The Fruits of Civilization (31-2-7)

You really have to take that extra step and click through to the list of all sellers for a given product if you want to find the lowest price. ~ American computer scientist Christo Wilson

Online shopping is undeniably convenient. Hosting many sellers for its vast array of products,, the giant online shopping center, appears to offer the lowest prices. Instead, Amazon gives sellers a way to provide the illusion of competitively low prices while reaping non-competitive profits.

It may seem that Amazon lists sellers with the best prices for featured products; but that is not so.

When you go to a page on Amazon, what you’re seeing is typically not the lowest price available. ~ Christo Wilson

Most featured sellers use an automated pricing mechanism called algorithmic pricing, which adjusts product prices in real-time using computer algorithms. The algorithms are designed to reap any possible profit while probabilistically staying within the bounds that leave consumers likely to click the “buy” button.

Amazon has a relatively low number of algo sellers – from 2 to 10%. But they cover almost a third of the best-selling products offered by outside merchants, so the impact is large. ~ Christo Wilson

Such automated pricing may sound expensive to code, but it’s not, because Amazon brokers it to sellers as a subscription service for a fee.

60% of sellers using algorithmic pricing have prices that are higher than the lowest price for a given product. ~ Christo Wilson

Algorithmically determined prices are 10 times more volatile than those set by humans. It makes it very difficult to determine whether you, the consumer, is getting the best possible price. Come back in a few days, or even a few hours, and the price may be significantly lower. Or higher.

This is very much a winner-take-all system. If you’re that one lucky seller who gets the ‘buy box,’ you make all the sales. So if you want to be competitive for the top-selling products, you pretty much have no choice: you have to be an algorithmic seller. ~ Christo Wilson