A report from the Institute for Local Self-Reliance (ILSR) indicates that school districts are experiencing increased costs for basic supplies due to unpredictable dynamic pricing on Amazon. The report claims that these districts are paying, on average, 17 percent more when sourcing items through Amazon Business compared to traditional procurement methods with local suppliers, which typically involve competitive bidding. This pricing model does not guarantee fixed rates, leading to significant price fluctuations.
For example, an employee from the City of Boulder, Colorado, purchased a 12-pack of Sharpie markers for $8.99, while a nearby employee from Denver Public Schools paid $28.63 for the same product on the same day. Similar inconsistencies were noted for other common items such as Crayola markers and Kleenex tissues.
Amazon has responded to the ILSR’s findings, with spokesperson Jessica Martin stating that the report is flawed and misleading. She criticized the methodology of the pricing research, arguing that it lacks reliability and uses selective comparisons to draw conclusions.
Moreover, the ILSR report highlights a decline in competition among suppliers, noting a drop from 1,300 independent suppliers to 900 over the last decade. A comparison of prices for frequently purchased school supplies found that independent suppliers were able to provide lower prices than Amazon for 68 percent of the products examined.
In contrast, a separate study published by Profitero and reported by Amazon suggests that the company offers, on average, prices that are 14 percent lower than those of 23 other leading U.S. retailers. However, the advantages of negotiating prices with local independent suppliers, including bulk discounts, may not be reflected in this comparison, particularly when considering Amazon’s dynamic pricing model.
The discussion surrounding Amazon’s pricing practices continues, with implications for procurement strategies among local governments and schools.
Source: https://www.theverge.com/news/838491/amazon-dynamic-pricing-school-supplies-islr