I think that Amazon has been playing with this "Dynamic pricing" model for a while now. They certainly have the data to explore it, at least. The game can be played from the retailer as well as the consumer side.
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Official Sales Alert thread - Page 3162post #47416 of 493457/21/16 at 2:11pmThread Starterpost #47417 of 493457/21/16 at 2:16pmWhat do you mean by the game can be played from the consumer side? I can't dynamically lower the price to my level.
Jeff Bezos is a lot smarter than I am, but my simplistic analysis says that if the product has not moved at say a 60% discount for a period of time, it is not likely to move more quickly by lowering the discount to 50%. But what do I know?post #47418 of 493457/21/16 at 2:24pm
Kind of related to this, I realized that ssense had different deals for Canadiana and US consumers this past season. There were like 5 John Elliott pieces that were about 50% off on the Canadian side, but when you switched shipping to US they were all full price. Same sizes/stock across the board.post #47419 of 493457/21/16 at 2:29pmI understand that with loads of data and algorithms available, retailers can game the system to charge different prices to people in different demographics or change prices dynamically. As a customer, I prefer transparency and consistent pricing. Just as when I go see a bespoke tailor, I prefer to see pricing lists so that I know the tailor is not playing games depending on his perceived view of what you can pay, etc.post #47420 of 493457/21/16 at 3:02pmThread StarterQuote:Originally Posted by bry2000
What do you mean by the game can be played from the consumer side? I can't dynamically lower the price to my level.
Jeff Bezos is a lot smarter than I am, but my simplistic analysis says that if the product has not moved at say a 60% discount for a period of time, it is not likely to move more quickly by lowering the discount to 50%. But what do I know?
That's not true. If a consumer knows that something at 60% off that is not selling with only go down in price, then the consumer has an incentive to wait. The only consideration is if that piece will sell out. However, if the price can fluctuate up or down, then the consumer may be more incentivized to buy at a higher price to mitigate the risk of the product becoming even higher priced.
I think that more likely that the prices may be changing in real time to reflect how well an item is doing. If an item sells at 60% off, then the retailer, who knows that a lot of people want the item, raises to 50% off only, and puts "one item left" or whatever, and see if any within the pool see that the scarcity has increased, and want the item enough to purchase it at the higher price.
These explanations are simplistic, but certainly, decreasing the price at a predictable rate, on a schedule, may not always be be best strategy for a retailer.post #47421 of 493457/21/16 at 3:16pmBut is that the way retail pricing works in the real world? My experience is that things start off at a retail price. If something has not moved at that price all season, retailers will discount the item and continue to do so under market clearing price is reached. I don't know many stores that are starting out at a random price (or discount to a retail price) and then move prices around as the market for the product develops.
What kind of risk am I taking of an item selling out at a higher price, when the item has not moved for a while at a lower price? That is a risk I am more than willing to take.post #47422 of 493457/21/16 at 3:27pmpost #47423 of 493457/21/16 at 4:25pmThread StarterQuote:Originally Posted by bry2000
But is that the way retail pricing works in the real world? My experience is that things start off at a retail price. If something has not moved at that price all season, retailers will discount the item and continue to do so under market clearing price is reached. I don't know many stores that are starting out at a random price (or discount to a retail price) and then move prices around as the market for the product develops.
What kind of risk am I taking of an item selling out at a higher price, when the item has not moved for a while at a lower price? That is a risk I am more than willing to take.
Retail pricing "in the real world" has never operated the way it does now. We are in an unprecedented age, when geographical boundaries to goods or knowledge essentially no longer exist as we understood them to, so people are playing with all types of pricing models.
Also, Amazon is not most retailers. They have the resources and brainpower to play with new schemes and analyze massive amounts of highly granular data to try to optimize their revenues in a way that would have been unheard of just a couple of decades ago. Even though I, for example, could use or build similar tools, I am constrained by being just me. Amazon is fundamentally a data company, and you can bet your bottom dollar that they are doing their darndest to figure out ways of squeezing revenue out of the margins.post #47424 of 493457/21/16 at 4:45pmpost #47425 of 493457/21/16 at 4:54pmpost #47426 of 493457/21/16 at 4:57pmpost #47427 of 493457/21/16 at 5:02pmpost #47428 of 493457/21/16 at 5:10pmpost #47429 of 493457/21/16 at 5:35pmpost #47430 of 493457/21/16 at 6:04pm
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