The secret behind Amazon's low prices
14.01.2015 20:00
You might think Amazon is the cheapest place to go for online purchases, but a new study has revealed this isn't always the case.
Researchers have found that the Seattle-based company fools users into thinking they are getting a good deal by tweaking their prices a number of times each hour.
Overall, the study found that the online marketplace harnesses the 'psychology of price perception' in buyers by making millions of individual price changes a day.
For instance, when it's offering its biggest discounts on popular products, such as a TV, it will increase the prices of its less popular items to make a profit.
According to a white paper by Boomerang Commerce, the technique means Amazon often appears to be beating its competition on low prices.
'Amazon may not actually be the lowest-priced seller of a particular product in any given season,' the report reads.
'But its consistently low prices on the highest viewed and best-selling items drive a perception among consumers that Amazon has the best prices overall – even better than Walmart.'
Boomerang uses the example of a $350 (£230) Samsung TV that was discounted $250 (£165) on Black Friday.
But at the same time, Amazon increased the price of the HDMI cable needed for the TV, as the product would not change the price perception of the larger purchase.
Another example, according to Business Insider, is when a best-selling router was priced 20 per cent below Walmart's price, a different model was priced at 29 per cent more expensive than it cost on Walmart.
'Competitive pricing has moved beyond weekly adjustments and price matching,' said Guru Hariharan, founder Boomerang Commerce.
'The Producer Price Index sheds light on the complexity and the speed at which retailers adjust their pricing to drive buyers and revenue.'
(dailymail.co.uk)
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