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Online Shopping Giant Amazon makes Customers pay more for Popular items

At least 94 percent of sellers who won the buy box placement without having the cheapest listing were either sold by Amazon itself or companies paying Amazon

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Amazon, Wikimedia
Amazon insists that its algorithm chooses products to go into the buy box based on a range of factors, including customer service and free delivery
When customers search for and click on a product, the Amazon algorithm chooses one vendor’s offer to put in the buy box
Having the product in this buy box offers a major advantage for the retailer, as most customers end up adding it to the cart and buying it
Sept 21, 2016: The online shopping portal Amazon’s algorithms make customers pay more for popular products giving prominence to items that benefit the retail giant, a study by ProPublica said.
ProPublica on Tuesday said it reviewed 250 frequently purchased products over several weeks to see what all were chosen to appear in the highly-priced ‘buy box’ that pops up first as a suggested purchase.
Amazon that bills itself as the “Earth’s most customer-centric company”, not only sells products directly itself, but also allows other retailers to sell their own products through its platform.

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This means that the same product could be offered by dozens of vendors at different prices and with different shipping costs.

When customers search for and click on a product, the Amazon algorithm chooses one vendor’s offer to put in the buy box.
Having the product in this buy box offers a major advantage for the retailer, as most customers end up adding it to the cart and buying it.
ProPublica found that almost three-quarters of the time Amazon would place its own products or those from companies that pay Amazon to fulfil orders into the buy box, even though they might not always be the cheapest.

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If a customer bought everything recommended by Amazon’s buy box they would end up paying 20 percent more than if the same products was bought at the lowest price on the platform, the study said.

Amazon, however, offers a tool to allow customers to compare product prices by producing a list that ranks sellers of the same item by “price and shipping”.
ProPublica. Wikimedia
ProPublica. Wikimedia
Although even there, the company gives itself an advantage by omitting the shipping costs for its own products.
This would mean the rankings were accurate for Amazon Prime members, who get unlimited ‘free’ shipping for $99 per year, but for anyone else the ranking is misleading.
Amazon insists that its algorithm chooses products to go into the buy box based on a range of factors, including customer service and free delivery.
Amazon founder and Chief Executive Officer (CEO) Jeff Bezos had said in 2007 that it uses “very objective customer-centred algorithms” to automatically award the buy box to the lowest priced seller, which is clearly no longer the case.
At least 94 percent of sellers who won the buy box placement without having the cheapest listing were either sold by Amazon itself or companies paying Amazon.
The companies that do not pay Amazon hefty fees (between 10-20 percent of sales) to fulfil orders, find themselves sidelined.
ProPublica concluded that it shows how hidden algorithms govern online interaction from Google search results to Facebook news feeds. (IANS)

  • Manthra koliyer

    This is just one of the tricks that the online websites use!

  • ucscalum

    You mean Amazon wants to be profitable? How shocking!

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How did Baniya Billionaires Become Digital Anarchist? (Tech Trend-Part II)

"Unlike entrepreneurs who believe in concentrating on business administration, baniyas are hawk-like people".

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Cell phone without batteries
Life beyond chargers, cords and dying phone- Researchers, including one of the Indian-origin, have invented the cell phone that works without batteries. Pixabay

The great Indian baniya community, single-mindedly focused on business and keeping a close tab on profits, has embarked on a digital journey to understand their customers better and boost growth.

Utilising new technologies like Artificial Intelligence (AI), Machine Learning (ML) and data analytics in their businesses, they know better what the young buyers’ preferences are.

Today, India’s Gen-Y shop using a mix of online and offline modes where they compare prices and refer to reviews online even when they shop in an offline store.

The traditional acumen, mixed with New-Age technologies, have unleashed a new breed of baniyas who are defying old wisdom and charting new courses.

Business
Behind every successful entrepreneur, there’s an army of loved ones having their back.

“Anyone can set up and start a business with a small or a big idea or investment but without having a business sense, the knowledge of trade and the market trends, they can’t survive. Baniyas are ahead in this game with additional support of family culture and community,” says Anoop Mishra, one of the nation’s leading social media experts.

Indian millennials — aged 18-35 and accounting for nearly 34 per cent of the population — have driven e-retail industry’s growth through their increasing Internet usage, says global services firm Deloitte.

“Millennials’ increasing usage of internet for shopping has driven growth of online retail. E-retail is expected to surge from 3 per cent of total Indian retail market in 2017 to 7 per cent by 2021,” said the report.

Convenience of buying anywhere and anytime, discounts and access to products not available offline are some of the key reasons for India’s Gen-Y going online — and Baniyas know this well.

Prasoon Gupta, Co-Founder and Director, Sattviko Foods, says his idea was to offer a snack that finds its origins in traditional Indian recipes but with a modern twist for young consumers.

“Right from coming up with a unique idea to differentiate ourselves from the other players, and what they deliver, Sattviko has overcome many hurdles and has thrived in its journey to where it is today,” Gupta told IANS.

Tips to expand business
Tips to expand business . Today, India’s Gen-Y shop using a mix of online and offline modes where they compare prices and refer to reviews online even when they shop in an offline store.Flickr

He has developed an AI-based technology platform called “JIGSAW” to enhance and scale-up the distribution medium.

Ola is serving over one billion customers annually and is creating employment opportunity for millions through its ride-hailing platform.

Ola Co-founder and CEO Bhavish Aggarwal who set up the firm some eight years ago believes the future of employment is micro-entrepreneurship.

According to Mishra, “Unlike entrepreneurs who believe in concentrating on business administration, baniyas are hawk-like people”.

“This is the secret to their ever-flourishing business,” Mishra noted.

Also Read: World’s First Fully Solar Powered Airport In India

Baniyas are strict with keeping their balance sheets up-to-date. They are also a closely-knit community and adhere to their clan’s unwritten rules very strictly.

The inner community network plays a big role, where they have enough access to trade or business knowledge, availability of funds and other resources. Almost all of them have retained the hard-nosed approach of their forefathers.

“The current army of baniyas knows by heart how their forefathers worked. It is deep down there, even if they live and study abroad and then start their business back home. It is right in their genes,” said Mishra. (IANS)