
How Amazon Tricks You into Thinking It Always Has the Lowest Prices - xmpir
http://recode.net/2015/01/13/how-amazon-tricks-you-into-thinking-it-always-has-the-lowest-prices/
======
ecaron
When I started working on [https://trackif.com](https://trackif.com), I
thought the premise was thin because prices couldn't fluctuate that much. I
assumed everything gradually declined in price, and that it'd primarily be
driven by store-A vs store-B price dropping.

Nope. Retailers are just gaming us 24/7\. I've become very aware of all the
different timeframes retailers offer post-purchase price-matches (published at
[http://blog.trackif.com/trackif-smart-shopping-guide-
store-p...](http://blog.trackif.com/trackif-smart-shopping-guide-store-price-
matching-correction-return-policies/) since I felt like I was hoarding
knowledge.)

Have retailers always played games like this? Or it just a side-effect of
sales moving online?

~~~
indymike
I can speak to 25 years ago: the answer is yes. Here are some of the things I
saw:

* Marking items up 30-45 days ahead of a big sale. This allowed our price to be 25% off instead of 10%. Or sometimes, our sale price probably should have been the regular price. This happened all the time, and people fell for it hard. Usually this would happen before a 10% off everything sale.

* Price adjustments from competitive shops. All of a sudden on some non-advertised sale day the laser printer would spit out a new low every day price if a strategic product was priced above the competition.

* Some price adjustments occurred to game the competition. We did this a lot with appliances where we'd mark up a model we knew the manufacturer had a ton of inventory. The competition would buy a few truckloads and then we'd run $200 off when they ran their $100 off add.

The only thing the internet has changed is the speed price changes occur and
has enabled some other kinds of buy this get that deals.

~~~
corysama
In the furniture biz, lots of places have laws restricting how many days/year
a given shop can do "going out of business"/"total clearance" sales.
Otherwise, they tend to run them non-stop for decades because they are so
effective at bringing in customers.

According to my friends that have worked furniture retail, it was common
practice to mark everything up 300% for a week then have a "40-60% Off!!!"
sale. Customers would be very excited about how much money they were "saving"
even though the reality was that they were buying at a net markup compared to
a few weeks ago. But, a few weeks ago the shop was much, much quieter even
though the prices were lower. So, what's a shopkeeper to do?

~~~
justincormack
In Europe, there are rules about sale pricing for all items, they have to be
at the original price for a certain period. They still manage to game it a
bit, but slightly less so, eg some items are normally overpriced etc.

~~~
SixSigma
What I have noticed recently in UK TV adverts is that £xxx off special offer
and then put an on-screen rider "discount on 'after offer' price".

So they pitch it like a sale but really they will just offer whatever is left
of their product at a higher price for a while in some store or maybe just
online.

------
TheLoneWolfling
[http://camelcamelcamel.com/](http://camelcamelcamel.com/)

(Amazon price tracking.) Very useful if/when you want to buy something and
want to check historical prices. (You can also set email alerts when something
drops to below a certain price.)

Edit: linkified. (Thanks, canvia!)

~~~
exhilaration
If anyone is curious about whether's it's worth checking CamelCamelCamel
before making an Amazon purchase, look at the price history for this tea in
the past year:

[http://camelcamelcamel.com/Stash-Tea-Green-Chai-
Count/produc...](http://camelcamelcamel.com/Stash-Tea-Green-Chai-
Count/product/B000CQE42M)

The price rapidly fluctuates between $18.99 and $14.24 on a nearly monthly
basis. In this case it's worth it to create an alert and wait a week or two
for the price to drop again.

~~~
talmand
But wouldn't something like tea fluctuate in pricing anyway because of the
type of product it is and not necessarily because of price gaming?

~~~
exhilaration
You're suggesting that the worldwide price of tea or market conditions are
causing these nearly monthly fluctuations, between two set prices? I'm
skeptical, the graph doesn't suggest that to my untrained eye.

~~~
talmand
I wasn't suggesting anything, I was asking a question.

------
dominotw
I buy from amazon for their predictable shipping and insanely awesome customer
service.

~~~
chaostheory
Agreed. Maybe if this article was written 5 years ago I can understand, but
unless you're live somewhere where you don't have access to Amazon; everyone
knows it's not just the prices that Amazon has that keeps customers coming
back. People trust it. Amazon has the best customer service I've ever
experienced. It is amazing. imo it's because unlike most stores, Amazon keeps
your full shopping history so they know your worth to the company (as well as
your habits and so on).

~~~
_delirium
As a counterpoint: Most people I know go to Amazon 100% for the prices. Often
they will actually visit a brick-and-mortar store first to browse in person
(page through a book at a bookstore, even try on shoes at a shoe store), and
only _then_ order on Amazon, once they've decided what they want. Amazon adds
nothing here in convenience or service. The most convenient option would be to
just buy the item you already physically have in your hands, which means you'd
get it today, and not have to deal with UPS missed-delivery bullshit. But
Amazon gets the sale because they win on price. Or at least used to!

~~~
tacotime
counter-counterpoint: I bet a large portion of the people you're talking about
are genuinely price conscious consumers trying to make the most educated
purchases they possibly can. I doubt these people would be the same type that
blindly buy an hdmi cable at a 20% markup... how simple is it to compare
prices these days online? If you're traveling to a book store then buying
through amazon I would bet money that you're probably going to price check
that Amazon branded hdmi cable.

------
GabrielF00
They mention HDMI cables specifically. I just went into a Best Buy and asked
for their cheapest HDMI cable. The salesman showed me one for $15. The Amazon
basics cable is $5.49. If you've got Prime and you factor in the shipping
costs of using another website, it's hard to beat Amazon's price.

~~~
sparkman55
For cables, Monoprice is also a good alternative (and, generally, price-
competitive with Amazon).

Another commenter mentioned that Monoprice's HDMI quality has declined; I
haven't noticed any problem with their Ethernet and USB cables.

For HDMI, Monoprice goes all the way down to $2:
[http://www.monoprice.com/Search/Index?keyword=hdmi](http://www.monoprice.com/Search/Index?keyword=hdmi)

Best Buy preys on the 'I need this cable in 30 minutes for the big
presentation' customer, and prices accordingly. Try buying coaxial cable -
it's obscene!

~~~
eropple
The main reason I buy cables from Amazon instead of Monoprice is Prime.
Monoprice's shipping is always slow for me. (Last gig I was at, we bought a
truckload of their monitors, though, on my recommendation. Love those guys,
just wish they could ship faster without ruining my wallet.)

~~~
driverdan
You can buy a lot of Monoprice cables through Amazon at the same price but
with Prime shipping.

------
peteretep
I am willing to pay a significant premium to Amazin for the no-bullshit
customer support. If my transaction doesn't delight me, I know they will make
good on it.

~~~
ZenoArrow
I have a similar mindset. I don't know anyone who thinks Amazon has the best
prices, I'm happy to pay a little extra for the convenience and quality of
service.

Case in point, I bought a new router from Amazon last week. When I got it I
realised I'd made a mistake (I'd chosen one without an ADSL modem). I fill in
a simple online form to get the return label, return it via Collect+ (it's a
service in the UK for collecting parcels from local stores) and Amazon process
my refund whilst the item was in transit (before the item got back to their
warehouses). This is typical of their customer service, it's really second to
none (in my experience).

~~~
thirdsun
Apart from the refund before the item was returned, this is pretty much
standard procedure in europe, as in a consumer right by law - you always have
14 day return period at any online store. Sure, amazon extends their grace
period (30 days, right?) - other than that it's really nothing special.

~~~
ZenoArrow
Nothing special from a legal standpoint, but it's all about how easy they make
it. I have bought from other online retailers, and whilst the experiences
haven't been bad, they still aren't quite as slick compared to Amazon. I can't
really point to anything in particular that will convince you, it's just that
the whole process is painless and easy, not just for the basics (purchasing)
but for everything.

Aside from the 'refund before the item was returned' example, I could also
point to when I'd had to speak to Amazon customer support before, all done
through instant messaging on the website with one of their team. Resolved
within minutes. Contrast with other retailers where there's a back and forth
with emails. Again, not horrible with other retailers, but the Amazon
experience was more streamlined.

~~~
thirdsun
It's fine, I didn't try to nitpick. No need to convince me - I like their
service too. Though you'd be surprised how many people don't know that the
return option is available everywhere.

------
Tarang
It's not only amazon that does this with loss leader pricing, it its also my
local grocery store with milk and bread.

For me what gives me the impression amazon has the lowest prices are their
nearly nonexistent profits. Whatever's up may not the the _cheapest_ but it's
always difficult to find something cheaper elsewhere, even if it does exist.

------
DougWebb
I'm sure Amazon is constantly adjusting their prices in order to maximize
their sales and revenue; they even have some price automation tools as part of
their inventory management system for people who sell their stuff through
Amazon.

However I'm not sure these adjustments are meant to make people perceive that
Amazon has the lowest prices. Instead it seems like they're meant to ensure
that Amazon actually _has_ the lowest prices on the most popular and high
volume items. On those items they are pricing for high volume, while on the
lower volume items they need a higher price to get an equivalent margin.
That's what this looks like to me: maximizing margins across products with
different sales volumes.

------
WalterBright
Another common sales technique is to have 3 models in a line - the stripper,
the standard, and the deluxe. The stripper was barely functional, and its sole
purpose was to have a cheap price to attract customers to the showroom. The
deluxe had every silly feature the manufacturer could think of, like
pinstriping on a dishwasher. It had a very high price. It's sole purpose was
to 'frame' the price of the standard model and make it look like a bargain.

The standard model was the one the manufacturer expected to sell. Of course,
the rare price-insensitive customer would buy the deluxe, and the salesman was
happy to sell that and collect the large commission.

------
JoachimSchipper
Pricing the most-seen items lower is not quite as nefarious as "trick" would
suggest, IMHO - and part of it is probably just driven by various advantages
of selling a lot of some particular product.

------
WalterBright
This is all old, old news. Back in the 1970's, a friend of mine was shopping
for a nice SLR camera. He knew which camera he wanted, and diligently
researched ad after ad, finally settling on one with the cheapest price. We
all piled into his car to go get it.

Sure enough, he bought the camera body dirt cheap. But he walked out of the
store with a lense, filter, case, flash, film, and a few other accessories.
When back home, he ruefully discovered that the total price he shelled out was
higher! He didn't realize that the accessories were priced higher than the
competition. People simply are not price sensitive to add-ons, and salesmen
have known that for centuries.

Gillette is famous for pretty much giving away the razor and making money on
the blades.

There's even a word for it: "loss leader".

All Amazon has done is automate it. Pretty much all retailers do it.

~~~
tobinfricke
> Gillette is famous for pretty much giving away the razor and making money on
> the blades.

Admittedly... if you're not including the blades, the "razor" is just a
plastic stick.

~~~
WalterBright
Not so before BIC - the Gillette razor was a nicely crafted metal tool.

------
WizzleKake
Amazon jacks the price around on a lot of the household items that I buy.
There one item that I last purchased for $11.94. I have seen it as high as $29
and some change. Right now it is $23.94.

I've wised up to this tactic and will buy extra when the price is low enough
to make it a better deal than buying at the grocery store.

~~~
driverdan
Their pricing of household items is not very good. Almost everything I'd buy
is cheaper at retail stores and I don't need to buy a pallet load.

------
steven2012
Surprisingly most home improvement things are cheaper at Home Depot rather
than Amazon. I learned this one the hard way. Also Amazon routinely displays
"original" prices that are much higher than other places and with the
"discount" falls in the same price range.

------
gdulli
When I decided I didn't feel great about supporting Amazon any longer due to
its reported treatment of its business partners, corporate employees, and
warehouse employees, I started shopping around and was surprised to find it
wasn't so hard to find deals just as good or better elsewhere.

Sometimes prices are just lower elsewhere, sometimes free shipping comes
without a requirement to make a $35 order. (Or pay a high annual fee for free
shipping that wouldn't amortize well for me.)

And sometimes Amazon still is the cheapest, but not by so much that it feels
imperative to shop there if I have reasons not to.

------
kmfrk
As has been said, this should be no surprise at all - especially if you've
followed phenomenons like the Harry Potter books that got the same treatment.

Amazon underbid competitors on the short tail and make it up on the long tail.

Amazon also stand the benefit that nothing is technically "upsale", since it's
all horizontally in the same basket, so they can't get accused of selling you
extra stuff the way other vendors might.

------
zeeshanm
I read on NPR a while ago some guys found an arbitrage opportunity in book
prices. So - he would track the most sought after books, buy them when price
were low, usually around July/August, and then sell them back on Amazon when
prices were high, around the time of September and January. Makes sense.

~~~
bronson
Planet Money, probably their second best textbook story:

[http://www.npr.org/blogs/money/2014/11/10/363103753/textbook...](http://www.npr.org/blogs/money/2014/11/10/363103753/textbook-
arbitrage-making-money-off-used-books)

(best imo was talking about the whole mess around writing textbooks)

------
xenadu02
This has been WalMart's strategy for decades so it shouldn't surprise anyone.

~~~
returnofthejedi
What is Walmart's digital stratergy?

~~~
GabrielF00
I think WalMart is pretty focused on free ship-to-store. This doesn't appeal
to me at all since I live in a big city and going to a suburban Walmart would
be a big production. It makes a certain amount of sense for my parents since
there's a Walmart neighborhood market five minutes from their house. It
eliminates one risk of online purchases (package sitting on your doorstep) but
introduces the inconvenience of parking and getting your product from the
store's customer service department.

~~~
logfromblammo
Every time that I have used Ship-to-Store from Wal _Mart, I have had to spend
at minimum 30 minutes between entering and exiting the store parking lot. Most
of the time, I have to hunt down a store employee myself, because unlike the
customer service desk, the Ship-to-Store /Layaway desk is not continuously
staffed.

Wal_Mart is great when the value of your own time is not very high, but at
some point, it is glaringly obvious that they keep prices lower by making all
their customers spend just a little bit more time in the store than absolutely
necessary.

So the inconvenience is very inconvenient. It is only made worse by the fact
that I didn't shop for the items, and didn't buy them, but I'm simply the one
who drives past a Wal*Mart every day. For the shopper, it really is free at-
home delivery. For me, it is, "Hey, guess what? You get to flush half an hour
of your life down the toilet today--what a deal!"

Ship-to-Store is precisely the reason why I fear Amazon Locker and other "ship
it the last mile yourself" services.

------
tmalsburg2
> The startup wants to help Amazon competitors think about pricing in as
> sophisticated a way as Amazon does.

The catch is that if several big retailers apply the Amazon strategy, a self-
reinforcing feedback loop will drive the prices for popular products to zero
and the prices for less popular products to +inf. This will make popular
products even more popular, which further strengthens the effect. The question
that this startup has to answer is thus how they are going to keep the market
from exploding and how they can benefit several clients at the same time.

------
DiabloD3
I dont get why they use HDMI cables as their first example: we keep buying
HDMI cables because they get busted, not because we need more.

AmazonBasics is currently the best cheap cable (replacing Monoprice's now that
they aren't nearly as good as they used to be).

Also, why does the article call them HD cables. Whats an HD cable? None of my
ports say HD, they say HDMI.

And it doesn't even get into how Prime games S&H over the long term.

~~~
wingerlang
Is it possible that there are different types of cables that offers HD
transfer to the TV? I've never really heard "HD" cable either, but in the
article I read it as HDMI, had to go back to check if it actually said HD.

~~~
DiabloD3
You can do 1080i over YCbCr analog, but no one has done this for like a
decade, and it only made sense for pre-HDMI HD sets (which made as little
sense to manufacture as pre-Rec2020 4k TVs being made now).

------
kenjackson
Lego pricing on Amazon is generally bad. Often much worse than what Lego sells
the sets for. That is one area I'd love to see Amazon change.

~~~
mynameisvlad
Amazon doesn't sell every product themselves. Most are Amazon Marketplace
sales, which are entirely 3rd party (some are Fulfilled by Amazon, which gives
you the Prime shipping but is still 3rd party). In these cases, Amazon can't
control the prices at all; it's all up to the 3rd parties to set the prices.

------
eurusd
I also like the simple but effective Keepa
[http://keepa.com](http://keepa.com) to compare amazon prices in different
countries at the same time. In Europe for example, Hometheater amps are 50%
cheaper in Germany than france, while france is cheaper on something else and
UK is cheaper on tools and sometimes projectors (depending of FX rates)

------
known
I think Amazon is emulating
[http://en.wikipedia.org/wiki/S%26P_500](http://en.wikipedia.org/wiki/S%26P_500)

------
AnonJ
"Rising the price of the cables by 33%" feels really sinister and underhanded.
Is this guy totally sure that it was done intentionally.

------
milesf
I use [http://camelcamelcamel.com](http://camelcamelcamel.com) to track stuff
I'm looking to buy. Here's a screenshot from my price tracking last year on a
WD 6TB drive:

[http://i.imgur.com/evOBCVN.png](http://i.imgur.com/evOBCVN.png)

------
known
You'll buy anything you think Amazon is losing money on.

