Since Amazon pioneered bot-drive pricing more than a decade ago, this practice has represented a massive challenge for the retail industry.
In January this year Walmart engineers who track other retailers’ prices got a massive shock – the technology they were using to check Amazon’s prices a few million times a day unexpectedly stopped working.
Now this was no small matter for retail giant Walmart, who like many retailers, relies on computer programs that scan competitors’ websites’ prices to adjust their own prices accordingly. Even a 20 cent price difference can have an impact, and may mean losing a sale.
What happened was that Amazon had a new tactic up its sleeve, to block these programs known as bots or robots.
While the world’s largest retailer is known for its many customer service offerings, including fast delivery and a massive product catalogue, its behind the scenes technologies is also a major component to its success.
Agility with bots allows Amazon to keep its rivals in the dark while it undercuts their pricing (or is secretly charging more), while also being able to see what they are doing.
The Bot World
Traditionally, physical stores would change their pricing on a weekly basis, due to the time and expense involved in swapping shelf prices.
However, the world of e-commerce makes it much easier for retailers to update their prices regularly, many doing so multiple times a day, which is largely driven by inventory level algorithms, rival’s pricing data as well as sales forecasts.
Some companies even move prices as often as every 20 minutes, and use a variety of different methods, including bots, to gauge what prices and when, and say that consumers can be so sensitive to price that even a mere 50 cent difference can results in noticeable sales decline.
The example above clearly illustrates how Amazon’s technological prowess is helping it dominate the retail world.