On the most recent Black Friday (i.e., the day after Thanksgiving, when many retailers make enough profit for the year to exceed their costs, known as getting in the black), Amazon actively changed the prices of one-third of the products in its seemingly endless supply. Try to imagine what that means. Amazon, the marketplace for virtually everything, engaged in literally millions of price changes, on what would already be probably its busiest shopping day. Why?
Here’s the thing: It isn’t all that unusual for Amazon. On a regular basis, it changes the prices of 15–18 percent of its products, every single day. With its famous algorithms and remarkable data warehouses, Amazon evidently believes it has better insights into what consumers will pay at any particular moment for a vast range of products.
Some product categories come in for more changes than others. Some are subject to change every day, others undergo price alterations every third day, another set shifts once a week, and still others experience changes only once or twice a month. Perhaps unsurprisingly, considering its investment in the Kindle, the most frequently changed product category is tablets, for which Amazon changes the prices of 15 percent of its stock every one to two days.
But the really remarkable transitions are the ones that take place around the holidays. Reports from the most recent year’s holiday trends indicate that Amazon literally changed more than 3 million prices, each and every day during the month of November—of course, with the previously mentioned jump in activity on the day after Thanksgiving.
Pleased with how well these changes have worked, Amazon promises to continue making them, and perhaps even ramp up its efforts. According to one analysis, the retail giant is likely to make up to 10 million price changes per day in the coming holiday season.
Source: Jenn Markey, “Three Things You Need to Know About Amazon’s Price Strategy,” Retail Customer Experience, April 21, 2014, http://www.retailcustomerexperience.com