Amazon accused of price gouging on essential items in early days of pandemic

An American consumer advocacy group is accusing Amazon of price gouging on items such as soap, face masks and toilet paper in the early days of the COVID-19 pandemic, even as the e-commerce giant claimed to be cracking down on third-party sellers on its platform who were doing the same thing.

A report by Washington-based Public Citizen claims that Amazon hiked prices on many essential items in March and April, adding mark-ups of up to 1,000 per cent on some basic items.

"Amazon has fundamentally misled the public, law enforcement and policymakers about price increases during the pandemic," said Alex Harman, the consumer policy advocate for the group which says it lobbies lawmakers for legislative changes to protect consumers.

The group tracked a sample of items to monitor their price and availability. Among the price changes the group said it observed were:

• A pack of 50 disposable face masks increased by 1,000 per cent.
• Dial liquid antibacterial hand soap increased by 470 per cent.
• A pack of 100 disposable hand gloves increased by 336 per cent.
• A pack of eight 1,000-sheet toilet paper rolls increased by 528 per cent.
• A pack of eight Brawny paper towels increased by 303 per cent.
• A five-pound bag of unbleached flour increased by 425 per cent.

In a statement to CBC News, Amazon strongly refutes the claims and says it is in favour of legislation that would forbid price gouging in all forms.

"There is no place for price gouging on Amazon and that includes products offered directly by Amazon," the company said Thursday. "Our systems are designed to offer customers the best available online price and if we see an error, we work quickly to fix it."

Amazon has published blog posts in favour of establishing a nationwide law against price gouging, and another saying that it has "no place in our stores." 

PPE in short supply

Items such as hand sanitizer, toilet paper, flour and other sudden essentials were hard to come by in March and April across the U.S. and Canada, as reports of massive price hikes and supply shortages were rampant.

CBC News reported at the time that Amazon's Canadian website was selling a small, 60-millilitre bottle of hand sanitizer for $184. Amazon blamed third-party sellers, and vowed to crack down on any similar instances.

But the Public Citizen report says Amazon was also hiking prices on many items at the time. "Amazon has publicly blamed third-party sellers for price increases while continuing to raise prices on its own products and allowing those sellers to increase their prices," Harman said. "Amazon is not a victim in the price gouging on its marketplace — it is a perpetrator."

Basic supply and demand

Farla Efros, president of retail consultancy HRC Advisory, said in an interview with CBC News on Thursday that any price hikes for in-demand items just boil down to simple supply and demand issues.

"Given the fact they were able to service their customers, I think that [consumers] will be forgiving," she said.

Efros added that prices went up elsewhere. "You saw the same thing in the grocery stores," she said, noting high-profile examples of retailers who were shamed in the media, including high-end Toronto grocery store Pusateri's, which at one point was selling sanitizing wipes for $30 a can. 

And a couple in B.C. went viral for buying up the entire supply of sanitizing wipes at multiple Costcos in and around Vancouver and then reselling them at an exorbitant markup on Amazon, before Amazon banned them.

Efros says consumers are mostly grateful to be able to get their hands on those items at all, which wasn't the case at most in-person stores. "Consumers were so desperate to get their hands on anything and everything that they didn't pay as much attention as they would normally."

But another retail expert thinks Amazon may have taken a hit to its reputation with consumers. Doug Stephens, founder and CEO of The Retail Prophet, says the secret weapon in Amazon's growth as a retailer is the trust that consumers have in its prices and reliability.

"You felt pretty confident that you weren't going to be gouged, so something like this is really damaging," Stephens said in an interview. Coming on the heels of other revelations about labour violations and health concerns in warehouses, and a Competition Bureau probe into whether Amazon gives preferential treatment to its own products, Stephens says the company may have hurt itself a little in this pandemic, despite their booming sales.

"It takes a long time to build trust but it takes a little time to lose it," he said.