I don't know about that. A good part of Amazon's initial advantage was in their goodwill. Their reviews were (for a long time) pretty fair and would mark bad products as bad. Their customer service was always quite attentive.

I think in growth industries, the potential future of goodwill outweighs the value of expending that goodwill right now. Unless you've already lost the market -- but I don't think that'll be to prices as much as competitors offering more/better products.