Amazon doesn’t offer the lowest price as often as it once did, as the e-retailer carefully calculates when low price is the best strategy. But with the leading online retailer less aggressive on price in certain categories big retailers are more aggressive in matching Amazon’s prices.

While many online shoppers look for the best deals on Amazon.com, increasingly that’s not where the lowest prices are to be found, according to data from several price-monitoring services. That’s not because Amazon doesn’t think price is important—experts say the No. 1 online retailer in the Internet Retailer Top 500 simply is increasingly scientific in evaluating when it needs to undercut competitors and when it can win sales based on availability, free shipping and reputation.

Nonetheless, Amazon’s slightly less aggressive pricing may be contributing to more major retailers matching Amazon.com Inc.’s prices this holiday season. Meanwhile, some web-only retailers are working hard to win sales in ways besides competing on price with Amazon and other competitors.

There is a growing body of data showing that Amazon is less often the low-price leader compared to the recent past. For example a study by online price-monitoring service Ugam Solutions of major North American retailers finds that Amazon offered the lowest price in 2013 on 31 of the 50 most-popular wireless routers, but that fell to 25 this holiday season. In computer keyboards and mice, Amazon won on 37 of the 50 items Ugam studied last year but only 23 this year.

In one respect, Amazon has not backed off: It has by far the best selection of the most popular products across many categories, Ugam says.

The Ugam data only includes products offered by Amazon itself, and not by other retailers selling on Amazon.com. And that’s an important caveat because third-party sellers on Amazon account for about 40% of units sold on Amazon.com, and they often compete fiercely to win the prime position on Amazon.com, known as the Buy Box, says Mabel McLean, research lead at L2 Inc., a research firm focused on digital markets.

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But a similar trend shows up in data from ShopSavvy Inc., which crawls millions of web sites and shows consumers the lowest prices on its web site, ShopSavvy.com. ShopSavvy, which does monitor prices of outside sellers on Amazon.com, says Amazon has the lowest price currently on only 6% of the products it’s tracking, down from 9-10% at this time last year.

“There’s a general perception by consumers that Amazon is the cheapest place to buy, but that’s been eroding over the last three years,” says John Boyd, co-founder and CEO of ShopSavvy. “Most of the time Amazon isn’t the cheapest place to buy. As a result a lot of the local chains are becoming a lot more aggressive in pointing that out by offering price-matching policies.”

Among the major retail chains offering to match prices this holiday season on Amazon.com, No. 1 in the 2014 Internet Retailer Top 500, are Wal-Mart Stores Inc., No. 4; Best Buy Co. Inc., No. 15; Target Corp., No. 18; and Toys ‘R’ Us Inc., No. 34. But those price-matching deals often exclude prices offered by outside sellers on the Amazon Marketplace.

And it may be that some frequent online shoppers are taking note. While a study conducted in September found that 90% of consumers who had shopped online at least four times in the past year said they always check Amazon.com before making most online purchases, when asked what competitors had done in the past year “that would cause you to shift your business to them and away from Amazon,” 74% cited “sharper prices.” That was far ahead of the No. 2 answer selected, “elevated customer service.” The survey of 1,000 online shoppers was conducted by research firm The E-tailing Group for e-commerce software provider MarketLive Inc.

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But some experts argue that Amazon is setting its prices scientifically, using data about customer behavior and competitor pricing and inventory to determine how competitive it must be on price. “Amazon can be very strategic in whether they have the lowest price or not,” says Kevin Sterneckert, chief marketing officer at e-commerce technology provider Order Dynamics, who has been involved in retail pricing and merchandising for some 25 years in positions at such companies as research firm Gartner Inc., software companies Oracle Inc. and DemandTec, and retailers Wal-Mart and Big V Supermarkets.

He says Amazon looks at whether a price change will impact whether a consumer buys—it may on an expensive camera but not on a package of toilet paper, for example. The e-retailer also tracks its rivals carefully, he says, including how much inventory they hold of each product and how long it takes competitors to deliver. “There are Internet retailers that sell at very low prices, but it may take them 15 weeks to deliver,” Sterneckert says. “In Amazon’s eyes, they’re not competitive.” And that may lead Amazon not to meet that competitor’s prices.

Other retailers may be out of stock of a popular item, or charge for delivery; Amazon takes all that into account when setting its prices, Sterneckert says.

Amazon declined to comment for this story.

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Another development that has caused Amazon to not compete aggressively on price in certain categories is the agreements it’s made with luxury brands to restrict price competition on their products in order to lure them to sell on Amazon.com, says L2’s McLean. For example, when Amazon launched its Luxury Beauty store in October 2013 it restricted marketplace sellers from selling below list price on certain products.

As an example, she points to L’Occitane en Provence Shea Butter Hand Cream. While the price on that product had been fluctuating on Amazon.com, as third-party sellers competed on price, McLean says, “once the luxury store opened, the price remained static.” Nonetheless, McLean says, Amazon overall remains a vigorous competitor on price, with the lowest price online on 95% of the cosmetics products it sells.

Given the many product categories it now sells in, Amazon’s strategy is watched by many retailers, whether they operate physical stores or just sell online. And many are trying to differentiate themselves in ways other than price, recognizing that giants like Amazon and Wal-Mart command lower prices from suppliers because they buy in such large quantities.

Among them is Pete Labore, executive vice president of operations at Backcountry.com, a web-only retailer of outdoor apparel and gear that is part of the Liberty Ventures unit of Liberty Interactive Corp., No. 6 in the Top 500. He says that the juggernauts like Amazon and the nature of the Internet itself ensure that e-retail price competition will only get more intense. “Knowing that price isn’t something that we can win on in the long run, we continue to be focused on the selection and service aspects of our business in order to differentiate ourselves,” he says. That includes finding products not widely available and offering service to customers from employees who are passionate about mountain biking and climbing, skiing and other pursuits that draw shoppers to Backcountry.com.

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Backcountry also focuses on shipping fast, especially during the holidays. “Nearly every order placed before 5 p.m. Mountain Time will ship out the door to customers the same day,” Labore says. “During the holidays we’ll also be offering free two-day shipping, which is a pretty short delivery time.” It was Amazon, of course, that raised the bar for online retailer on free and fast shipping, with its Amazon Prime program that offers consumers who pay an annual fee of $99 free two-day shipping on all orders.

At Newegg Inc., the web-only electronics retailer that’s No. 17 in the Top 500, the most notable thing about this holiday season is how early it began, says chief marketing officer Soren Mills. “Compared to what we’ve seen in years past, there is more activity out there earlier with more competition.” He notes that Newegg was one of the pioneers in early discounting, having started five years ago offering “Black November” discounts starting Nov. 1 each year.

In terms of competing with Amazon and other online retailers, Mills says Newegg constantly monitors and adjusts it prices to keep up with the competition. “That’s the nature of online retailing today,” he says.

Amazon also changes prices constantly—2.5 million times per day, according to a 2013 report by Profitero, a provider of pricing technology. DealScience.com, which scours the web for coupons that consumers can access on its site, noted recently that Amazon was changing its price almost daily on a Keurig 2.0 Coffee System, with prices ranging from $81 to $110. By contrast, Sears Holdings Corp. was changing its price two to three times per week on that product, ranging from $143 to $170, but Walmart.com held its price steady at $139.

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A Walmart.com spokesman says the retailer monitors competitors’ prices but does not constantly adjust prices lest it annoy customers who buy an item in the morning only to see it offered at a lower price that afternoon at Walmart.com. “We are committed to everyday low prices and we want customers to be confident when they shop with us they are getting the lowest price,” the spokesman says.

Sterneckert notes that retailers that operate stores simply can’t change prices as often as Amazon does—it’s not possible to change the prices on products on store shelves every few minutes the way Amazon can change its online prices. Plus, he adds, a consumer who researches a product online and then finds a higher price in the store a few hours later is likely to be disappointed.

Even with all the advantages Amazon has on price, it doesn’t surprise Sterneckert that store-based retailers have started matching Amazon’s prices. “Amazon was taking market share and they were getting tired of that,” he says. “The retailers decided to take a stand and not allow price to be a reason why consumers shop somewhere else.”

That very closely tracks what a Best Buy spokesman said about why the consumer electronics retailer began matching the prices of Amazon and other major competitors in November 2012: “We instituted the policy in order to take price off of the table for consideration by customers.” Wal-Mart, which previously had only matched prices of local store competitors—although store managers had the discretion to match online prices—formally changed its policy recently to explicitly say it would match Amazon’s prices.

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An advantage of a price-match policy over simply lowering prices for everyone is that only some customers will ask for the lower online price. Sterneckert says the percentage of consumers who request a price match is likely in the low single digits, though that percentage undoubtedly varies considerably depending on the product and the amount of the price difference.

As Newegg’s Mills observes, changing prices to keep up with or undercut competitors has become common among online retailers. Savings.com, another coupon site, notes that in a recent two-week period the low-price retailer online changed 10 or more times for 20% of items tracked, and changed five or more times for 45% of the items.

For all the focus on price, however, it’s not clear that low price is the most important factor for many online holiday shoppers. A recent study by consulting firm Simon-Kucher Partners found that price did not show up among the top three reasons why consumers plan to shop online this holiday season. The top three reasons in the survey of 1,000 consumers were: “convenience of shopping whenever,” “free shipping” and “avoiding holiday crowds.” As recently as two years ago, the firm says “lower prices” did make the top three in this annual survey.

Looking at apparel, for example, lower prices ranked six among reasons for shopping online, cited by 34% of respondents. Convenience topped the list at 66%, followed by free shipping 63% and avoiding crowds 56%.

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“Consumers are busy people,” says Susan Lee, the partner who runs Simon-Kucher’s consumer goods and retail practice in North America. “This is also consistent with our earlier finding that the more consumers are used to shopping online, the less important price is as a decision driver. Instead of price, free shipping will be key for retailers going forward. This is what consumers are paying attention to.”

And there’s another thing to consider before a retailer marks down prices hoping to attract new customers: Those customers may not be very profitable in the long run.

A study by OrderDynamics of 635,000 orders during the holiday season concluded that a first-time customer buying during the holiday season produced an additional profit during the following year of only 48.6% of the profit from the holiday season purchase. In other words, if a group of first-time buyers contributed $10,000 in profit margin from their 2013 holiday season purchases they only produced an additional $4,860 in profit in 2014 to date. But active customers, defined as those who purchased two to four times before the 2013 holiday season purchase, produced 78% more profit and loyal customers who had purchased at least five times previously from the retailer produced 179% more in profit in 2014.

“The real question,” says Sterneckert of OrderDynamics, “is whether it’s worth it to acquire new customers during the holiday season through promotions. Retailers spend a lot of effort during the holidays to get new clients, but those clients are not necessarily going to be profitable customers in the next year.”

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