, Inc. (AMZN) Rising Over Bed Bath & Beyond

0, Inc. (AMZN) Rising Over Bed Bath & Beyond
By Szk7788 (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is finding it hard to maintain its market share against rival, Inc. (NASDAQ:AMZN), despite the low price advantage.  According to analysts David Gober, Scott Devitt and Pamela Kaufman from Morgan Stanley, Amazon’s prices are more than Bed Bath & Beyond Inc. (NASDAQ:BBBY) by 0.4 percent, compared to March pricing where they were at a discount of 5.2 percent. Analysts believe that buyers are showing confidence in the pricing offered on, Inc. (NASDAQ:AMZN), and the retailer also is making efforts to enrich the buying experience., Inc. (AMZN) Rising Over Bed Bath & Beyond

Analysts expect a further decline in Bed Bath & Beyond’s profitability in the coming time as the company depends much upon coupons and lower margin products to increase traffic.

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BBBY has an edge in pricing over Amazon

In the survey, analysts noted that Bed Bath & Beyond Inc. (NASDAQ:BBBY) is more price competitive compared to Amazon, citing that 37 percent of the items at BBBY are cheaper compared to 28 percent in the last survey. At, Inc. (NASDAQ:AMZN), 32 percent of the items are cheaper compared to 42 percent in March survey. However, after taking shipping into consideration, Amazon is more competitive.

 On comparing the prices of the items taken in the survey in March, as well as in August, prices for products on Amazon surged 1.5 percent and shipping charges by 52 percent, which comes to a total price increase of 2.7 percent.

How buyers perceive prices on Amazon

Around 69 percent of consumers who make a purchase from Amazon within housewares note pricing of the specific products as a key reason for purchase, as compared to 39 percent of such consumers in Bed Bath & Beyond. Another 41 percent see the overall pricing across the website compared to 27 percent of such consumers in Bed Bath & Beyond Inc. (NASDAQ:BBBY).

The analysts felt there were various reasons behind the price perception of, Inc. (NASDAQ:AMZN), like its overall price halo from competitive pricing across its site, sales tax differentials, and consumers ignoring coupons, as well as more aggressive pricing in SKU’s with higher velocity. Further, analysts feel that price is not the sole reason why consumers shop at Amazon. The key reason that drives the traffic is “Good website to make purchases online” followed by “Pricing of specific items I was looking to buy”. Amazon has left BBBY behind in three top reasons as to why people prefer Amazon.

BBBY need to be more aggressive

On the other hand, BBBY exceeds in “Selection of Merchandise” and “Quality of Merchandise.” However, Amazon is soon coming at level in these areas by increasing its SKU overlap with Bed Bath & Beyond Inc. (NASDAQ:BBBY), and “Quality of merchandise” was one among the reasons to persuade buyers to buy at Amazon year over year in an August 2013 survey.

 Consumers are increasingly growing positive about, Inc. (NASDAQ:AMZN) prices, and also the online retailer is trying to fill the gap quickly where Bed Bath & Beyond Inc. (NASDAQ:BBBY) has edge. Analysts note that at this stage BBBY should be more aggressive on prices and couponing in order to differentiate itself and defend its share. BBBY should convey its pricing advantage to consumers through aggressive marketing or a price matching program similar to Best Buy, Target, Walmart and others.

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