Description: Amazon is giving toymakers favourable promotion for the upcoming Christmas sales season – if they are prepared to pay up to $ 2 million. There’s nothing illegal about charging the toy manufacturers a fee for their place in the sun. But some have commented that the practice is not clearly disclosed to consumers. They may be disappointed to find out that a highly rated product is recommended strongly because the vendor has paid for the privilege.
Date: October 17, 2019
1) Were you aware that this practice was going on? What do you think of it?
2) How could consumers make their voices heard to cause Amazon to have better disclosure of the link between dollars and product placement?
3) Have you ever noticed how Amazon seems to have such a high price-earnings ratio? See problem BE14-12 on page 806 of Wiley’s Financial Accounting: Tools for Business Decision-Making for an example of this. Why do you think the P/E is so high compared to other companies?