Back-to-school Price Wars: Amazon out-discounts Walmart and other top online retailers as inflation weighs heavy on consumers

August 3, 2021
Mike Black
Written By
Mike Black

So far, the big back-to-school storyline has been inflation and how much more families are paying for erasers, backpacks and binders, than ever before. 

But what’s hidden behind the Labor Department’s monthly-reported inflation numbers is just how hard inflation is hitting families when they shop online, which is increasingly the preferred option as long as COVID remains a threat. 

Every month, Profitero’s eCommerce Price Index tracks online prices for thousands of products sold on retailer eCommerce sites. Prices for office supplies and clothes (two of the biggest back-to-school categories) jumped a further .06 ppts and 1.2 ppts, respectively, between July and June, the start of back-to-school season. Compared to June 2020, online prices for office supplies and clothes are up 4.8% and 11.3%, respectively, as of July. 

Rising inflation doesn't mean that all retailers are passing costs along equally, however.

Profitero compared online prices across four retailers (Amazon, Walmart, Target and Best Buy). We found that Amazon was 10% cheaper on average across 2,300 top-rated products, spanning school supplies (notebooks, backpacks) school tech (tablets, laptops) and college gear (mini fridges, dorm room décor). 

Walmart's not far behind when it comes to college essentials, with only a 2% average price gap versus Amazon. But they are 6% more expensive overall when including school supplies and school tech. 

Target is the most expensive online retailer compared to Amazon, averaging 17% more expensive across all products studied and 27% more expensive on school office supplies, specifically. 

 

Analysis

For families, Amazon’s price aggressiveness is good news because it gives them more options to save money at a time when all costs are going up. But for competing retailers, it could spell bad news in the form of lower back-to-school sales. Especially if a COVID resurgence keeps shoppers away from stores, where Walmart, Target and Best Buy are most able to differentiate via same-day pickup convenience.

For brands, any kind of Amazon-instigated price war is certainly bad news because it can only mean squeezed profits across eCommerce channels that are already profit-challenged.

Methodology:

Each day, Profitero monitors prices and other data for millions of product pages on hundreds of unique retailer sites. For this study, Profitero analyzed daily online prices collected over a ~four-week period (June 22 to July 18, 2021) at Amazon, Walmart.com, Target.com and Bestbuy.com across approximately 2,300 top-rated products, representing back-to-school categories. Only identical in-stock items in the same pack configuration were compared. Prices for the same items were collected within 24 hours of each other to ensure validity of the comparisons.

 

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