[londons_explore]

> isn't always a price point that is both low enough that people are willing to buy the cheaper returned item, but still high enough that it's profitable for Amazon to continuing stocking

I don't think this is how the prices on Amazon Warehouse are set... I suspect Amazon or Amazons third party sellers consider most warehouse sales to be a lost sale of the 'new' item. That means it's better to destroy the item than sell it at a discount greater than the production cost of a new item.

Thats why you rarely see discounts >30% in amazon warehouse, despite the fact any price over a few dollars probably pays for the storage and shipping costs.

Remember destroying items costs money - in many countries there is a tax on landfill, which for many items can work out about the same cost as shipping it to someone at amazons scale.

[crazygringo]

> Thats why you rarely see discounts >30% in amazon warehouse

I think it's more that, if an item is in genuinely resellable working condition, lots of people are willing to pay 70% for it, so there's no reason to go lower. Heck, stuff in excellent condition is usually around 90% the original price, because people will pay it.

The fact that Amazon permits third-party sellers to sell used items in the first place seems to be evidence that Amazon isn't worried about them cannibalizing sales of new items. And after all, Amazon knows buyers interested in used items might buy elsewhere anyways, so Amazon prefers to make that profit itself. That's why "Amazon Warehouse" exists in the first place.

On eBay, when you find items that are akin to "open box" but are only 40% or 30% of the original price, there's usually something seriously defective -- the screen doesn't work, it's missing a required accessory, etc. They're basically being sold for parts. That's just not the business Amazon's in.

[kevincox]

> I think it's more that, if an item is in genuinely resellable working condition, lots of people are willing to pay 70% for it

That isn't the author's point. If it cost 20% of the price to produce and ship a product to the end user (AKA 400% markup, which isn't unreasonable for many items) then providing a discount >20% is less profitable than selling a new item at full price. Obviously it isn't an exact formula (you may capture sales that you would have otherwise lost) but the larger the discount the less likely it is to make sense, even if the item is "free" to sell because your profit off of the discounted "free to produce" item is less than the profit off of the new item, even after subtracting the costs.

[crazygringo]

See my second paragraph. I addressed precisely that.

It is indeed what you say -- "you may capture sales that you would have otherwise lost" -- and that Amazon prefers to capture those rather than having another site capture then. Remember, people who are highly price-conscious compare sites.