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90 eco 204 chapter 16 analysis of firms with market

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Unformatted text preview: ent and razor blades. "The long-term implication is that a price is no longer a price," said Eric Best, chief executive of Mercent, which tracks prices for more than 400 brands. For vendors that sell on Amazon, having the lowest price on a product is the quickest way to get sp ace in the coveted "buy box," Mr. Best said. A product in the buy box, or the default box that adds a product to a shopping cart, is picked more than 95% of the time by shoppers, he said. Mr. Falack of Cookie's said that changing prices more frequently has boosted sales dramatically, but requires a lot of attention. First he set the software to beat his competitors by a certain percentage. Then he set a floor price below which he wouldn't go. Then he restricted his competitors to those who had at least two stars out of Amazon's five-star rating system. For consumers, the result is more volatile pricing. Once the low-price vendor for a particular item sells out, rivals selling the same product can immediately lift their prices without fear of being undercu...
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