How many different products do you think Amazon sells?
One million? Ten million? 100 million?
Try 562,382,292 products.
The current top selling products on Amazon include pressure cookers (the latest kitchen device we have to have but will never use), L.O.L. Surprise Dolls (the Kratovil girls are responsible for most of these purchases), and Himalayan salt lamps (I wonder how far up the Himalayas some poor schmuck has to hike to mine one of those).
With so many product offerings, easy ordering process, and reputation for great deals, it’s no wonder Amazon sales account for one third of e-commerce transactions in the U.S.
My friend Nichole recently had a bad customer service experience on Amazon.
She placed an order for what she thought was two cases of a specialty canned dog food. The total amount came to $71.42 (tax included), about what you would expect to pay for two cases of a good canned dog food.
Nichole’s order arrived one time but several cans short. She got exactly two cans of dog food, meaning she paid $35.71 (tax included) for a can of dog food.
She immediately contact Amazon customer service who confirmed that the price, $35.71 (tax included) for a single can of dog food, was correct, and no, she can’t return the dog food for a refund.
Tip for you Amazon shoppers, pet food (along with grocery products) is not returnable. Surprising, right?
Nichole continued to press the issue with Amazon customer service and Amazon in the end agreed to offer her a special one time only refund for being a good, loyal Amazon customer. But according to Amazon, the price on the site was correct, $35.71 (tax included) for a single can of dog food.
So how does a can of dog food get to be $35.71 (tax included) on Amazon?
The answer, my friends, is dynamic pricing.
Amazon’s proprietary algorithms enable it to reprice its items based on consumer demand, buying behavior, competitor’s pricing, and market data.
And Amazon changes its prices all of the time, as often as every 15 minutes. In fact, it only takes Amazon two minutes to make a price change, compared with the 43,000 minutes (or just under a month) in takes for other U.S. e-commerce sites to change their prices, according to retail pricing technology firm Intelligence Node.
So what does this mean for you, the Amazon shopper?
Two shoppers shopping for the same item at the same time on Amazon could be charged different prices. Amazon’s algorithms can set prices using the shopper’s browsing history, the ad trackers and cookies, how the shopper navigated to Amazon, the device being used, the other apps on the device, the network the device is on, the OS the device is using, and the browser being used. For example, someone shopping on a Mac could be shown a higher price than someone shopping on a PC.
Prices can rise based on spikes in demand. Have you ever gotten an Uber after a concert? Then you are familiar with the concept of “surge pricing,” increasing the price based on an increase in demand. Amazon’s algorithms can increase prices based on spikes in demand.
Algorithms can be used to set prices based on what other retailers are charging. Sometimes this can result in high, even absurd prices. For example, a genetics textbook was once listed for $23,698,655.93 on Amazon. Why would a $100 textbook suddenly be worth $23 million? The two sellers listing the textbook each had set the price to automatically adjust based on what the other was charging for the book. And no one was checking the computer’s math.
So which one of these pitfalls resulted in Nichole paying $35.71 (tax included) for a single can of dog food? I don’t know. In fact, it probably doesn’t matter. What does matter is what should you do if you find yourself in Nichole’s shoes holding a $35.71 can of dog food?
First of all, you should do what Nichole did and escalate the issue with Amazon Customer Service. This incident aside, their customer service is good, really good. They want to keep your business.
Second, when shopping online, be sure to clear your browser cache frequently and check prices at different times of the day and on different devices. Don’t be in a hurry to buy something.
Have you ever been charged an outrageous price for something on Amazon? Leave a comment or send me an e-mail.
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Copyright © 2018 by Siobhán Fitzpatrick Kratovil. All Rights Reserved.Tags: E-commerce
David Patrick says
Cooks Illustrated published an article about carbon steel skillets. Their top ranked pan’s retail price was $50. I went to order on Amazon, and the price was $250. Simple supply and demand meets algorithms. I waited a few months, bought the pan for $50, and have happily sautéing ever since