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Walmart vs. Amazon Price War. Customers Win.

Written by Gary North on November 14, 2014

A fundamental rule of free market pricing is this: “Customers compete against customers. Retailers compete against retailers.”

The latest example is Walmart and Amazon. Walmart headquarters has just sent down a memo. Stores are allowed to match prices on Amazon.

Critics of the free market call this “cut-throat competition” I’m all for it. When retailers adopt cut-throat competition, customers win.

This is also called a price war. I’m all for it. Customers win.

This “slashes profit margins to the bone.” I’m all for it. Customers win.

The free market is a system that favors customers, not business. It is a system of customer authority, not business authority. Why is this? Because money is the most marketable commodity, as Austrian School economists have said since the days of Carl Menger (1890’s). Who owns money? Customers. Who wants to get their hands on this money? Retailers. So, businessmen are forced to compete. They are forced to compete, not with customers — with other retailers.

Critics of the free market describe this as a system where sellers exploit customers. It isn’t. It also isn’t a system in which customers exploit sellers. Sellers compete against sellers. Customers compete against customers.

To participate in this great competition, be aware of what you want to buy. See what it is sold for by Amazon. If it is not cheaper at Walmart, provide a print-out of the Amazon page for the customer service person.

Better news: Walmart managers are also allowed to match the prices of other retailers.

Your time is valuable. Not every item is worth this much trouble. But some may be. Be prepared. Print out that offer. It’s money. Walmart money.

Continue Reading on www.forbes.com

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