What Is Dynamic Pricing?
Dynamic pricing is a blanket term for any shopping experience where the price of an item fluctuates based on current market conditions. On Amazon, as well as multiple other marketplaces, e-commerce stores, and sales-related businesses, dynamic pricing is utilized by retailers to optimize product prices.
Dynamic repricing creates flexible prices depending on many different variables. A retailer might change the price of an item based on consumer demand, price fluctuations at a competing retailer, or even the time of day and weather conditions.
Although dynamic pricing was utilized before the Internet, most notably within the realm of airline tickets, it was e-commerce that made it much more widespread. The Internet broke down doors in comparison shopping by allowing consumers to compare prices easily, which in turn drove prices down.
Advantages of Dynamic Pricing
The advantage of dynamic pricing is that it keeps the competition fair for everyone. The customer benefits because they can easily price match between sites, as well as take advantage of dips in the market when they can purchase the item they want for a cheaper price.
The seller benefits because they can learn to adjust prices to maximize profits. Due to complex algorithms and machine-learning pricing solutions, a retailer can know exactly how much to increase revenue by in both high demand and low demand situations.
Amazon Dynamic Pricing for the Buyer
Dynamic pricing works in exactly the same way on Amazon. A buyer who is searching for an item in the morning may see a different price from the price he sees when he searches in the evening. In addition, if he places the item in his shopping cart in the morning, and then that seller changes his price during the day, the price in the buyer’s cart will also change to match the seller’s new price. Amazon has a policy of refunding buyers for certain items if theirprice has changedwithin seven days of purchase.
If there is something a buyer particular wants, and he does not mind when he gets it, he might be better off purchasing it during an “off-peak” season. He might find, for example, that purchasing sunglasses during the winter will save him money, or a toy for his favorite nephew might be more affordable during the months further from Christmas. Moreover, buyers can use external websites that will send them alerts when their selected item’s price on Amazon goes down or hits a certain low threshold.
Amazon Dynamic Pricing for the Seller
The Amazon seller too should take advantage of dynamic pricing. If he does not take into account seasonal changes, consumer demand, seasonality, and so forth, he could end up missing out on profits.
While many sellers opt to constantly assess the market themselves and then change their prices manually, many other sellers (especially high-volume ones), decide to employ the services of algorithmic pricing technology to do this for them.
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