Sunday, December 30, 2012

Is there any science in Amazon pricing?

I keep a handful of stuff in the "Saved for later" category in my Amazon shopping cart. It is amusing to see that prices of some items constantly keep changing.

Take these earbuds, for example. I listen to podcasts while commuting with a pair of earbuds plugged to my phone, and for that purpose audiophile-grade fidelity is not a requirement. Ones from different brands I tried over time, including these, have developed frayed wire just outside the connector plug and died after several months' use. Cheap earbuds are consumables to me, and I keep a couple of unopened spares around, and restock every once in a while.

They used to be around $20, but among several colors, I noticed that one particular color started selling below $10 a few weeks ago. A few days ago it was at $8.26 and then this morning I saw it at $8.06. Another example I saw was that a deck of cards that lists at $45 fluctuated both upwards and downwards between around $30 to $45 within just a few weeks. I saw a similar pattern between $140-$160 for a pair of men's shoes within three weeks.

I am guessing one of the reasons why they keep changing the prices is because they want to encourage customers to come back to their shopping cart often. I however wonder how the price fluctuations are computed. Is it random-walk just to make sure that "The prices of items in your cart changed" notice appears often enough, or is there a deep science based on supply-and-demand and consumer psychology involved? Perhaps they are measuring how low they have to go before I move an item out of the "Saved for later" bin to see how bad a cheapskate I am?

I can understand why the price of this DVD that I kept in the "Saved for later" for the last three years gradually climbed before December 25th and then dropped soon after that day every year. But I do not expect there is much seasonality in demand with earbuds or deck of cards.

1 comment:

Remko Tronçon said...

It puzzles me too. Basic economics (price/demand) I'm told.

One fun site to track prices (to see whether you're at a reasonable price) is E.g. for the earbuds.