kind or whose value is established by perception. I don’t see merchants preferring this option with manufactured or commodity products, however.
Going forward, this could also be a great mechanism for sellers and buyers of classic cars, boats, and collectibles who don’t want to engage in an online auction process.
I wonder if Amazon plans to use its data engine publish reference pricing as it accumulates more transaction history. “Items like this one recently sold for these prices….”
Given consumer desires for a “deal,” the make-an-offer capability will clearly drive a specific segment of consumers down the purchase path farther than they would have gone normally. That will result in a higher conversion rate.
For that reason I see more e-commerce sites offering such capability.
I LOVE this promotion! I am a haggler from way back, so my comments are purely from my personal perspective. When you look at art, collectibles, etc., prices tend to be driven by emotion in general, so I would think a merchant would rather sell an item for a reasonable price, rather than not selling it at all. I would love to see this expanded. Great program, Amazon!
No, NO, and NO!!! I completely agree with Dave, this is a return to antediluvian selling methods, but (apparently) unlike him, I don’t see this as a good thing.
My rant having been made, let me elaborate; for the types of items with which this is being initiated—custom items, small sellers—this might “work” (indeed, one can argue it’s always been in existence. If something didn’t sell, the seller lowered the price…implicit haggling). But if people think this is to be the rule with ALL products, or should be for all sellers (i.e. Walmart wants $69.95, but I’ll offer them $55) it will be an invitation to complaints and chaos.
In business, the deal that is good for all participants is nothing less than a total success. In the “make me an offer” plan we only see how crazy selling price can get instead of an opportunity to gain success for all parties. Amazon will need to hire more customer service associates for the overflow of bidding consumers that make offers whenever and for whatever they have interest in. so this plan will help with the creation of jobs even if it is for our overseas colleagues. Another area of concern is that in the membership of lower price bidders there is a significantly higher portion that may not be able to provide funding for their offers or that have a propensity for reneging on a deal they initiated. But as always, I will be happy to observe this effort and learn from any and all successes it may bring.
This will be a win for Amazon and its sellers, especially on speciality items and collectibles. Brings the thrill of the treasure hunt and haggling to Amazon, adding yet another element to their arsenal.
Feels like Priceline.com for me, with a bonus. You actually know what your are buying when your bid is accepted. Also allows customers to interact with the company. I think it’s a smart move.
Leave it to Amazon to come up with a new and creative way to stimulate sales. I can see this being a success especially with slow moving inventory.
“Make an offer” will have some success in limited product categories. In some areas of the world negotiation is in the culture, but not in America. Negotiations take time and in a society that has a poverty of time it is just not worth the effort. Amazon is wrong it is an auction, but it only has one buyer. Depending on the category, negotiated pricing will expand in e-commerce, but the majority of sales will be at fixed price. Consumers don’t have the time to compare prices, so they use software.
When this was announced, I was both surprised and excited about this for the following reasons:
1. This makes Amazon more competitive with eBay. eBay’s claim to fame was its initial auction function and now Amazon is getting a piece of the pie after it proved its dominance in “buy it now” ecommerce.
2. Prices already change often on all marketplaces due to dynamic pricing. This speeds up the process and gives the consumer a sense of agency in the pricing process.
3. Many online businesses already use “name your price” functions. It is most useful for products that don’t have an exact value. The 150,000 products on which this function debuts fit this mold: historical artifacts and art. This pricing strategy allows consumer demand to dictate price (with a suggested price as an anchor). I think the posted sale price will have a huge impact on the offers sellers receive, so sellers must put a lot of thought and research into what they initially present to shoppers.
Amazon is definitely a trend setter in ecommerce and based on the outcome of its “Make an Offer” function, that will determine whether or not it becomes commonplace.
Amazon doesn’t lose a thing providing this service, and haggling online isn’t new. The sellers will have to accept the offer, and still pay the fee, so why not. The wild wild west of retailing is now available at Amazon. I’m curious to see how well this goes, because a seller can only take so much of a beating before he destroys his bottom line.
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“Make an Offer” seems like a clever way to introduce the thrill of haggling often found in independent brick-and-mortar channels to online retail—and, as TechCrunch rightly notes, keep the negotiation within the Amazon marketplace platform.
I see the most potential for categories that are typically sold by independent dealers/merchants and have speculative value or relatively high resale value.
There are also third-party services like Greentoe that have brought a similar mechanism to big-ticket, new items like electronics and appliances.
I think they have potential but expect some merchants may pass unless the negotiation can be automated (a la Priceline).
This will likely be a BIG win for Amazon—especially relative to customer engagement. Although “haggling” may have some negative connotations such as to bargain in a petty, quibbling and often contentious manner, the idea of “make an offer” puts customers in the driver’s seat. Prior to 1865 there were no selling prices for goods, simply asking prices which then allowed customers to negotiate with merchants to make a purchase at a price they deemed fair. Welcome back to the 1800s and bravo to Amazon for putting customers first. I believe other e-commerce sites will follow. And remember, some restaurants have already paved the way.
This will be interesting to watch because Amazon doesn’t control the pricing, the actual seller on Marketplace does. If the majority of them try to drive hard bargains, then this likely won’t take off. And 150K items or eventually hundreds of thousands of SKUs is still not the majority of items sold on Marketplace.
If negotiated prices emerge as more mainstream, I believe it will take a while as this requires a change in consumer behavior here in the U.S. Not saying it can’t become more commonplace, but it’s a significant change from how consumers operate today so it will take time to learn. And it’s worth noting that eBay has been emphasizing more fixed-price sales over the last several years.
In and era when consumers want the lowest price and haggling has become the norm, it seems natural for Amazon to offer this option to its sellers. In a way, Amazon is doing a reverse eBay. eBay started with buyers bidding for an item, then went to a Buy it Now strategy.
The fact that Amazon will not make this feature available on its own sales is telling. It can sit on the sidelines and collect more fees from sellers without potentially sullying its reputation with consumers.
For the seemingly growing percentage of the shopping population that loves to haggle and negotiate prices, this new Amazon option will provide a platform to attract a new niche of shoppers to Amazon and online shopping in general. Personally, this seems like a lot of work for just a chance to get a good deal, as I loathe adding steps to the buying process.
How big this becomes will be dependent upon the breadth and quality of the merchandise that is presented for bidding as well as the ultimate deal the shopper receives through this process.
Not all auctions produce great deals on in-demand merchandise, but certainly “Make an Offer” is worth offering to shoppers, and Amazon will surely refine the process as it matures.
For the types of goods being offered, this seems like a great fit. These items are pretty unique and price setting can be very arbitrary. I see this as a real win.
Negotiating prices for other categories of items? Not so much, but maybe some. If there ever was a race to the bottom on pricing, I would say this is the starting gate.
… And that’s my two cents.
Negotiated pricing has a long and successful history in market economies. Wall Street and exchanges like the CBOT discover price/value daily. “Make an Offer” should open an important dialogue about pricing in retail. We assume manufacturing, with its fixed costs to recover and significant investment in assets, require stability in pricing. But as any commodity based organization knows, when pricing accurately reflects supply and demand, you learn to adapt. Case in point industries such as oil and energy, or meat and corn. Prices clear to move out surplus or reward production. So why not for consumer goods? In a legacy world, changing pricing meant physically changing shelf or product tags. In the online world, it is an instantaneous process, in real time. We have to step out of the box and re-imagine every aspect of retailing. This one could be a game changer.
Amazon’s “Make an Offer” price negotiation platform makes great sense for items that are one-of-a-kind or whose value is established by perception. I don’t see merchants preferring this option with manufactured or commodity products, however.
Going forward, this could also be a great mechanism for sellers and buyers of classic cars, boats, and collectibles who don’t want to engage in an online auction process.
I wonder if Amazon plans to use its data engine publish reference pricing as it accumulates more transaction history. “Items like this one recently sold for these prices….”
Given consumer desires for a “deal,” the make-an-offer capability will clearly drive a specific segment of consumers down the purchase path farther than they would have gone normally. That will result in a higher conversion rate.
For that reason I see more e-commerce sites offering such capability.
I LOVE this promotion! I am a haggler from way back, so my comments are purely from my personal perspective. When you look at art, collectibles, etc., prices tend to be driven by emotion in general, so I would think a merchant would rather sell an item for a reasonable price, rather than not selling it at all. I would love to see this expanded. Great program, Amazon!
No, NO, and NO!!! I completely agree with Dave, this is a return to antediluvian selling methods, but (apparently) unlike him, I don’t see this as a good thing.
My rant having been made, let me elaborate; for the types of items with which this is being initiated—custom items, small sellers—this might “work” (indeed, one can argue it’s always been in existence. If something didn’t sell, the seller lowered the price…implicit haggling). But if people think this is to be the rule with ALL products, or should be for all sellers (i.e. Walmart wants $69.95, but I’ll offer them $55) it will be an invitation to complaints and chaos.
In business, the deal that is good for all participants is nothing less than a total success. In the “make me an offer” plan we only see how crazy selling price can get instead of an opportunity to gain success for all parties. Amazon will need to hire more customer service associates for the overflow of bidding consumers that make offers whenever and for whatever they have interest in. so this plan will help with the creation of jobs even if it is for our overseas colleagues. Another area of concern is that in the membership of lower price bidders there is a significantly higher portion that may not be able to provide funding for their offers or that have a propensity for reneging on a deal they initiated. But as always, I will be happy to observe this effort and learn from any and all successes it may bring.
This will be a win for Amazon and its sellers, especially on speciality items and collectibles. Brings the thrill of the treasure hunt and haggling to Amazon, adding yet another element to their arsenal.
Feels like Priceline.com for me, with a bonus. You actually know what your are buying when your bid is accepted. Also allows customers to interact with the company. I think it’s a smart move.
Leave it to Amazon to come up with a new and creative way to stimulate sales. I can see this being a success especially with slow moving inventory.
“Make an offer” will have some success in limited product categories. In some areas of the world negotiation is in the culture, but not in America. Negotiations take time and in a society that has a poverty of time it is just not worth the effort. Amazon is wrong it is an auction, but it only has one buyer. Depending on the category, negotiated pricing will expand in e-commerce, but the majority of sales will be at fixed price. Consumers don’t have the time to compare prices, so they use software.
When this was announced, I was both surprised and excited about this for the following reasons:
1. This makes Amazon more competitive with eBay. eBay’s claim to fame was its initial auction function and now Amazon is getting a piece of the pie after it proved its dominance in “buy it now” ecommerce.
2. Prices already change often on all marketplaces due to dynamic pricing. This speeds up the process and gives the consumer a sense of agency in the pricing process.
3. Many online businesses already use “name your price” functions. It is most useful for products that don’t have an exact value. The 150,000 products on which this function debuts fit this mold: historical artifacts and art. This pricing strategy allows consumer demand to dictate price (with a suggested price as an anchor). I think the posted sale price will have a huge impact on the offers sellers receive, so sellers must put a lot of thought and research into what they initially present to shoppers.
Amazon is definitely a trend setter in ecommerce and based on the outcome of its “Make an Offer” function, that will determine whether or not it becomes commonplace.
Amazon doesn’t lose a thing providing this service, and haggling online isn’t new. The sellers will have to accept the offer, and still pay the fee, so why not. The wild wild west of retailing is now available at Amazon. I’m curious to see how well this goes, because a seller can only take so much of a beating before he destroys his bottom line.