The Wall Street Journal reports that Amazon has begun lowering the prices on products sold by third-party merchants on its site by as much as nine percent, “covering the cost difference itself to ensure competitive pricing.”

According to the story, “The new ‘Discount provided by Amazon’ tag allows Amazon to compete more fiercely with low-cost rivals including Wal-Mart Stores Inc. and Dollar General Corp. just as the all-important holiday season gets under way.”

KC's View: Interesting move, which highlights, I think, exactly how seriously Amazon is taking the competition these days. It used to be said that Amazon focuses on customers, not on the competition … but maybe the folks in Seattle are at least glancing occasionally in the rear view mirror.

Amazon will make third party merchants whole, covering all the discounts itself … and taking credit for them. But that may put some of the merchants in a difficult position, if they’ve agreed to keep prices above a certain level in order to satisfy vendors. Amazon could help its own price image, but hurt the brand equity of some companies with which it works.

But clearly, Amazon has made a short-term decision here, with market share in mind. And maybe, just maybe, the faint sound of footsteps behind it…