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Amazon’s $23,698,655.93 book about flies
- maxxxxx 16y agoSometimes you can use this for trade ins to Amazon directly. Last week I traded in a book that had several prices for $100. Amazon took it for $27. On other sites you can get it for $24.
- kbrower 16y agoI have a book with 1 sale and 6 sellers including amazon. They definitely do not have the book.
- benvanderbeek 16y agoI work at a mid sized Amazon 3rd party seller. We reprice automatically. With thousands of SKU's there's no other way to be competitive. There are many layers to consider though, you definitely can't let your whole catalog auto-reprice. Usually sellers just focus on their top X% SKU's and let the rest auto-calculate. I wonder if we have a price ceiling setup...? Edit: Yes we have a floor and ceiling. I have no idea what I was thinking.
- blackRust 16y agoAny 3rd party tools available to 3rd party sellers? Offering something that beats the current algorithms could be a good deal (if its not illegal).
- bravura 16y agoI have code that does ecommerce price point optimization using machine learning. In an ideal setting, it combines a variety of signals, including prediction using previous sales data. It's also able to "smooth" over different products, so that you can make good price point choices even for products that have very little sales history.
- ced 16y agoWhat's the algorithm? Edit: I'm puzzled by the downvotes to my honest question. "machine learning" is not an algorithm, it's a field!
- yid 16y agoProbably some sort of regression for the prediction part, and perhaps linear programming for the price optimization, since there are probably some nontrivial (but possibly linear?) constraints on pricing.
- mgkimsal 16y agoWhat would be even more useful is to have the browsing customer's data passed in as a signal as well, but I'm guessing Amazon doesn't send that out to third parties. If 3rd parties could also customize their prices based on the potential of someone to buy (and perhaps offer bundled items based on their own algorithms) we'd probably see even greater efficiencies than we've already seen.
- russellallen 16y agoSanity checks, people. Sanity checks.
- benvanderbeek 16y agoActually yeah, we set floors and ceilings. We sometimes use % up or down from competitors but always w/in the floor/ceiling.
- keeran 16y agoI'm surprised the author (and no-one here) hasn't worked out the starting date of the automated price war based on the original RRP of the title :)
- AretNCarlsen 16y agobordeebook was effectively increasing their price by a factor of 1.2684/day, and as of Apr 8 priced the new book at $2,198,177.95. I'll guess that the used price ($35.54) implies that the initial pricing of the new book was about $50. Log base 1.2684 of the ratio of the Apr 8 price to the estimated original price = log($2198177.95/$50)/log(1.2684) = 45 [days]. Ergo looks like the two algorithms started competing around Tuesday, Feb 22. I'm sure my original price is off, but that actually won't make much difference. If it was $40, then the initial date was Feb 21; if $60, then Feb 23. [EDIT] By the way, if the price was originally 99c you would still see the $2.2M price after just another two weeks (61 days total). Ah, exponents.
- sesqu 16y agoThe original price candidate, derived from the logarithm, that is second closest to integer cents is 62.91998, with 162.85966 coming in 6th and the other positions filled by implausibly large numbers. Neither number has integer cents, since the actual series rounded or truncated values between iterations. For that reason, a simple logarithm won't tell us what the original price was - you'd need a simulation of the rounding.
- AretNCarlsen 16y agoGood idea! Here it is in C: http://pastie.org/1824968 http://pastie.org/1824968 (You have to manually add the 'f' after the constants if you want to do the whole thing in floating-point, as well as uncommenting the correct Dollars_t definition.) For the range $20.00 to $200.00, no exact matches to an integer original price (in cents) for the algorithms ceiling, floor, or round, in float or double. This was on a 32-bit Xeon server (EC2).
- pitdesi 16y agoSomeone should try selling a book that there are limited copies of (ie one that can't be procured easily) to see what happens if someone buys from a seller who doesn't have it.
- benvanderbeek 16y agoThe seller will drop ship it from another seller or they cancel the order. Not a lot of options. As long as they don't do it too often it won't affect their feedback ratings noticeably.
- gwern 16y agoThe nice thing about selling books is that you aren't bound to deliver the book - you can always just cancel the contract and refund the money. It's unlike short selling stocks in that respect; you aren't vulnerable to a short squeeze (http://en.wikipedia.org/wiki/Short_selling#Risk http://en.wikipedia.org/wiki/Short_selling#Risk). (For an example, read up on Porsche & Volkswagen: eg. http://www.nytimes.com/2008/10/30/business/worldbusiness/30iht-norris31.1.17372644.html http://www.nytimes.com/2008/10/30/business/worldbusiness/30i... )
- bryanh 16y agoThe NYT piece on Porsche & Volkswagen (and many other market corners) is actually a really useful piece of financial literature. It nicely outlines some of the outlandish and clever ways that people can use common market forces to create situations for profit. I always try to think in a similar way when it comes to startups. Where can you harness some market force to create a favorable position for yourself?
- zecho 16y agoMy wife used to sell used books on Amazon part-time a few years ago, mostly as a hobby to feed her own library. She employed some software and pricing algorithms, similar to the ones mentioned in the post. Often, she'd go to library or estate sales and just scan hundreds of books. If they met her pricing targets, she'd buy them. But one time a book she scanned had an incorrect barcode number (it wasn't clear if Amazon had the incorrect barcode or what), but so did several other sellers of the same book. When she posted the book for sale, it came up with a different title, but she hadn't noticed while she was posting inventory. Initially my wife assumed she'd lost the inventory when someone tried to buy from her, but it wasn't until she tried to drop ship from another seller that they realized what was going on. The sellers all had to cancel their orders with each other on down to the buyer, who took it in stride. But, with Amazon, you can still rate sellers who cancel your order, so there's at least that risk...
- deleted 16y ago[deleted]
- anigbrowl 16y agoThis explains a lot. I wrote a small book back in the 90s that had few sales and was unlamented when it fell out of print. A couple of years ago saw it as the subject of an amazon.com sidebar ad and was astonished to find that it was listed at $100 or thereabouts, and couldn't imagine how or why it might have become collectible. The idea that this was the result of competing pricing algorithms makes a great deal more sense to me. Now, if you'll excuse me I'm off to weep over my broken dreams of belated celebrity.
- RK 16y agoMy dad had a similar experience. His very obscure, self-published, out-of-print book was showing up for something like $1000, while at the same time he was mailing out free copies to people who emailed (plus shipping), just to make more room in the garage.
- lsc 16y agooh man. reminds me of the days when I sold books on amazon and half.com. I wrote a script that took the 'nickel less than the other guy' approach. These things are /wonderful/ when it comes to making the market more efficient. Really, though, the shipping costs eat up most of the efficiency. Amazon needs an easy way to say "I want these 10 books, used. Find me the lowest price (including shipping)" - the idea is that the more books you could buy from one seller, the less shipping friction would be involved, but amazon isn't really set up that way, which makes it much less efficient for the low end used books.
- baddox 16y agoEveryone always mentions that buying more items from a single Amazon store would make shipping cheaper? Is that ever true? Of all the online stores I've made purchases from, I believe monoprice is the only one that appears to base shipping on tiers based on item size/mass. All the rest simply charge a set rate for each item, and it doesn't matter how you divide your shipments up into different orders.
- lsc 16y agowell, the post office would take less of a cut. shipping one one-pound box is usually a lot cheaper than shipping two half-pound boxes. In theory, amazon could either give that surplus to the seller, to the buyer, or they could split it between the two. (I guess they could also keep it for themselves, but that might have negative PR consequences.)
- meric 16y agoThey'd also price it "above equilibrium" leading to a loss of potential profits.
- Retric 16y agoAmazon gives you the option to group things to reduce shipping. And if you do this you do get a discount and you will revive a single box with several items in it. If you are ordering small and cheap items like USB cables the discount can be significant.
- Jach 16y agoI'm interested where the 1.270589 number comes from. sqrt(golden ratio) is close: 1.27201965
- extension 16y agoI would guess it's derived from other statistics using yet more automated systems.
- scorpion032 16y agoI'd think they wanted a "25% to 30% premium" and use a value close enough that people can't find the ratio mentally.
- siegler 16y agoA similar thing happened to me as a seller. I saw that one of my old textbooks was selling for a nice price, so I listed it along with two other used copies. I priced it $1 cheaper than the lowest price offered, but within an hour both sellers had changed their prices to $.01 and $.02 cheaper than mine. I reduced it two times more by $1, and each time they beat my price by a cent or two. So what I did was reduce my price by a few dollars every hour for one day until everybody was priced under $5. Then I bought their books and changed my price back.
- weaksauce 16y agoI love that. It's a great lesson to programmers that we should think about the extreme cases and have set lower and upper bounds on our algorithms. Sanity checks should be in your code for most applications and inputs.
- ambiguity 16y agoAmazon should put an upper bound on the maximum price a product can be. Can credit card companies even process a transaction in the tens of millions of dollars?
- caf 16y agoI remember hearing about someone buying a multi-million dollar artwork with their platinum amex once, so it would seem so.
- joshu 16y agoPlatinum Amex I doubt. Maybe with a Centurion card.
- patrickgzill 16y agoThe so-called "Black Amex" card has been used to purchase a ~$30 million aircraft, according to American Express.
- JonnieCache 16y agoIt's gonna be quite a giggle when this happens with the stock market.
- joshu 16y agoYou think it doesn't?
- JonnieCache 16y agoWell there was the 'flash crash' but it wasn't that big a deal. This financially uninformed hacker thinks it could get much worse some day soon. http://en.wikipedia.org/wiki/2010_Flash_Crash http://en.wikipedia.org/wiki/2010_Flash_Crash
- jrockway 16y agoIt won't, because although computers have a lot of control over the market, people also look at it pretty regularly. The reason why nobody noticed a $23,000,000 book on Amazon is because out-of-print biology books are not very liquid. If that were Microsoft stock, someone would have manually made a bet on it, and then the price would have corrected after a while.
- Qz 16y agoA quick visit to amazon: http://www.amazon.com/gp/search/ref=sr_adv_b/?search-alias=stripbooks&unfiltered=1&sort=-price http://www.amazon.com/gp/search/ref=sr_adv_b/?search-alias=s... Multiple books priced upwards of $600m. One has a Kindle edition for 9.99.
- jonhendry 16y agoSeveral are from the same vendor. I think there are some very sloppy resellers on Amazon.
- nightpool 16y agoA few of these only have one seller. Money laundering? A different algorithmical problem? Something else?
- smackfu 16y agoCould be this: If two sellers have the book, and are setting the prices algorithmically, and then one of them sells it offline (like in a used bookshop) and removes it from sale, how does the other seller change their price to be more realistic?
- geekfactor 16y agoHmmm. I wonder if this would work in reverse? Suppose I want to buy a book that has several new copies for sale on the Amazon Marketplace for say $60. If I post a new copy for sale for $10, perhaps one of these algorithms would kick in to reduce the price?
- scorpion032 16y agoIn the meanwhile what would you do if you get placed an order for several of those?
- jaysonelliot 16y agoI can't begin to describe how much this pleases me. It's straight out of a William Gibson novel, but happening right now. God, I love living in The Future.
- maayank 16y agoIndeed, I was also reminded of WG. Alas, while it seems that information technology-wise we delve more and more into a cyberpunk world, health-wise and body modification-wise we are still not there. Where are my grafted muscles and commodity eye-balls?
- Hubbert 16y agoAnd not just his art, but his life as well: "they lived off his wife's teaching salary. During the 1970s, Gibson made a substantial part of his living from scouring Salvation Army thrift stores for underpriced artifacts he would then up-market to specialist dealers" [Wikipedia]
- njharman 16y agoI see this all the time. On Ebay too. Hmmmmm, maybe I'm spending too much time trolling for things to buy?
- guynamedloren 16y ago[Discalimer: I've never looked into this before and I have absolutely no idea how the Amazon reseller market works, so this might be impossible or prohibited.] What's stopping somebody from relisting every product that already exists in the reseller market, but raising the price a few bucks? Even if people are more likely to buy the lesser priced product, the seller has to lose since they don't actually have any products on hand or skin in the game. Better yet, they could relist the products for less than the competitors and jack up the shipping prices to skim a few bucks profit off the top of each sale (this would work if somebody sorted by item price only, instead of price + shipping).
- patrickyeon 16y agoMy first question: what's the penalty for listing something that you can't deliver? As in, if someone buys 'your' copy, adn someone else buys the only other copy before you get it, what do you do and how does Amazon react when you do that? Furthermore, though, how much more do you have to charge to cover your own time, shipping complexities, and just the general mess of dealing with two other entities for every sale you make? All of that adds up to a pain in the arse to make a couple bucks, in my estimation.
- rick888 16y agoI've been a seller on amazon for the last 6 months. Your order to cancel ratio needs to be below 7%. If it's above this, your account will be restricted (you won't get paid during this time). It happened to me...but it was lifted after about a month. Depending on the category, many things on Amazon sell so fast, it would be very difficult to do this.
- guynamedloren 16y ago>Furthermore, though, how much more do you have to charge to cover your own time, shipping complexities, and just the general mess of dealing with two other entities for every sale you make? All of that adds up to a pain in the arse to make a couple bucks, in my estimation. If you can operate at large enough scale, thousands or tens of thousands of books a month, then I think there's an opportunity to be had, even if you're pocketing a dollar or two from each sale.
- originalgeek 16y ago> My preferred explanation for bordeebook’s pricing is that they do not actually possess the book. There's only one problem with this theory. The Amazon TOS requires sellers to have inventory before they can sell inventory. And they will ban you for life for violating that.
- rwmj 16y agoHa ha ha ... I've encountered lots of annoying sellers who do this -- I make an order and they cancel it last minute because they obviously don't have the book/CD. Yet I keep on seeing them appear.
- FordMF 16y agoYes and no. It's true this a policy violation, but I can tell you unequivocally that a huge percentage of used sellers on Amazon are actually arbitraging their competitors inventory. As a midlevel sized buyer and seller on Amazon, I've always assumed that these sellers had some kind of secret upper-tier arrangement with Amazon? Because as buyers, we see high volume sellers do things on a daily basis that we would never do as sellers for mortal fear of our account getting banned. Yet somehow these megasellers seem able to muddle on year after year? A lot of them are not necessarily even primarily e-commerce sellers, but are semi-camouflaged divisions of larger traditional publishing entities - like how the seller oneworldbooks is actually the textbook wholesaling giant MBS Books. These sellers are companies so large they are akin to major new-book publishers, so I assume their relationship with Amazon as a company is cozier than ours is as "random small bookstore with Amazon account".
- originalgeek 16y agoThere is an upper-tier "club" on Amazon, you can see it alluded to indirectly in various SC help files. Maybe these guys get away with more than we do.
- jeffdavis 16y ago"they have a huge volume of positive feedback" Is that a pun or something?
- Figs 16y agoI've seen lots of books on Amazon priced at $0.01 or $0.02 before. Maybe a result of similar processes? (I always assumed they were some kind of scam, since why the hell would someone sell a book so cheap?)
- 5teev 16y agoThose sellers are counting on making money by shipping for less than the amount by which Amazon reimburses them. ($3.99 for a recent purchase of mine, while the postage was about $2.00.)
- smackfu 16y agoRight. Practically speaking, these people aren't actually selling books, they are just making money by doing the "handling" part of S&H.
- Harkins 16y agoThey are. I sold a chunk of my library, a couple hundred books, on Amazon, and saw sellers who would update their prices to be a cent or two below mine any time they didn't have the lowest price. The other commenter is correct, that there's still profit to be made in shipping charges.
- cookingrobot 16y agoAutomatic pricing is super common these days, even on more expensive things than books. I'm actually working on a startup called shopobot.com that wants to help people use the volatility to their advantage. We see rapid $50-100 swings on things like SLRs, so it's actually pretty significant. Ironically our site is down right now because we're based on Amazon's web services. Karma? :)
- OkGoDoIt 16y agoThat actually sounds pretty awesome. Didn't some of those CSE's like MySimon used to have a graph of pricing over time as well? Any way I can get an invite code for Shopobot?
- cookingrobot 16y agoSure! Just drop me an email (it's in my profile) and I'll hook you up with an invite code.
- instakill 16y agoSend me an invite code please (email in profile). Would also like to discuss some things with you. Tx
- klbarry 16y agoSend me an invite please, awesome idea.
- derrida 16y agoIts all innocent when it is Amazon. But I am sure there must be similar phenomena taking place in the financial markets, but the algorithms that determine pricing there are more complicated than multiplying by a simple factor.
- atakan_gurkan 16y agoPricing something high can actually increase sales. There is an example in Cialdini's book "Influence", near the beginning of chapter 1. A jewelry store owner was trying to get rid of some items, instead of marking the price down, she marked them up (by a factor of 2), and they were rapidly gone. It is a nice book to read, and will probably make you feel uneasy when you realize the abundance of manipulation tactics around us.
- jonnathanson 16y agoVery funny and enlightening analysis. I've seen the fringes of algorithmic pricing a few times in other categories -- especially out-of-print DVDs or VHS tapes. Example: don't ask me why I enjoy the movie My Dinner With Andre, but for whatever reason, I do. A few years back, I wanted to buy a copy of the DVD and checked Amazon. It turned out that the DVD was long out of print, and new copies were going for $400 apiece. I figured this price was high, but nevertheless, it was nothing that couldn't be explained by actual rarity and supply/demand metrics. Rare DVDs have been known to climb into the hundreds of dollars, especially if new and unopened. But I came back a few days later, and the price was $1932.78 (or something unusual to that effect). The next day, $3500 and change. Which struck me as odd, to say the least. Was some nefarious Goldman trader attempting to fix the market for Wallace Shawn's back catalog? Needless to say, I didn't love the movie quite that much. So I passed. These days, Criterion has released a new DVD version of the film, and accordingly, everything's dropped back down to about $30 per copy -- including the price of the original, OOP version. I feel sorry for anyone who actually might have taken the plunge at $400, which is not out of the realm of possibility. That's a lot of money for a film about two guys having dinner.
- xudir 16y agoawww
- hellasbook 16y agoI have been an on line book dealer for the past 10 years. Originally the rules about having actual possession of the goods offered for sale were quite strict. Then came the megalisters - agencies with software that listed all books in print and a contract with publisher's warehouses/library supply services/factors to arrange delivery of in print books to customers. Then came the "phantom listers" - agencies with software that spiders through the listings of legitimate on line book dealers looking for titles with few (or no) copies listed in Amazon. They then list them at inflated prices. Some of these have more than one alias on Amazon. I think of them as the Piranhas of the Amazon in the ay that they consume the smaller fish. If and when they receive an order then then try to purchase a copy from one of the "real" owners of the book.[Some are cheeky enough to request as well a"trade discount" on the dealer's price] Small businesses listing on Amazon and abebooks.com must keep their "fulfillment"rating high, so they can ill afford to refuse to supply such parasites.In fact when I requested once that I NOT be obliged to support what I think of as an unethical selling and pricing model I was told 1] that the buyer was a valued long time customer and that 2] I could approach the agency in question and - at THEIR discretion - request that they stop ordering books from me. Since AZ and ABE take out some % of the list price for the the books sold on their site (as well as monthly listing fees, closing fees and sometimes a portion of the shipping charge ) they can and do make a much greater profit from the high priced phantom listers than from the legitimate reasonably priced offerings of small book dealers, consequently they are not very interested in aggressively policing the situation. Now there is "Monsoon" and other software to automatically adjust prices on line. In practice most often works to REDUCE the price below the lowest price already listed - a rush to the bottom where books get listed for mere cents. One tactic I recommend is to search for books and to see the widest range of options is to use "addall.com" It comes in 2 flavours "New' and "Used"and searches around 30 book listing services You can compare prices (ascending or descending) and also see the kind of dealers who sell the books. Many listings have boilerplate descriptions "we ship fast" "books may have..." etc. which indicate that no human may have examined the object being listed.Other listings have descriptions of content and condition that clearly demonstrate that it is a"real"book from a "real"dealer. When in doubt look for THAT dealers OWN website to ask questions and get personal service.
- anactofgod 16y agoHeh. I suspect that this is happening in a less transparent way with automated commodities trading systems.