A lurid glimpse into the new algorithm driven world.
The High-Speed Trading Behind Your Amazon Purchase: Just beneath the placid surface of a typical product page on Amazon lies an unseen world, a system where third-party vendors can sell products alongside Amazon's own goods. It's like a stock market, complete with day traders, code-slinging quants, artificial intelligence algorithms and, yes, flash crashes...The algorithm will often raise the price on items in a seller's catalog, to see if other sellers will follow suit. The goal is to maximize sales while avoiding bidding wars that can be a race to the bottom...The result, said my marshmallow merchant, is that the customer isn't always getting the absolute best price, especially compared with in-store retail....But the point of Amazon isn't to offer a consumer the absolute lowest price possible; it's to offer the lowest price possible given the convenience that Amazon offers...The most vigorous competitor to sellers on Amazon is, in many cases, Amazon itself. The merchants I interviewed say it is common for Amazon to notice a product category that does well and begin selling it as well. Amazon may even go further and develop a house-branded version of a product. While the price of a pack of Duracell AAA batteries, for instance, fluctuates from one day to the next, the price of Amazon's own brand of AAAs is stable