Prime Day is More Than a Week Away But Amazon Echo 2nd Gen Just Reached is Lowest Sale Price Ever and So Has Google Home
- Amazon Echo is selling today on Amazon.com in the U.S. for its lowest price ever, 50% for $49.99
- Sale prices are not limited to the U.S., but vary widely by country with some discounting both Echo and Dot, some one or the other device, and still other countries showing no discounts
- The moves may be a competitive response to similar price reductions by Google for Google Home to $69 in the U.S. and U.K. and selective discounting elsewhere
- However, supply chain realities such as excess or tight inventory may also be contributing factors of discount levels by country in advance of Prime Day next week and new product launches this fall
Amazon Prime Day might be more than a week away, but Amazon is doing some selective discounting on Alexa products around the world. Notably, Amazon Echo 2nd Generation is currently priced in the U.S. today at just $49.99. That’s the lowest price yet for the flagship product of the Echo smart speaker line. It also matches the list price for the far less robust, Amazon Echo Dot 3rd Gen which is currently selling on discount for just $24.99. So, 50% seems like a trend, but in fact, no other Echo products are currently on sale at all in the U.S. That is likely to change on Prime Day but we don’t expect to see discounts this steep on other products unless Amazon is planning to discontinue or replace the product with an update.
Some Other Countries Get in on the Discounts
The U.S. isn’t the only market with an Amazon Echo and Dot discounts. In the U.K. the devices are selling for €59.99 discounted from a list of €89.99. Echo Dot 3rd Gen is also selling in the U.K. for 50% off of list price for just €24.99. In Germany and Italy, there are no discounts for the Echo or Echo Plus, but Dots are selling for a 67% discount for just €19.99 instead of the €59.99 list price. Australia, France, and Spain are showing no discounts at all. India has a 20% discount on Echo and 33% on Dot.
The Supply Chain Rationale Behind Discounting
The Echo Dot has routinely been discounted by 40-50%, but the Amazon Echo has remained relatively close to its $99 list price. And, we are seeing inconsistent discounting in different markets. The obvious question is, “Why?” It is commonly assumed that Amazon’s smart speaker discounting is driven primarily by the interest in promoting new consumer trial and extending Alexa’s presence in the home with more multi-device households. This is part of Amazon’s larger strategy to build a broad and loyal Alexa user base. The benefit to the company is tighter integration of Amazon’s value propositions into consumers’ lives and prevention of other companies staking out similar territory.
However, not all discounting is designed simply to increase the user base or device density among users. Sometimes, the discounts are driven more by supply chain management considerations. Other times, it is a competitive response. We saw heavy discounting of Echo Dot 2nd gen and Echo Show 1st gen prior to new models being introduced last year. Those efforts were aimed at reducing the inventory of end-of-life devices before announcing new models. The added user base was a byproduct benefit.
Amazon Echo 2nd Gen was introduced in September 2017 and based on a two-year upgrade cycle is due for a refresh to 3rd Gen in September of this year. So, it is likely we will see many more discounts on Amazon Echo 2nd Gen if that new model is really in the wings for later this year. We might not see it in some markets because they simply may not have as much supply available to make discounting as necessary. Or, they may be waiting for Prime Day to showcase the product discounts. Regardless, its a pretty extraordinary development that Amazon Echo three years ago had a $179 list price and now is more capable and selling for less than one-third the cost.
The Competitive Pricing Rationale Behind Discounting
Another factor may be a competitive pricing response. Google’s recent discounting of Google Home in the U.S. to $69 and the U.K. to €69 provided a clear target for Amazon to undercut. Interestingly, neither Google Home nor Home Mini is on sale in Australia or Germany. France has a discount on Mini but not Home, and Italy has a 20% discount on Home and 40% on Mini. Google has also been heavily discounting Home Hub with pricing as low as $60 from a $129 list, but Amazon currently has no discounts on the competing Echo Show or the new Show 5.
As a result, we can conclude that Amazon’s discounting may be influenced by competitive pricing, but not solely on that factor. Supply chain realities and product lifecycles are likely contributing or driving factors behind the moves. The winner is the consumer. They are getting access to ever more robust smart speakers for lower prices each year if they wait until the discounts inevitably appear.
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