Group & Industry News

A pricing comparison carried out by OPSoftware’s Rick Marlette suggests that it may be cheaper for local governments to purchase supplies from an independent dealer rather than Amazon Business.

Marlette was asked to conduct the price comparison by the Institute for Local Self Reliance (ILSR) as part of the organisation’s report on Amazon Business’s US Communities contract which was published yesterday.

His research looked at the costs for 57 items purchased by a California county schools district from an independent dealer over a two-week period in January 2018. He then calculated how much it would have cost the district if it had bought the same items from Amazon Business, both direct from Amazon via its Business Prime offering and from its Marketplace resellers.

The findings show that the independent dealer provided the lowest overall price for the 57 items purchased by the schools district: $1,205. For Amazon Business Marketplace, the total price was $1,282, or 6% higher, while for Amazon Business Prime, it was $1,328, or 10% higher.

Interestingly, while the overall basket of products was cheaper via the dealer, it was Amazon that offered the lowest price on the most number of SKUs – 32 out of 57 – indicating that the dealer was more competitive on items that the schools district purchased more frequently.

The analysis also found the dealer provided superior shipping terms, with next-day delivery, rather than the two-day delivery on Amazon Business Prime items and up to two weeks for Amazon Business Marketplace items.

“While [these findings] may be counter to the common assumption, it’s not actually that surprising when you consider that independent office supply dealers are buying in significant volume, often via group purchasing cooperatives, and many have achieved significant efficiencies through years of operations,” wrote Marlette in his conclusion.

He added: “Amazon’s pricing is dynamic and can vary day by day. This comparison was a snapshot taken at a single point in time. In theory, a purchaser could spend days and days on Amazon Business checking every item, waiting for a lower price, while weighing delivery times against the needs of their organisation. There is, of course, a significant cost to doing this.

“Do most independent office supply dealers generally beat Amazon Business pricing? While the dealer in this study is typical of similar dealers around the country, it’s not possible to say for sure. However, one thing should be crystal clear: the claim that Amazon Business has the lowest overall price is false, and any assertion to the contrary is not based on fact.”