Monday, September 29, 2014

Those crazy Amazon prices

I know it's happened to you. You're browsing Amazon when you run across a book you've been looking for, but then wham, you see the price. "Holy crap! Is that really $1,200?" you exclaim, wondering if you'll need to get a second job as a Walmart greeter to pay for just one book.

Over the weekend I was looking through my Amazon wish list when I came across Yemif Gordon's book on the MiG-21. Two sellers had it listed for more than $3,000!
That can't be correct, I thought to myself, but rather than go onto the forums to vent as many people are prone to do, I emailed the seller to ask if the price was accurate. My message was simple:

I see this item for sale on Amazon, but the price seems extraordinarily high for a book, over $3,000. Is that accurate or a typo?

We're not the only people who've noticed these outrageous prices. A few years ago one blogger wrote about a book whose price peaked at over $23 million, which generated a great deal of buzz on the interwebz.

In case you don't know, these exorbitant prices are the result of what's known as algorithmic pricing or robo pricing. Amazone sellers use computer software -- provided by companies such as Revionics and Advanced Pricing Logic -- to  troll the internet looking for the same item and adjusting the price of their items according to the instructions fed into the software. As this article points out, algorithmic pricing is generally intended to drive prices down (have you noticed the many books on Amazon selling for one penny?), but it can drive prices up as well, which explains why we often see books and other products selling at ridiculous prices.

The seller of the MiG-21 book responded to me within a few hours with the following:

We purchased and listed about 20,000 book from a library we liquidated. After a few sold we realized there was a quality control issue so we had to raise the prices of all of those books to make sure no one purchased them while we manually go through each item and check to make sure the item is sellable.

Also some of our books were discarded but still listed in error. Given the number of emails we have been receiving we should have removed the books then relisted one at a time. I checked this book and it appears to be one of the books that was discarded. I've sent in a request to have it removed.

I don't know enough about how listings are managed on Amazon, but I'm not convinced that raising prices is the best way to make sure no one purchases select items. And I think it's unusual that two sellers on two continents have listed the same book within a few dollars of each other, so I suspect algorithmic pricing is at play regardless of what I was told.

Nonetheless, the next time you find something you want on Amazon, don't hesitate to contact the seller. The response may well be interesting, if not positive.

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