The working principle of Amazon's pricing algorithm

Amazon uses cookies to track user behavior, selling approximately 400 million products every day and collecting a large amount of data about when and why shoppers make purchases. Amazon's dynamic pricing algorithm mainly considers the following factors:

1. Seasonal factors

For example, can your fur gloves sell well in summer? Even though gloves are one of the best-selling products on Amazon, their likelihood of popularity during the hot summer season is quite low.

2. Other factors of demand

Amazon's dynamic pricing strategy is mainly applicable to products with high demand during specific times, such as whether there is a major holiday coming soon? Are people going on vacation soon? Some products sell better at night, while others sell better during lunch breaks. Amazon understands all of this. It can be guessed that products with strong demand have higher prices.

3. Supply

This factor typically works in conjunction with demand. Is your product popular and limited in supply? So, please be prepared to see the price increase! However, Amazon's pricing algorithm only allows prices to rise when demand still exists after you have sold out all the products. On the other hand, if there are many unsold items in this category, Amazon will lower their prices.

4. Number of product visits

Even if your product has not yet been highly demanded, Amazon's pricing model already knows that it may. If shoppers repeatedly click on the same product or browse it through an Amazon ASIN account, the prices of these products will also be adjusted.

5. The seller's overall performance

If your customers have good reviews and communication with buyers is clear and consistent, Amazon's dynamic pricing algorithm is more likely to choose you

6. Price

Your own price and the price of competitors with the same product