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Illustration: Aïda Amer/Axios
In the latest phase of the desperate race to survive against Amazon's immense selling power, brick and mortar stores are increasingly aping one of the retail giant's most potent practices: dynamic pricing.
Kaveh reports: This increasingly popular tactic — in which a seller constantly adjusts the price of its products, for example hiking hotel prices during a big convention — benefits both buyers and sellers, its defenders argue. But as pricing is increasingly automated, the dangers include gouging and discrimination.
"We are headed, long term, in the direction of prices that are constantly changing, either by time of day or by individual or by demographic type," says Joseph Turow, a media and marketing professor at the University of Pennsylvania.
The big picture: The price for any given item on Amazon.com changes every 10 minutes, on average, driven by insight the company gleans from many millions of shoppers' habits and preferences.
But consumers, already accustomed to price spikes when certain goods are in high demand, are seeing them pop up in unusual places.
This is just the beginning. "Dynamic pricing is inevitable," says Alex Shartsis, CEO of Perfect Price, a startup that sells software allowing companies to deploy the practice on their own wares.
At its best, the tactic can curb waste — such as by automatically lowering the price of perishable produce if it's overstocked, or soon to go bad — and keep products available by raising prices as stock dwindles.
And taken to its extreme, experts worry that completely individualized pricing can harm certain buyers.
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In a new example of Amazon's pricing strategy, it appears to be lowballing rivals in a classic squeeze to take over yet another industry: freight.
Erica writes: With its track record of upending nearly every business it enters, Amazon has the potential to decimate UPS and FedEx as it moves into shipping. Its tactic is a modern example of putting competition through a Rockefeller-style “good sweating.”
"Amazon is turning areas of the business that were historically costs into new revenue streams," says Gartner L2 analyst Griffin Carlborg. Shipping could be a massive source of profit for the tech giant — U.S. companies spent $1.5 trillion on moving goods in 2017, reports WSJ.
Analysts say it’s a familiar strategy. Amazon has tried to grab customers from sellers on its site by debuting cheaper, private label products right alongside the existing selection.
The company denies the lowballing: "We work with many line-haul service providers in our transportation network and have long utilized them to carry loads for Amazon. This service, intended to better utilize our freight network, has been around in various forms for quite some time. The analysis suggesting dramatic undercutting of pricing is false."
The big picture: As we noted when Amazon announced 1-day shipping, one way the company can slash delivery times for Prime is by building its own logistics network — chipping away at its reliance on the big shippers.
Photo: Anjelika Gretskaia/REDA/UIG/Getty
Illustration: Sarah Grillo/Axios
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Russia and the North Pole (Nastassia Astrasheuskaya, Henry Foy — FT)
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Kidnapping: An efficient business (Anne Diebel — NY Review of Books)
Photo: Thomas Monaster/NY Daily News/Getty
As we've reported, millennials turn their collective noses up at mayonnaise, mainstream beer and American cheese. The latest reports are that they are doing the same to raisins, the default snack for school lunch bags for generations.
Producers fight back: For some months, Sun-Maid, the producer of 40% of U.S. raisins, has said it does not intend to be made obsolete. But how will it avoid that fate?
In the NY Times, Jonah Engel Bromwich profiles how the tension has played out in California's Central Valley, home of the Thompson seedless grape, which is mostly dried into raisins, as farmers seek to save themselves.
One thing favoring the producers: Unlike the other victims of changing tastes, raisins are actually not bad for you. For those traveling in tough conditions, for instance, they are a good source of a quick energy jolt.