As of Friday, April 24, the bag of rice was priced at around $20.
Prices on Amazon have been volatile since the outbreak of COVID-19 in the United States.
The cost of an eight-pack of Skippy Superchunk Peanut Butter nearly quadrupled, from $12.52 to $45.
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Experts say the fluctuations on Amazon are often a result of the algorithms sellers use to optimize their sales.
How does dynamic pricing work?
Dynamic pricing is already common for items like plane tickets and hotel rooms.
If demand goes down because, say, a pandemic has stopped people from traveling,then prices drop.
But dynamic pricing isnt quite that simple on Amazon because of its Buy Box.
When shoppers smack the Buy Now or Add to Cart button, they are selecting a specific vendor.
Amazon does providetools that help sellersuse dynamic pricing on the Amazon marketplace.
There are also independent companies like Feedvisor and Sellery that create pricing algorithms for Amazon third-party sellers.
Those sellers were more likely to win the Buy Box and to earn revenue.
Can dynamic pricing benefit consumers?
Dynamic pricing can facilitate more competition by accurately reflecting the market and lowering prices for consumers.
American Airlinesstarted using dynamic pricing in the 1980sto compete with budget carriers.
Those new, lower prices made air travel a possibility for many more people.
One study found that nonprofits like orchestras could use dynamic pricing toimprove their revenue and also improve attendance.
The authors of the study found similar results indynamic pricing at major league baseball games.
Can dynamic pricing hurt consumers?
Another problem is that algorithms can push against each other, especially in competitive marketplaces like Amazon.
In one instance two competing algorithmsdrove the price of a science textbook up to $24 million.
Thats an extreme example and one that could easily be avoided by setting a price maximum in the algorithm.
But even with price caps, dynamic pricing can force prices up.
He gives the example of a bottle of Purell, now suddenly a hot commodity.
Amazon says its working hard on preventing price gouging and reportshaving removed nearly 4,000 accounts from the marketplace.
We actively monitor our store and remove offers that violate our policies.
But the site is still seeing huge price increases.
High prices arent the only concern.
How can I see to it Im paying a reasonable price?
TheUnited Kingdom relaxed collusion laws, allowing supermarkets to set prices on essential items.
This article was originally published on The Markup by Sara Harrison.
it’s possible for you to read the original piece here.
