amazon_priceMental Floss has an interesting piece on Amazon algorithmic pricing. This doesn’t really have a lot to do with e-books, given that e-books are sold by only one seller—Amazon itself. But for physical goods—things can be be bought and resold—it turns out that sellers who use algorithms to adjust their prices automatically often rule the roost.

Researchers from Northeastern University ran a study that tracked pricing and seller data for 1,641 of Amazon’s best-selling products. They found that Amazon has a relatively low number of algorithmic sellers—“from 2 to 10 percent”—but these sellers tend to concentrate on Amazon’s best-selling products, and they often have prices that are higher than the competition’s. Algorithmic prices tend to fluctuate a lot more often than regular sellers’.

And Amazon doesn’t always feature the lowest price in the “Add to Cart” box which permits adding a given item to the shopping cart or buying with one click. Amazon’s own selection algorithm also considers seller rankings, reviews, and Amazon Prime participation to make its decision. So, people seeking the lowest price should click through into the list of all sellers before making their choice.

It’s nice we have a study to tell us this, but I—and I suspect many other canny Amazon shoppers—had already noticed this. I always click through to see what prices are available as a matter of course. And when I do, my own “selection algorithm” doesn’t always pick the lowest price, or even necessarily lowest price plus shipping cost. Whether I can get the item shipped to me by Amazon Prime is an important factor, and whether their seller is reliable or seems fly-by-night. I may very well end up settling on the one Amazon picked myself, even if it’s not the cheapest.

Algorithmic pricing on Amazon has resulted in its share of really weird pricing issues—such as the $23 million second-hand textbook we noticed in 2011. But by and large, such shenanigans don’t happen as much now.

In any event, this bit of barely-even-news suggests that buyers should always scan the price list to make sure they’re getting the best deal. Which, as a long-time Amazon buyer, I already do anyway, and would recommend others do as well. And, again, it doesn’t apply to e-books. But if you’re one of those people who like to buy books in either format, it’s worth bearing in mind when buying the paper version.


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