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Amazon effect study: Cavallo explains how retail pricing has changed



Jeff Bezos AmazonTed S. Warren/AP Images

  • As Amazon has led the online retail revolution, the
    manner in which companies price their goods has been
    permanently changed.
  • A new study from Harvard Business School assesses the
    impact of these changes on consumers, as well as the Federal
    Reserve, which watches prices closely when making monetary
    policy decisions.

Over time, it’s become a widely accepted fact that Amazon has pushed retail prices

The company’s offerings are so diverse that they can afford to
sell many products at razor-thin margins, then make up for it in
other, less competitive areas.

In the process, Amazon forces other retailers to
lower their prices, putting pressure on
their bottom lines. And, in many cases, it’s forced these
competitors to permanently alter their pricing strategies.

But it doesn’t end there. A new study from Harvard Business
argues that the so-called “Amazon effect” has
increased both the frequency and
magnitude of retail price fluctuations. …


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