
Amazon’s algorithm is hiding the best deal from many customers - known
https://www.propublica.org/article/amazon-says-it-puts-customers-first-but-its-pricing-algorithm-doesnt
======
danso
I'm a little too lazy to create an account in which Amazon Prime is not
enabled, so I'm looking at listings in Incognito mode (i.e. not going through
to the order confirmation screen, which requires creating an account).

In the ProPublica article, the example of Loctite Liquid glue is used:

[https://www.amazon.com/gp/offer-
listing/B004Y960MU/ref=dp_ol...](https://www.amazon.com/gp/offer-
listing/B004Y960MU/ref=dp_olp_all_mbc?ie=UTF8&condition=all)

The first listing is indeed from Amazon.com as the seller. It has the cheapest
price at $5.97 with "FREE Shipping" if you have Prime. So I assume that
without Prime, there is a cost for shipping.

The next listing is as the ProPublica article claims, from
"TheHardwareCityCo", with a price of $6.75 with free shipping.

Assuming that that free shipping, unlike Prime, is unconditional, it is worth
pointing out that TheHardwareCityCo offers a shipping date from "October
3-12". I'm assuming that you also don't get the return guarantees that you do
from Amazon.com.

Furthermore, the massive markup cited in Quartz/ProPublica -- $1,400 extra for
buying a basket of the 250 most popular products -- only applies if you
decided to buy each item individually, as Amazon automatically gives you free
shipping (Prime member or not) if you buy $50+ worth of items.

Not seeing the big problem here, to be honest. Frankly, I get annoyed when the
default seller for an item is _not_ Amazon, and I have to dig to find the
listing that has Amazon as the seller. I have Prime, so that makes a big
difference, but I prefer Amazon's reliability over spending time trying to
figure out which third-party seller is the least shadiest.

~~~
BGZq7
> The first listing is indeed from Amazon.com as the seller. It has the
> cheapest price at $5.97 with "FREE Shipping" if you have Prime. So I assume
> that without Prime, there is a cost for shipping.

When I'm not logged in, it shows it has free Prime shipping. When I do log in
to my account without Prime, it shows it has free shipping with an order of
$49 or more. The only way I can find to see the shipping cost is to add it to
my cart and proceed to checkout, which makes it a bit difficult to comparison
shop.

> Assuming that that free shipping, unlike Prime, is unconditional, it is
> worth pointing out that TheHardwareCityCo offers a shipping date from
> "October 3-12". I'm assuming that you also don't get the return guarantees
> that you do from Amazon.com.

Amazon also seems to overstate these shipping dates to make Prime shipping
look better. Almost every time I have ordered something via a 3rd party like
that, it arrives before the earliest date Amazon says it could.

~~~
gruez
>Amazon also seems to overstate these shipping dates to make Prime shipping
look better. Almost every time I have ordered something via a 3rd party like
that, it arrives before the earliest date Amazon says it could.

They do that for themselves as well. Their shipping estimates for super saver
shipping is always exaggerated, with packages arriving in 2-3 business days
rather than 5-7 estimate

~~~
ggggtez
Also worth noting, is new third parties are not allowed to give lower time
estimates until they achieve a certain rating.

------
childifchaos
This article is complete nonsense.

I expect Amazon to recommend me products that it itself is selling or it
itself has in its own warehouse, the sellers are secondary, if I wanted to buy
from another seller I would use eBay.

The fact that there is even an option to then price compare with other sellers
and purchase direct from the seller while on the Amazon website is a pretty
cool bonus, not Amazon trying to scam me.

It's not a price comparison site searching for the best price and giving it to
me (if I wanted that I would use a price comparison website) and it's not eBay
or a marketplace, it's Amazon, a direct retailer with an added bonus of
allowing you to search a separate marketplace but it's main business is
selling directly!

The marketplace is mainly clever marketing by Amazon, people use Amazon
because they don't need to look else where because it has everything, since
even direct order companies sell on there, hence once some people discover
this they just use Amazon for everything (I know lots of people that do this)

~~~
adolph
_almost wholly unregulated_

Is the key bit. They aren't trying to be coherent, they are advocating for
anti-democratic law, aka regulation.

------
a3n
> Amazon bills itself as “Earth’s most customer-centric company.”

In general, when a person or company proclaims something like this, it should
be viewed with robust skepticism.

If it were undeniably true and obvious from evidence, they wouldn't need to
say it.

If they need to say it, it could be because no one else is saying it.

Similarly, if your boss or a co-worker says "I'm all about X," it may be that
they just read a book that mentions X, or heard it in a meeting and just now
decided that it would be good to be seen in that light. If they really were
all about X, you'd already know it.

~~~
jasonkostempski
At some point in my life I realized I need to apply this to every single claim
made by everyone, including people I trust and even my own thoughts. It's
exhausting, but I can't not do it.

~~~
a3n
Self-skepticism is particularly hard.

------
ikeboy
The buy box prefers FBA sellers over FBM because customers prefer FBA sellers
over FBM.

It also takes into account length of time as a seller, feedback, valid
tracking, and other things that customers want.

If you want the lowest price, you can easily choose that one. But most people
do not, and it's silly to expect Amazon to cater to the minority at the
expense of the majority.

------
merb
Actually I prefer to sometimes spend more on a product, especially if the
marketplace seller has negative comments.

If I buy directly from Amazon I mostly now that if it's broken I can easily
send it back and that they are actually using most german laws (except
financials), so as a Customer I know I have protection and the company won't
die in the lifetime of the product.

------
skookum
This article seems to be much ado about nothing. Amazon's buy box algorithm is
weighted towards sold or fulfilled by Amazon because Amazon's metrics show
that Amazon's customers prefer sold or fulfilled by Amazon.

Many Amazon customers prefer sold or fulfilled by Amazon even if the final
price paid is higher than the best price. Sometimes the best deal is not the
best price - one has to factor in the hassle of deciding whether a given 3rd
party is worth dealing with.

Lastly, I'm also not sure how many customers use Amazon in a way where this
supposed hiding of the best prices would be detrimental to them. Speaking as a
non-Prime customer of over 15 years, I have never once paid for shipping for
an Amazon.com/FBA item. I tend to accumulate items that I'll order eventually
in my cart's "Saved for later" and use them to pad out orders I want shipped
now up to the free shipping threshold.

------
Hydraulix989
This doesn't even bother me, but the fake reviews are driving me nuts.

You have the influx of Chinese sellers that "bribe" top reviewers into writing
"unbiased" reviews (lol!). I am a Top Reviewer, and I get about 3-5 emails a
day asking for reviews in exchange for free items.

Not only that, sorting by Best Rating no longer sorts by a weighting of the
number of reviews and the average rating, so items with 3 reviews all 5-stars
beat items with 1000 reviews average 4.9 in the search results.

No wonder people play this game now.

------
phreeza
How is this surprising, given that Amazon is a privately owned, profit driven
company?

~~~
bkor
Two quotes:

1\. "Amazon doesn’t count shipping costs for its own products, or those it
fulfills for others, when customers rank a product by “price + shipping.”"

2\. "Amazon said: [..]The sorting algorithms [..] are designed for that 90% of
items ordered, where shipping costs do not apply.”"

This is not just misleading, this is a step beyond. It's a big company, it
should take care of its customers and if it does not, customer protection
agencies should go after it.

~~~
ceejayoz
It's really not surprising that Amazon's algorithm takes "of _course_ you'd
want Prime" into the calculations.

------
bogomipz
Price discrimination in eCommerce has been known for some time now. This is an
interesting read on the subject:

[http://personalization.ccs.neu.edu/papers/price_discriminati...](http://personalization.ccs.neu.edu/papers/price_discrimination.pdf)

------
ajju
"The prices Amazon shows are ranked correctly for those who pay $99 per year
for Amazon’s Prime shipping service "

This may not refute the main point of the article, but if you are a prime
customer it seems Amazon is still doing the right thing for you. (Unless I
missed something).

------
brownbat
Consumer protection rules should require up-front labeling of final price
paid, including all taxes, shipping, and fees.

Maybe, as some have argued in this thread, the algorithm is agnostically
detecting Amazon's popularity. So I don't want to pick on just Amazon.

I have the same problem if I drive to a new state. I'll have no idea how much
things really cost, because I made the mistake of not memorizing all local
sales tax schedules along my route before getting in the car.

We should make all merchants play on the same playing field, one with the
lowest possible incentives to confuse customers by showing them any price they
won't actually pay.

~~~
Zyst
>Consumer protection rules should require up-front labeling of final price
paid, including all __taxes __, shipping, and fees.

I disagree specifically with the taxes not being added on a sale separately. I
live in Mexico, a country that does mark any sale price as the sale price +
taxes. Your taxes are already included in the final price. I will attempt to
explain why I believe this is a bad thing below.

It's hard to appreciate it as someone on your side who grew up always seeing
the taxed amount in receipts and the like, but here in Mexico people are
largely uneducated about how much they are paying for purchase taxes. We are
currently paying 16%[1] on purchase taxes aside from frontier states.

Every time this comes out in conversation people tend to be shocked, usually
thinking the amount paid would be less. The sad part of this is that it's
common not to know, if I had to guess around 95% of the community likely
doesn't know how much purchase tax is, with a big part of the other 5% being
business owners that have to deal with it in a daily basis.

What I believe is that constantly seeing how much you are being charged when
it comes to your taxes makes you politically aware of how much your state is
charging you. Having this number hidden for you is certainly convenient, I
won't lie about that. Having the number you see on a shelf be the exact same
number you are going to pay certainly is easier, however, I believe this
knowledge by the population helps towards keeping politicians honest.

Since all of your citizens are painfully aware of exactly how much you are
paying on every purchase, raising that number becomes substantially harder,
since it would be met with much bigger backlash.

This is a theory that I have bouncing around in my head, and I don't have any
hard evidence to back it up, but in conclusion I think that having visible
taxes helps educate the population, and keep the government honest. Which
would be my argument against hiding that number in a "purchase total" figure.

[1] [http://www.itimbre.com/impuestos/](http://www.itimbre.com/impuestos/)

~~~
yummyfajitas
In the US we have lots of hidden taxes too - corporate taxes (some of the
highest in the world), regulatory fees, that kind of thing.

Additionally, we impose various surreptitious tax-like requirements on
companies: health insurance can't charge your actuarial price (equivalent to
taxing the healthy and paying the sick), rural and city customers must pay
similar prices for various resources, etc.

But I agree with you - we should replace all these taxes with a single
transparent consumption tax.

~~~
cmdrfred
>corporate taxes (some of the highest in the world)

Highest theoretical rates, the effective tax rate is another story.

"The top statutory tax rate of 35% in the U.S. is somewhat higher than that of
30 other OECD countries, but the average effective tax rate — the actual rate
paid after deductions and credits — is slightly lower than our competitors"
[0]

[0][http://www.americansfortaxfairness.org/tax-fairness-
briefing...](http://www.americansfortaxfairness.org/tax-fairness-briefing-
booklet/fact-sheet-corporate-tax-rates/)

~~~
briandh
The quoted statement is highly deceptive. It is backed up with "Our average
effective tax rate is 27.1% compared with 27.7% for the other 30 OECD
countries, according to CRS", but 27.7% is the rate _including_ the US, which
is not a sensible comparison. According to the cited CRS report, the average
excluding the US is 23.3% [edit, see below: note that these are GDP-weighted
averages].

Additionally, the PwC study the CRS uses [1] provides a full list and ranking.
The only OECD countries with higher effective rates are Japan, Germany, and
Italy. So, the US effective rate is lower than that of only 3 of "our
competitors" and higher than that of the other 26.

[1]
[http://businessroundtable.org/sites/default/files/Effective_...](http://businessroundtable.org/sites/default/files/Effective_Tax_Rate_Study.pdf)

~~~
cstejerean
At a glance I feel like I am missing something. If the average without the US
is 23.3% and the US average is 27.1% then how can the combination of the two
lead to an average of 27.7%? That doesn't seem right.

I understand that including the US would raise the average, but it shouldn't
take it from below the US average to above the US average.

~~~
briandh
The average is weighted by GDP (another reason it is important to examine the
rankings).

------
i4i
I think the article helped me realize that Ebay is a better match for me
philosophically. Ebay is incentivized to provide a fair and transparent
marketplace that empowers anyone. Their product is really the marketplace.

~~~
agumonkey
It's too wild for my tastes. I'm always worried about the seller, genuine
brand, shipping .. Amazon built a reputation of good enough customer service I
believe.

~~~
i4i
The reputation engine built into Ebay seems to be taken very seriously. OTOH
as someone who has avoided joining Prime, typically waiting until I have
enough purchases to qualify for free shipping, I've experienced constant nudge
(the increase in free shipping sale amount moving from 35-50, the obvious skew
towards Prime in search results) shopping at Amazon in the last two years. I'm
just suggesting that for me, having a philosophical reason to support Ebay
over Amazon (democratic, bottom up, vs. top down) will help assuage the
nuisance factor.

~~~
agumonkey
I understand and agree with all your points. Just saying that amazon tames the
psychological risk factor better than ebay, at least to my eyes.

------
kefka
and I quote from the article, "It is not clear why Amazon’s algorithm now
pushes its own products ahead of better deals offered by others."

Really now? Can you be that obtuse? It's to sell directly and make more profit
than having a 3rd party sell an item.

Tl;Dr. Amazon prefers to return Amazon's stuff on top of searches. News at 11.

~~~
pgrote
I've noticed in the last couple of months that amazon will tag things as
AMAZON CHOICE or BEST SELLER that Amazon doesn't sell itself.

For instance, if you search for mouse pad in the US you'll see the Amazon
Choice is a third party product as is the Best Seller.

The Amazon Choice has this right under the price:

Note: Available at a lower price from other sellers, potentially without free
Prime shipping.

When you click on it you see you can save $1.30 if you're willing to wait 3
weeks. To me, this is handled properly.

~~~
TheOtherHobbes
But you don't really need to wait three weeks, so that delivery "estimate" is
misleading.

UK suppliers tend to ship same day or next day, with delivery within one to
three working days.

If a supplier isn't overwhelmed with orders, the rational choice is to ship
ASAP, because it increases positive feedback and the prospect of reorders.

Not all suppliers understand this, but most do.

You only have to wait weeks on orders shipped from abroad. But the product
source country is usually obvious from the listing, so you can allow for that
- if you want to.

------
petra
One thing i don't get: what role do small retailers play in this world,
between the manufacturers and the large retailers/distributors like Amazon ?

Because idealy the manufacturer just sends stuff to FBA, pays FBA it's 15%
percent, and becomes the lowest cost supplier, right ?

~~~
hga
This can be very dangerous, because if for any reason Amazon decides to stop
doing business with you, you must pay them to either ship back your stock or
to destroy it.

A little time with your favorite search engine should find plenty of horror
stories, especially from merchants selling used CDs, DVDs and Blu-rays,
there's been suspicion in the past that false claims of piracy were being used
to suppress the supply of these items.

And don't they charge for holding your inventory? They'd be insane not to, and
that charge might be higher than you can arrange.

------
nickm12
This is a sensationalist title thrown onto a rehash of the real article, which
can be found here: [https://www.propublica.org/article/amazon-says-it-puts-
custo...](https://www.propublica.org/article/amazon-says-it-puts-customers-
first-but-its-pricing-algorithm-doesnt)

