The One Big Amazon Mistake You Might Be Making
This trick could leave extra money in your wallet.
If you’re a seasoned Amazon shopper, you can practically order with your eyes closed. It’s simple: search, click on the first result, give the price and ratings a cursory look, and add to cart.
The whole process can take less than a minute—but is it time to linger before heading to checkout? Maybe so, according to new research from Northeastern University, presented at the International World Wide Web Conference. The reason is a phenomenon called “algorithmic pricing,” and it might mean that some of the deals you’ve been scoring aren’t as amazing as you thought they were.
What it boils down to is that much more preference is given to third-party sellers who use an automated practice called algorithmic pricing—which readjusts the prices of products in real time based on things like competitors’ changing prices and inventory levels. Sellers who use this are more likely to end up in the “buy box,” even though other sellers with lower prices might be out there, too.
"Amazon has a relatively low number of algo sellers — from 2 to 10 percent," study author Christo Wilson says in a statement. "But they cover almost a third of the best-selling products offered by outside merchants, so the impact is large."
The bad news for Amazon fanatics? There’s a chance that the price you see on any given Amazon page might not be the lowest price that’s available for that product: The study found that 60 percent of sellers using algorithmic pricing have prices that are higher than the lowest available price.
But there are steps a budget-conscious shopper can take. Wilson tells RealSimple.com that it’s more than worth your while to spend a little extra time researching the products you purchase.
“The first step is to look and see if there are other sellers offering other prices,” Wilson says. “There’s research that shows only about 18 percent of people click that link that says ‘50 offers from other sellers,’ which is a shame because… there are often lower prices.”
Wilson says it becomes a cycle: Algo sellers are featured more frequently, so they make more sales and get more feedback. And because Amazon’s system also rewards products with more reviews (because a poor-quality product reflects badly on the company) by featuring them in the buy box, these sellers continue to get more exposure.
If you want to find out for yourself if a product is being sold using algorithmic pricing, Wilson says the easiest way is to refresh the page frequently — if the price fluctuates a lot, the seller might be using an algorithm for pricing. There’s a website and browser extension called CamelCamelCamel that can help, too—it displays a graph with a product’s pricing over time. It can also help you to predict if a product is likely to experience a dip (or spike) in pricing (which can helpful if you’re not in a rush).
Ultimately, it’s a judgment call, Wilson says. If you really want the lowest price, you can buy from a seller with less feedback, in which case you might be gambling on quality and shipping speed. However, there are plenty of high-quality, third-party sellers out there, just waiting for you to buy their lower-priced items. All it takes to find the best deal is a little digging.