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Databank enables Amazon price fluctuation

December 13, 2018 11:07 PM

ALBANY - It's something most online shoppers might never notice. The reality is Amazon changes its product prices 2 1/2 million times every day. That comes out to every 10 minutes.

"I noticed that with airfare," said Laura Falco, of Amsterdam, "It happened to me. I saw the price, then it changed."

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Prices change on Amazon because the company collects data, lots of it. If you were to stack all the gigabytes of hard drives, it would be eight times the height of Mount Everest, according to author Neel Mehta.

"We actually don't really understand the sheer scope of data and hence the power that these companies have," Mehta, author of the best-selling book "Swipe to Unlock," said.

After researching Amazon, Mehta discovered that by analyzing customers' shopping patterns, along with competitors' prices, profit margins, and inventory, the company knows exactly what individual shoppers are looking for and how much they're willing to spend.

"They know way more about you and about what millions of people around the world are doing than the mom and pop bodega around the corner," he said. "They know every single thing that anybody does on any of their platforms. They know how long you looked at a product, how long you clicked on a product, what you saw, and what you bought on other platforms."

As a result, he says, Amazon is able to pinpoint and give you the price that will maximize the amount of money you're about to spend on something.

"Some people get creeped out by it," said Ted Potrikus, president of the Retail Council of New York State. "They don't like the idea they're being watched."

Potrikus says if someone doesn't like it, they can opt out and shop at their local brick and mortar store.

"What you're doing is very valuable to someone somewhere," he says, "They're trying to change your experience and tailor it to what you just happen to be doing that day."

Amazon also raises prices on uncommon products, and then the most common products will appear less expensive, and people will assume they have the best prices overall.

Through that process, Amazon is able to undercut their competitors on popular items and raise prices on uncommon purchases.

In addition, Amazon -- based on your purchasing history, can bombard you with recommendations. For example, online shoppers are likely to see a message saying, "Customers who bought this item also bought..."

Big data, Neel Mehta concluded, has a tremendous economic value to big companies.

Credits

Dan Levy

Copyright 2018 WNYT-TV LLC, a Hubbard Broadcasting Company. All rights reserved

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