Amazon Says It Puts Customers First - But Its Pricing Algorithm Doesn't (propublica.org)

ProPublica has a report today in which it warns Amazon shoppers about the results that they see on the shopping portal. It notes that people often hope that the results that come up first after a search are the best deals, and that's what Amazon will have you believe, but its algorithm doesn't work that way. In what may surprise many, in more than 80 percent of cases, Amazon ranks its own products, or those of its affiliate partners higher. From the report: Amazon does give customers a chance to comparison shop, with a listing that ranks all vendors of the same item by "price + shipping." It appears to be the epitome of Amazon's customer-centric approach. But there, too, the company gives itself an oft-decisive advantage. Its rankings omit shipping costs only for its own products and those sold by companies that pay Amazon for its services. Erik Fairleigh, a spokesman for Amazon, said the algorithm that selects which product goes into the "buy box" accounts for a range of factors beyond price. "Customers trust Amazon to have great prices, but that's not all -- vast selection, world-class customer service and fast, free delivery are critically important," he said in an e-mailed statement. "These components, and more, determine our product listings."

Comments

I do this...

[wbr1]

I sell on amazon on the side. About 60-70k a year so small potatoes to amazon but a cool side biz. However, competing for the buy box is crucial to sales. One reason that amazon favors themselves and those that pay for services is that the items are in an amazon fulfillment center. This means amazon has control over inventory and shipping. If a 3rd party seller is fulfilling their own items, amazon has no view into inventory levels or shipping times other than past performance metrics (which do play a smaller role).

Amazon closely guards the exact algorithm that chooses who has the buy box. It is known that they strongly favor themselves (of course.. they want the sales). So much so that I often avoid items that Amazon fulfills themselves unless the ROI and/or rank are very good, or my research indicates that amazon regularly runs out of an item and I can exploit the inevitable price jump during those restocking gaps.

If you want more info on how the buy box works, there is a company called feedvisor that does repricing and other services for amazon vendors. I do not use their services (I use others), but they give away a yearly buy box bible. This uses information culled from their clients amazon seller accounts to see how competition and pricing and other changes affect buy box percentage and sales.

http://feedvisor.com/r/resourc... - warning it does require email registration, but it is an interesting read.