Amazon and Price Perception

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If you’re interested in Amazon and pricing then there’s a white paper out there from Boomerang Commerce that’s causing a stir.

Boomerang Commerce is a dynamic pricing company founded by former Amazon employee Guru Hariharan and the white paper called “Introduction to Price Perception Index” looks at how Amazon monitor prices across the board and amend their own prices multiple times every day to take the advantage.

As the report notes: “Amazon may not actually be the lowest-priced seller of a particular product in any given season, 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.”

None of this will surprise seasoned Amazon sellers. But it’s still an illuminating read. I first read about the report on Re/code and their report gives a great example of the practice.

Re/code notes: “In one example, Boomerang observed Amazon testing price reductions on a $350 Samsung TV — one of the most popular TVs on Amazon — over the six months leading up to Black Friday. Then, on Black Friday, it dropped the price to $250, coming in well below competitors’ prices. But when it comes to the HD cables that customers often buy with a new TV, Amazon actually pushed up the price by 33 percent ahead of the holidays. One reason is that the cables weren’t among the most popular in their category, meaning that they have little impact on price perception among shoppers.”

It’s well worth reading.

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