A lot of shoppers get surprised by how product prices change so quickly on Amazon. A customer buys a camera today for $300, and a week later, the same camera is sold at a discounted price of $200.

These price changes are usually the result of decisions made by marketers or automated pricing systems.

Now, if buyers understand how and why these changes happen, they can make more informed decisions. More importantly, if they have the right tool to watch for these price fluctuations, they will be able to save a lot of money.

What is Dynamic Pricing on Amazon?

Dynamic pricing simply means that a product’s price can change automatically. It is the same thing as price changes in traditional markets, like a market for fish and meat or vegetables. In these places, vendors react to changing markets and the status of their products (spoilage, for example) and change their prices accordingly.

For example, if one vendor reduces the price of pork, nearby vendors often lower their prices too. In the afternoon, shoppers can expect vegetables to be sold at lower prices than in the morning. Same thing with fish.

Online, the competition is heavier, so sellers use machines to make the price changes. This is called algorithmic pricing. Software analyzes information from other sellers offering the same product and makes the necessary adjustments to the prices to stay competitive.

Automated price adjustments happen based on real-time market data. For example, if Seller B cuts his price by 20%, Seller A will also want to do the same.

Why? Because Seller A wants to compete.

But instead of monitoring these changes manually, Seller A uses programs to track these price changes. The software program is also capable of making price changes at the exact moment it needs to.

Many e-commerce platforms, including Amazon, use algorithmic ecommerce dynamic pricing. This means prices for the same product can change multiple times within a single day. In fact, some studies suggest that prices on large e-commerce platforms can change millions of times per day. This is how they make sure their prices are profitable according to demand, supply, and competition.

Because of this, consumers get flustered. For example, someone may buy a camera for $499 one week and see it selling for $399 the next. What is going on?

5 Reasons Why Amazon Prices Change

Now, let's find out why E-commerce platforms and Amazon sellers change the price of their products…

Reason 1: Price Supply and Demand

In classic economics, supply and demand are like a tug-of-war that always results in price changes. The rules are simple:

If the demand is high and the supply is low, the price goes up.
If the demand is low and the supply is high, the price goes down.

The same thing happens online. It is nothing more than an ecommerce pricing strategy.

Seasonal demand is the number one factor that affects supply in many product categories. This is why electronics become cheaper if people shift their attention to newer products. The old models no longer have a high demand, so prices go down.

The big question is this: how can people know that this is happening already? By the time they find out, the supply is about to run out, and they will have missed the opportunity.

A price tracking tool like WireDale can help you know this instantly. Just add your desired product(s) to the wishlist, and the tool will automatically track product prices and notify consumers when prices drop.

Reason 2: Promotions and Discount Campaigns

Promotions play a heavy role in price changes. Sellers will traditionally cut down their prices to either compete or just get you in the door.

One popular holiday where all sellers offer a massive price markdown is Black Friday. Many companies will offer as much as 50% discount on their products. Some sellers see it as an opportunity to dispose of inventory, and some see it as a branding strategy.

Amazon Prime Day is also highly anticipated. It happens every July, just right after Independence Day. Amazon Prime members can get their hands on exclusive deals and big discounts for four consecutive days during this promotion.

The thing is that many shoppers do not know when exactly the price change will happen. Is it midnight? What day? The good news is that there is a tool that can notify users at the very moment a price drop happens on Amazon.

Reason 3: Competition Between Sellers

The online marketplace is highly competitive. In Amazon alone, it is not unusual to find more than 10 sellers of the same product. If two of them decide to cut down the price, the other eight won’t be able to compete.

Such moves by competitors are what drive price fluctuations. The competition, in addition, is global. So, while one seller is asleep, another is awake.

The solution that Amazon and other sellers came up with is automation. If stiff competition is happening between sellers, the program will know and adjust prices accordingly.

This is called automatic price matching, and many Amazon sellers use a software program like this. Price matching and undercutting are just a few of the tools of entrepreneurs in what they call seller price wars.

So, who wins here? Well, those who react quickly will win. However, consumers do not necessarily always see the products whose prices went down. Sometimes, they see the products with prices that did not move.

Reason 4: Inventory Levels

Inventory levels refer to the actual number of units of products in a warehouse. Like supply and demand, its status can determine the price.

Low inventory levels raise the price.
High inventory levels decrease the price.

Imagine there are thousands of gadgets unsold. These products may sit in storage for a long time. In this case, the best thing to do for the merchant is to lower the price so he can convert the inventory to cash, even if it means a financial loss.

On the other hand, a few products with high demand can lead the merchant to increase his prices. In some cases, this price change is also automated. The pricing software has a threshold of the number of units needed to be met to increase or decrease prices.

Reason 5: Seasonal Price Cycles

Phone, gadgets, and all sorts of products, even if they are not food, go through seasonal price changes. For example, there are things like holiday products, such as lights and décor.

Then, gaming products typically rise after the school year because merchants know that students will play a lot of games in the summer.

It is also common for merchants to raise prices for electronic products during the initial release. They know that fans of a brand are willing to shell out extra cash just to get a hold of the latest gadget. Once this interest goes down, the price will also go down.

Another example: ski products are expected to go up in the winter, and hunting gadgets are expected to rise as the hunting season approaches.

All these seasons and celebrations are already factored into an algorithm’s pricing mechanics. This is why products that were easily affordable yesterday can become expensive today.

How Price Tracking Helps Consumers Save Money

With all the price changes happening so quickly, consumers feel tricked and manipulated. On the other hand, there is no way to stop merchants from changing their prices—that’s just not how business works.

So, what is the solution?

As mentioned above, WireDale’s price history tracking system can help with this. It is an application that monitors price changes on Amazon and keeps consumers informed about these changes in real time. As a result, consumers don’t need to do this manually. WireDale will instantly send them a notification once the price of a product drops.

Benefits of the WireDale Price Tracker

Wiredale works to help people make smart purchase decisions. Our price tracking system monitors Amzon product prices regularly and records these prices in a database. If the price changes, the user gets an alert.

Consumers, after creating an account, can choose specific products on Amazon that they want to track. In addition to this, the user can see a price history of that product in the last 3 months, six months, a year, or all time.

What this means for the users is that they will have a baseline of the lowest and highest prices the product has had in the past. If the lowest happened, say, in December last year, the WireDale user would expect that the current price now will reach that same low price this coming December.

Users can also put a specific price as to when WireDale would send an alert. For example, if a product is currently being sold at $149, and the user typed $99, WireDale will only send an alert if the price changes to $99 or below that.

Users also have the option to choose how to trigger the alerts. The first option is based on the target price. In this setup, the user types the actual target price in dollars. Once that price is met, the system sends the alert.

The other option is percentage-based. A consumer can type a percentage like 10%, 20%, etc. If the current price of the product being tracked drops by that percentage level, the user gets an alert.

Finally, there is a deal detection alert. If WireDale finds out that a product is suddenly being offered as a promo, the user will get a notification.
The useful part is that WireDale sends an alert when the price changes. The user does not have to go back to the application again and again just to check out the prices.

Ultimately, Our efficient system has two big advantages-

Buying at the lowest price

One clear benefit of using this software is that consumers can buy the product at the lowest price. If not, somewhere close to that.

Just look at the price history chart generated by WireDale for the GOOLOO GT6000 Car Starter.

The lowest price was reached on February 11. It never went as low as that again, but the price on March 14 is definitely better than the day before.

Although some sellers do not go back to their lowest prices due to changing economies. Look at this Anker headphones price history, its price fluctuation tendency is very steady.

Making informed decisions

The second benefit is that you can make better decisions while buying any product. Looking at the chart earlier, someone would have bought the product on February 25 or March 13 and overpaid for it, not knowing the prices were swinging up and down. If the buyer activated the Price Alert feature earlier, then he would have bought it at a lower price on February 26.

Also, our “Wiredale Verdict” feature will help you make your mind quickly. It is a summary and recommendation system that tells the user whether or not to buy the product.

As shown on the screenshot above, the rating is “BUY NOW”. It means that, based on the data gathered for this product, its current price is reasonable. Also, compared to the market average for a product like this, its current price is lower.

The user no longer has to make this assessment as our system does this automatically. As seen on the second highlighted part, the product’s price is 11% lower than its six-month average. In addition, the price dropped by $30 in the last 30 days, which means this product is a good deal.

Conclusion

Consumers deserve better. They do not necessarily need to pay more because of ecommerce dynamic pricing, but they cannot be expected to watch these price changes daily. Amazon will not do these notifications either.

Tools like WireDale help users track these price changes automatically. The system tracks all Amazon product prices, analyzes them, and notifies the buyer if a certain price threshold is met. Nobody has to buy at high prices anymore.

If you are ready to track product prices and get notifications, visit WireDale now to sign up for a FREE account and start saving money on your next purchases!