13 Reasons Why Amazon Is So Cheap (Complete Guide)
Amazon is one of the most respected companies in the world and a wildly popular place to shop online, with millions of products and retailers.
If you’ve ever shopped on Amazon, you’ve probably noticed the low prices and huge selection. But why is Amazon so cheap? Here’s what I found!
13 Reasons Why Amazon Is So Cheap
Amazon has the lowest prices on so many products because it’s such a huge company. Amazon can sell a lot of stuff for a lower price and still turn a profit. Additionally, Amazon has extensive tracking technology and data to ensure its prices are lower than those of other competitors in the digital marketplace.
If you’re curious about Amazon’s pricing and why you can get so much for a good deal, read on.
1. Brand awareness
It’s safe to say shoppers recognize Amazon. It overtook Apple and Google to become the most valuable global brand in 2019.
With brands worth more than $315 billion, Amazon has the upper hand when it comes to brand awareness and recognition.
Because so many shoppers know about Amazon, the company can charge less for its products, knowing people will come to shop anyway.
2. Extensive catalog
When it comes to brand awareness, Amazon is known for its huge variety of products.
No other retailer can match the array of goods and services that are centrally offered on Amazon.
With 12 million Amazon-branded products, plus millions more from third-party sellers, Amazon keeps prices low because sales are going to be high anyway.
They can drop prices on hundreds of items while raising prices on others, and most consumers won’t even notice because the catalog is so big.
3. Membership options
There are approximately 147 million Amazon Prime members in the U.S. and 200 million worldwide.
Prime members enjoy perks like free shipping, discounted prices, and exclusive digital services.
Thanks to a strong and loyal membership base, Amazon has been able to lower its fees on some products without losing money.
With millions of people ordering from Amazon every day, a slightly lower price won’t hurt the bottom line much, which isn’t always the case for smaller retailers.
4. Huge delivery network
Amazon’s fulfillment network continues to grow. There are 110 fulfillment centers in the US and 185 worldwide.
Over a million packages are shipped every day, so you can imagine how busy Amazon delivery drivers are.
Their lower prices make sense when you consider the demand for Amazon goods and services.
Amazon can reach shoppers almost anywhere in the country, offering many products that other retailers can’t deliver quickly.
Amazon has capitalized on this demand by charging less for products that people want because they know they’ll catch up on discounts quickly.
5. Daily discount
Who doesn’t love a promotion? Amazon has a lot of discounts, and the company is happy to sell items because it actually encourages people to buy more.
In the first quarter of 2021, Amazon recorded a staggering revenue of $837,330.25 per minute. That’s more than Apple, Alphabet, Microsoft, Facebook, Tesla or Netflix.
With such high revenues and dominance in the digital marketplace, Amazon can keep prices low and keep customers happy and engaged with discounted deals.
6. Detailed data
In terms of customer numbers, Amazon has the upper hand.
While many consumers prefer to shop in person at a store close to home, Amazon covers the entire country and provides a one-stop shopping solution for items you won’t find anywhere else.
Given the company’s popularity and easy shopping setup, Amazon can track analytics on millions of customers.
They know what people are buying and what they’re not buying, which allows them to lower prices accordingly to encourage more sales.
Simply put, Amazon makes it easier to sell items cheaper than its smaller rivals.
7. Convenience
Many people prefer Amazon because it’s easier. Instead of the hours it takes to pack up the kids, get in the car, drive to the store, and do the shopping, Amazon can do it in minutes.
Amazon keeps prices low because that’s a big part of its appeal. Consumers expect fast and affordable ordering from their mobile phone, tablet or computer.
8. Private label
Amazon Basics is Amazon’s private label of popular home and office supplies.
Amazon buys these products in bulk from manufacturers, then sells and packages them under the Amazon Basics brand.
Prices for private labels are competitive, allowing Amazon to generate handsome profits from the most popular products people search for.
Not all companies have the opportunity to run a thriving private label at as low a price as Amazon, so the tech giant is sure to take full advantage of it.
9. Internal technology
Yes, Amazon is a tech company, so the retail side will definitely benefit. Amazon keeps tabs on competitors and uses algorithmic pricing to offer customers the best prices.
Amazon’s innovative technology monitors competitive prices, inventory levels, profitability, and demand to rapidly adjust prices on millions of items.
Reprice around the clock to meet demand and stay ahead of the competition, allowing shoppers to stock up on essentials without breaking their budget.
10. Low cost operation
Another reason Amazon is so cheap is its efficient, low-cost operating model.
Yes, Amazon may have a lot of employees and pay $15 an hour, but overall, the company operates very effectively and efficiently.
The savings in operating costs are passed on to consumers through rock-bottom prices on some popular products. Amazon can sell for less because it operates at lower costs.
The company integrates automation into storage, selection, packaging and delivery, supporting low price and operating costs.
11. Trustworthy reputation
Amazon works hard to maintain a strong reputation, and its overall impact on communities and the economy means many customers are happy to shop on Amazon.
Think of it this way: if you had to choose between shopping on a platform you know and trust, like Amazon, or a new website with only a handful of products and long delivery times, what would you do?
Most people will choose the reputable, well-recognized options on Amazon. With strong consumer confidence, Amazon can charge rock-bottom prices for its items and continue to make money.
12. Third Party Market
There are more than 1.9 million small and medium sellers on the Amazon marketplace.
This third-party marketplace creates a highly competitive environment, which naturally drives down prices as sellers compete for customers.
For example, if there are ten companies selling friendship bracelets on Amazon, and all products appear to be of similar quality, most consumers will choose the one with the lowest price.
If Amazon sellers want to stay in the competition, their pricing must be competitive.
13. High volume
Amazon has a huge inventory with millions of products coming in and out every day.
This supports low prices because Amazon doesn’t have to worry about making a profit off 10 small items.
Amazon focuses on the big picture, and the same can be said for many smaller retailers.
At the end of the day, even though Amazon makes razor-thin margins on specific items, they still generate such high overall revenue that it strikes a balance.
Amazon offers greater flexibility at low prices due to the large number of products and sales.
If you want to learn more, you can check out our related posts on other stores for 13 reasons why Walmart is so cheap, 13 reasons why IKEA is so cheap, and 17 reasons why Aldi is so cheap.
in conclusion
There are many reasons why Amazon is one of the cheapest big box retailers in the world today. Amazon is uniquely positioned as a tech giant to gain incredible recognition.
Most consumers in the developed world have at least heard of Amazon, if not regularly shopping there.
Amazon uses low-cost operations and a large selection of millions of items to keep prices low and consumers happy. Competitive pricing beats the m
