Really interesting piece in the Wall Street Journal about how products are priced on Amazon - an issue that may grow to be of even greater importance now that Walmart is investing billions in its e-commerce initiatives and depending on price, at least to some degree, to be a differentiating advantage.
An excerpt:
"Just beneath the placid surface of a typical product page on Amazon lies an unseen world, a system where third-party vendors can sell products alongside Amazon’s own goods. It’s like a stock market, complete with day traders, code-slinging quants, artificial intelligence algorithms and, yes, flash crashes.
"Amazon gave people and companies the ability to sell on Amazon.com in 2000, and it has since grown into a juggernaut, representing 49% of the goods Amazon ships. Amazon doesn’t break out numbers for the portion of its business driven by independent sellers, but that translates to tens of billions in revenue a year. Out of more than 2 million registered sellers, 100,000 each sold more than $100,000 in goods in the past year..."
If you want to know how it works click here.
An excerpt:
"Just beneath the placid surface of a typical product page on Amazon lies an unseen world, a system where third-party vendors can sell products alongside Amazon’s own goods. It’s like a stock market, complete with day traders, code-slinging quants, artificial intelligence algorithms and, yes, flash crashes.
"Amazon gave people and companies the ability to sell on Amazon.com in 2000, and it has since grown into a juggernaut, representing 49% of the goods Amazon ships. Amazon doesn’t break out numbers for the portion of its business driven by independent sellers, but that translates to tens of billions in revenue a year. Out of more than 2 million registered sellers, 100,000 each sold more than $100,000 in goods in the past year..."
If you want to know how it works click here.
- KC's View:
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Where this gets interesting, especially in view of heightened competition to Amazon, is where it is said that "the point of Amazon ... isn’t to offer a consumer the absolute lowest price possible; it’s to offer the lowest price possible given the convenience that Amazon offers."
Is there a tipping point at which Amazon's complicated algorithms could become less attractive than a different approach taken by Walmart? It is going to be interesting to find out.
