How Amazon raised prices to profit from the pandemic

by Alex Harman

Part 2 - Introduction

As the coronavirus COVID-19 pandemic took hold in the United States in late February / early March 2020, reports of product shortages, hoarding, and massive price increases soon arose. And once the pandemic response moved from emergency declarations to stay-at-home orders, the public increasingly turned to online shopping and delivery.

Amazon, which is by far the biggest online seller in the world, experienced a dramatic increase in revenue. But prices also spiked on Amazon, leading to accusations of price gouging on its online marketplace. Amazon responded by blaming the skyrocketing prices on unscrupulous third-parties that sell on its website. By taking a public stance against price gouging, Amazon portrayed itself as an unwitting victim.

Amazon claimed that it took several steps to curb price gouging. These steps included cooperating with law enforcement to identify third-party sellers engaged in price gouging, shutting down accounts of those suspected of price gouging, and ultimately calling for price gouging legislation.

But we have uncovered a pattern of significant price increases on essential products sold directly by Amazon, as well as price gouging by third-party sellers.

This report details 15 essential products that have been sold by Amazon during that COVID-19 pandemic with markups over the recent price on Amazon.com or other national retailers ranging from 76% to more than 1,000%, and 10 products sold on Amazon by third-party sellers during the same period with markups ranging from 225% to 941%. Notably, some state price gouging laws prohibit price increases of as little as 10%.

To address this problem, we make several recommendations including passage of a federal price gouging law as well as price transparency practices that Amazon should implement.

Amazon is trying to have the best of both worlds by enabling third-party sellers to exploit the crisis (and benefiting from facilitating those sales), but also seeking to immunize itself from responsibility for directly engaging in price gouging by shifting the focus on to the unscrupulous actions of third-party sellers, not only in the eye of the public but also in the eye of the law.

Source, links, references:

https://www.citizen.org/article/prime-gouging/

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