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Amazon adds its own discounts to third-party seller products

"Discount provided by Amazon" arrives in time for holiday shoppers.

For the first time, Amazon is cutting the prices of third-party seller items at its own expense to be more competitive with other online sites, a move first spotted by the WSJ. Such items are labelled as "Discount provided by Amazon," marking a new policy that even many of the retailers aren't aware of. "I do not know if this is new or if I just never noticed it before," wrote reseller Rock Creek Gifts on Amazon's seller forum. The discounts are less than 10 percent, and appear to only be applied for sellers that use Amazon's fulfillment service.

Amazon rolled out the discounts just in time for the holidays in an apparent effort to be competitive with rivals like Wal-Mart on goods it doesn't directly sell itself. "This item is sold by a third-party seller. The discount is provided by Amazon," the offer states. "This is a limited time discount."

Sellers have noted that the discount does not impact what they are paid on products, so Amazon is eating the entire reduction itself. "We actually have a couple of products where Amazon is doing just that and it's great," notes one seller. "One example is a product price at $78.50 [discounted to $74.90]. We still get the full proceeds from $78.50 sale less the fees."

The resellers are puzzled, however, as to how Amazon is selecting products to discount, and some note that it's not necessarily a good thing. Many have arrangements with other resellers, including Wal-Mart, that require them to maintain price parity on products sold on Amazon and elsewhere. The deal might also anger big brands which try to exert tight control over pricing.

The majority of resellers seem thrilled with it, though, and it should be a boon to consumers seeking hard-to-find items that Amazon doesn't stock itself. Anyway, affected resellers with price-matching agreements can opt out of the discounts, Amazon told the WSJ. Either way, it's a canny move by the retailer -- given the same price, many consumers will usually opt for Amazon, given its generous return and shipping policies.