When you search for a product on Amazon, the least expensive option closest to what you are looking for pops up in the “Buy Box.” Or so we all thought.
A recent probe into Amazon’s pricing algorithm showed that in a lot of cases the search results do not always yield the cheapest product. Most often those results yield the products sold by Amazon itself. ProPublica, a nonprofit journalism organization uncovered this “glitch” in Amazon’s pricing algorithm. Their research found that Amazon’s algorithm “substantially favors Amazon and sellers it charges for services.”
After noticing this disparity, ProPublica decided to investigate a bit further and put their findings in an article entitled: Amazon Says It Puts Customers First. But Its Pricing Algorithm Doesn’t.
For several weeks they tracked 250 products frequently purchased on Amazon’s site in order to determine which ones were selected for the most prominent placement in Amazon’s coveted “buy box” that pops up first as a suggested purchase. ProPublica found that approximately 75 percent of the time, “Amazon placed its own products and those of companies that pay for its services in that position even when there were substantially cheaper offers available from others.”
These findings are significant. According to ProPublica:
That turns out to be an important edge. Most Amazon shoppers end up clicking “add to cart” for the offer highlighted in the buy box. “It’s the most valuable small button on the Internet today,” said Shmuli Goldberg, an Israeli technologist who has extensively studied Amazon’s algorithm.
ProPubilica’s research revealed that the algorithm gave Amazon-linked products higher rankings in more than 80 percent of cases. They also found that the prices Amazon shows for those who have purchased the $99 annual shipping service (a.k.a Amazon Prime) and are spending at least $49 on Amazon eligible items–are ranked correctly.
Erik Fairleigh, a spokesman for Amazon, said the algorithm that selects which product is deemed the best buy is determined by a range of factors beyond price. He wrote in an email statement to ProPublica:
“Customers trust Amazon to have great prices, but that’s not all— vast selection, world-class customer service and fast, free delivery are critically important. These components and more determine our product listings… If a customer is solely looking for the lowest price available, we clearly alert them on the product detail page that lower prices may be available from other sellers.”
An Amazon spokesperson told NBC News,
“With Prime and Super Saver Shipping, the vast majority of our items ordered – 9 out of 10 – can ship for free. The sorting algorithms the [ProPublica] article refers to are designed for that 90 percent of items ordered, where shipping costs do not apply.”
Experts suggest that consumers looking for the lowest prices should spend some time investigating.
“In the case of Amazon, shoppers should absolutely look deeper into the offers from various sellers for the same product,” said Courtney Jespersen, shopping expert at NerdWallet. “Don’t automatically stop at the first deal you see and assume it’s the best price. You’ll want to factor in the product price as well as shipping charges when judging the overall value of the deal. And don’t stop at Amazon either — once you find a deal there, compare it to other retailers as well.
A few clicks can go a long way.