If you are like many consumers, you like knowing just how much you are saving, whether it is on a shopping trip to the mall, a grocery run to the local supermarket, or a quick purchase on Amazon.com. But according to the New York Times, the days of finding out how much you are potentially saving on the list price on Amazon are quickly coming to an end.
In the report on Amazon pricing, the Times noted that it has been a slow transition away from telling customers how much the list price is on several products. Instead, the leader in online retailing — at least in the United States — has just been telling customers the current price.
“The new approach comes as discounts both online and offline have become the subject of dozens of consumer lawsuits for being much less than they seem,” the Times reported. “It is also occurring while Amazon is in the middle of an ambitious multiyear shift from a store selling one product at a time to a full-fledged ecosystem.”
So, what does this mean for the average customer? It depends. In some ways, it shows how the company has evolved from a retailer willing to sell for the lowest possible price in order to win customers, the newspaper notes. In other ways, it shows, as mentioned above, how the retailer is a one stop shop for everything from books to shampoo and in some major cities, especially San Francisco and Seattle, a retailer for groceries.
While the Times and others have noticed the change in Amazon’s pricing policy, the company did not comment for the article. But others did.
“‘Our data suggests that list prices are going away,’ said Guru Hariharan, chief executive of Boomerang Commerce, a retail analytics firm. Last spring, Boomerang compiled a list for The New York Times of 100 pet food products that Amazon said it was selling at a discount to a list price. Only about half of them still say that.
“‘Amazon is a data-driven company with very few sacred cows,’ Mr. Hariharan said. ‘At the very least, it is conducting a storewide test about whether it should change its pricing strategy.'”
The news about Amazon’s pricing policies is hardly new. Other issues have been noted by other publications, including Jeff Bezos’ own Washington Post, which highlighted so-called algorithmic pricing in a June 10 article.
While it may sound like it is giving consumers the best deal, this is not always the case.
“Amazon relies on an algorithm to determine which seller ends up in the buy box for any given product. Wilson and his co-authors found the process is significantly more likely to give that spot to sellers who use real-time pricing, in which software is used to automatically optimize prices on the fly based on what competitors are charging. Here’s why that matters: Most sellers using that kind of pricing model don’t have the lowest prices on the site. In fact, the researchers found that 60 percent of those that use real-time pricing have higher prices than other sellers of the same item on Amazon. Most of the time, the price difference is about $1, but Wilson said researchers found ‘many’ cases where the price difference was in the $20 to $60 range.”
Co.Exist reported that a variety of factors that are included in the algorithm.
“Amazon doesn’t reveal the specific formula for deciding which seller gets featured — nor how much it favors Amazon products itself — but it is upfront that it looks at factors other than just price, including stock, customer service, and fast shipping,” it said.
With the changes in Amazon’s pricing policies, are you likely to keep shopping at the online retailer? Tell us in the comments section below.
[Photo by David Ryder/Getty Images]