Are Prices Cheaper at Amazon, Walmart, Costco, or Jet.com?

Jun 29, 2017

Some people are loyal shoppers because they simply love a retailer's products, or how the stores are designed, or how easy it is to order from the website.

Many other shoppers, however, make purchases based on one simple issue: Who's got the cheapest prices?

Price matters particularly for the least exciting products—household staples like cleaning supplies, pet food, Chapstick, deodorant, batteries, toothpaste, diapers, and laundry detergent. To try to identify which jumbo chains offer the biggest deals, the frugality site Cheapism.com recently compared prices for 75 such name-brand products at Amazon, Walmart, and the Walmart-owned site Jet.com.

Amazon vs. Walmart vs. Jet.com

Overall, Amazon had the lowest prices, Cheapism found: The total for all 75 items came to $813.39 at Amazon, versus $859.26 at Walmart.com and $859.47 at Jet.com.

So that means you should do your household shopping at Amazon, right? Not necessarily.

While Amazon had the lowest prices on 14 of the items, Walmart was the cheapest option for 12. So your choice varies based on what's on your shopping list: If you regularly buy some or all of the goods where Walmart is the low-price leader, and not so many of the items where Amazon is cheapest, you could save by shopping at Walmart.

What's more, these retailers and others are constantly comparing prices with each other, and the study shows it: Of the 75 featured items, there were 38 ties, with the exact same prices from two or all three retailers.

So where is the cheapest place to shop? The true answer is, frustratingly enough, it depends.

No one retailer consistently undercuts the others—certainly not all of the time, for all merchandise. The standard retail play used to win over cost-conscious shoppers is to lower prices on certain items, and then hope that these customers also buy other full-price goods at the same time for the sake of convenience.

The overarching idea is to get shoppers into the habit of picking up (or ordering) groceries and other staples from one preferred retailer. That retailer then wants you to keep shopping there—regardless of whether all the prices are actually good.

Shoppers should be well aware that prices can and do change all the time as well, so it's impossible to pin down where you'll get the best deals.

When Jet.com first launched in 2015, we found that its grocery prices were often cheaper than Amazon, Costco, and Walmart. But then Walmart bought Jet.com last summer—and now, months later, prices at the supposed "Amazon killer" website have risen and are now often higher than the competition.

Amazon vs. Costco

Recently a study from BMO Capital Markets tried to get to the heart of another shopper debate: Is Amazon or Costco a cheaper place to shop? The results were fairly surprising: After comparing prices for 54 common items at Amazon, Costco, and Costco.com, researchers found that physical Costco stores generally had the lowest prices, followed by the retailer's own website and then Amazon. Overall, prices were 17% cheaper at Costco.com than they were at Amazon, and prices for national brand items were 19% cheaper at Costco.com compared to Amazon.

Does that mean that Costco is a better place to shop than Amazon? Not remotely. The bulk sizes typically offered at Costco are not for everyone. Amazon is beloved for its dizzyingly huge variety of items, as well as extraordinary convenience, low-cost or free shipping, and a reputation for stellar service.

Also, as mentioned above, prices online can and do change all the time too, so just because Costco beat Amazon in one price-comparison study doesn't mean it would win in another one a few weeks later—or in one that compared other kinds of goods.

Aldi vs. Walmart ... vs. Other Walmarts

Perhaps most puzzling of all for shoppers, sometimes retailers are charging much different prices for the same items depending on location. A couple of weeks ago, a Minneapolis StarTribune story compared prices for basic groceries like milk, eggs, and Idaho potatoes at Walmart with the low-cost supermarket chain Aldi.

Aldi almost always had lower prices, which isn't particularly surprising given the store has a reputation for great value. What may shock shoppers is that the study compared prices at stores in two fairly similar markets—Iowa and Minnesota—and prices were significantly higher in the latter, even for the same store chain. A basket of the same seven items cost $14.78 at the Walmart in Dubuque, Iowa, compared to $19.63 at the Walmart in Bloomington, Minnesota.

What conclusions can shoppers draw from these kinds of price-comparison studies? There are two pretty clear takeaways—although neither should be terribly shocking to smart shoppers.

For one thing, you'll save money by buying generic-private label goods rather than national name brands. The Aldi-Walmart study focused on stores' private-label groceries, and those prices were cheaper across the board compared to name brands. What's more, Amazon is purchasing Whole Foods, which is already known for high-quality low-price private label groceries, and the competition among private-store brands is expected to heat up.

The larger lesson is that you're almost always guaranteed to save money by regularly shopping around, rather than blindly and loyally sticking with one go-to retailer.

This is a hassle, of course. But that's the tradeoff shoppers have always had to deal with: In order to get the cheapest prices, you often have to sacrifice convenience.

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