Algorithmic Selling on Amazon Spells Buyer Beware

December 12, 2016

The article on Science Daily titled Amazon Might Not Always Be Pitching You the Best Prices, Researchers Find unveils the stacked deck that Amazon has created for sellers. Amazon rewards sellers who use automated algorithmic pricing by more often featuring those seller’s items in the buy box, the more prominent and visible display. So what is algorithmic pricing, exactly? The article explains,

For a fee, any one of Amazon’s more than 2 million third-party sellers can easily subscribe to an automated pricing service…They then set up a pricing strategy by choosing from a menu of options like these: Find the lowest price offered and go above it (or below it) by X dollars or Y percentage, find Amazon’s own price for the item and adjust up or down relative to it, and so on. The service does the rest.

For the consumer, this means that searching on Amazon won’t necessarily produce the best value (at first click, anyway.) It may be a mere dollar difference, but it could also be a more significant price increase between $20 and $60. What is really startling is that even though less than 10% of “algo sellers,” these sellers account for close to a third of the best-selling products. If you take anything away from this article, let it be that what Amazon is showing you first might not be the best price, so always do your research!

Chelsea Kerwin, December 12, 2016

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