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[15 comments]

Price tracking sites help consumers to Amazon's best deals

March 3, 2014

Amazon's ability to continually adjust prices daily to undercut competitors has been touted as a competitive advantage. But a number of rogue price tracking websites have arrived to help consumers capitalize on those price swings.

One of the leaders is camelcamelcamel.com, which enables users to view the price history of over 18 million Amazon products. The user can see the exact day an item hit its highest price, its lowest price and its average price over a time frame. Price records of most items go back months or years.

Users can also set up Amazon price watches and get alerts via e-mail or Twitter when prices drop to a specified point. Prefab RSS feeds show the "biggest Amazon price drops" as well as "most recent price drops" and "most popular products."

An article on Bloomberg BusinessWeek profiling Camel and other price trackers noted that Amazon offers discounts of more than 30 percent that last only a few days, which lead to hump-shaped graphs — the inspiration for Camel's name. Prices are said to spike during the holidays but also are continually adjusted to demand.

What's surprising is that camelcamelcamel.com, as an Amazon Affiliate, receives price information directly. The website earns 8.5 percent of sales from customers the tracker refers. Other Amazon price tracker websites, including Keepa.com, Thetracktor.com, mypricetrack.com and Unimerc.com, appear to work on the same principle.

Speaking to Bloomberg, Judith Chevalier, a professor of finance and economics at Yale University, speculated that Amazon so far lets a small group of hyper deal seekers use tracking websites to allow some pricing transparency. In 2000, a public outcry ensued after it was learned that Amazon was using dynamic pricing to charge different prices to different customers based on their purchase history, their location and other factors. Ms. Chevalier said, "There's an optimal level of inconvenience, and it turns out that that's to have other people provide the service."

Camel suspects Amazon may cut them off one day, especially since Newegg, the online electronics store, kicked Camel out of its affiliates program for running a Newegg tracker program. It also operates a Best Buy tracker program.

FINANCIALS:     [NASDAQ:AMZN] [ ]

Discussion Questions:

What are the pros and cons of retailers like Amazon tolerating price tracker websites? Do you expect Amazon.com will kick camelcamelcamel.com out of its Affiliates program?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is it that Amazon.com will kick camelcamelcamel.com out of its Affiliates program?

Comments:

Camel has been around a long time. Oddly, I first heard about it from a reporter, and then I set up an alert on it for a pool filter. It worked, that's for sure, and I've never seen such a low price for a filter anywhere else or again.

I don't think Amazon necessarily needs Camel, but it also gives me pause about dynamic pricing in general. Retailers are thinking more about it, technologies are available to support it, and coupled with a competitive price intelligence engine, a retailer can theoretically do whatever it wants price-wise.

Once it becomes ubiquitous, I think the outcry will be a lot louder than it was in 2000. So...handle with care.

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Paula Rosenblum, Managing Partner, RSR Research

If consumers are patient, Camel can reward users with lower prices. Amazon is starting to focus on making money, and not just growing its user base. Some day, Amazon will block Camel from its Affiliates program. Until then Amazon is willing to tolerate Camel because it creates loyalty for Amazon. The real question is whether consumers will tolerate dynamic pricing.

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Max Goldberg, President, Max Goldberg & Associates

If the benefits - driving sales - of having camelcamelcamel.com outweigh the costs and lower margins for Amazon, then they will let them do what they are doing. If not, changes will be made shortly to make sure the benefits for Amazon are greater, or as camelcamelcamel suspects, they will get cut off.

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Bill Davis, Director, MB&G Consulting

Some items just need to be purchased that day so I do not believe solutions like Camel hurt Amazon and their profit margins (birthday gifts, must have items, etc...). What Camel does do is remind customers that there was an item they were interested in and the price is now right. "Act now or lose out."

I see those sales as incremental to Amazon. Yes, the margins may be lower, but would that consumer have purchased it when they first viewed it or did Camel help remind them to purchase it? In fact, do they add an incremental item to the basket when they go back to buy that item through camel increasing basket size? The data over the next few months/year will tell the story and I can assure you Amazon will be analyzing this data to see how to leverage Camel best.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

I think that Max Goldberg has hit one key component. Right now, Camel is valuable for Amazon because it creates some "loyalty," or at least drives the most price sensitive consumers to Amazon's site.

There is another potential value aspect of Camel for Amazon. It creates a rich research stream for price elasticity and conversion rates of most price conscious consumers.

If Camel and other price tracking affiliates become too large as a % of sales, Amazon can very easily restrict them to specific categories or eliminate them entirely.

In today's consumer centric world, the question may be: how many consumers will have both the patience and the time to wait for the lowest prices?

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Chris Petersen, PhD, President, Integrated Marketing Solutions

As Amazon extends it reach into the critical mass of shoppers, promotions will inevitably become a more significant piece of their business. While adjustments must be made to protect margins for Amazon, they will be smart to play with price trackers and others that bring volume to their business. Shutting them out may open the doors for emerging competitors and begin to alienate shoppers who are looking for deals and find them elsewhere.

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Mark Heckman, Principal, Mark Heckman Consulting

Pricing transparency is a reality and that is not going to change but rather will only be accelerated with intermediaries like Camel. While I do think pricing transparency is a key component of a loyalty strategy, if Amazon kicks Camel out, it might be because they begin to offer their own (branded) version of a mechanism to offer a similar service. At the same time, as Amazon is increasingly focused on profitability, it might care less and less about relative pricing disadvantages.

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Phil Rubin, CEO, rDialogue

Based on the amount of price changes that Amazon makes daily, I'd think they want to get the message to consumers. What's really interesting is that Amazon gives the prices directly to Camel. My gut tells me that Amazon is somehow making out in the arrangement, and is using the site to drive demand when necessary.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

At this point in time, Amazon should tolerate Camel because it will continue to build brand loyalty and customer acquisition. I imagine that as Amazon continues to focus on profitability and not expanding a user base, it may kick Camel out down the line.

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Jesse Karp, Omnichannel Consulting Manager & Loyalty Practice Lead, Cognizant Business Consulting

I'm really curious when and where the price tracking websites will settle into one or two major ones. Will Amazon or other retailers acquire them? That presents an interesting opportunity. So often Amazon rises to the top or very near the top on these aggregator websites. This indeed helps drive revenue for the retailer. This is not all bad news for Amazon in the mean time.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Price reporting applications save customers money and therefore are here to stay; the question is, in what form? It is easy for a consumer to visit a few stores and determine who has the best price.

On the internet it is not so easy. One must spend significant time due to the great number of companies selling the same item. One important element of the price reporting application is that it highlights the high price companies. This will have a negative impact on their longer-term sales. The negative is they don't always match the same item for comparison and they try to steer the consumer to a specific web site.

Amazon will pull the plug on price trackers, not because consumers don't want to know, but because the sellers don't want the consumers to know the prices. The sellers will force Amazon to stop the practice as it is costing them sales.

The future is dynamic pricing, which makes price tracking useless. By dynamic pricing I don't mean using past sales or a zip code to classify a consumer, rather use hourly demand. Adjusting the price hourly can result in increased revenue while achieving desired unit volume.

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W. Frank Dell II, CMC, President, Dellmart & Company

Mickey Drexler put it best when he recently said, "what do you do with a huge competitor that doesn't care if they make money?" Amazon's strategy is about market share, not profit, so I don't see this type of tactic changing anytime soon.

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Lee Peterson, EVP Creative Services, WD Partners

It seems to me that customers don't really like dynamic price changes, so they counter by using price tracker websites. Walmart made a lot of money with EDLP. Always the lowest? Of course not. But consistently very good.

On the other hand, the leaders in dynamic pricing are the airlines. They manage to be profitable only now and then, and for the most part their customers hate them, or can't tell them apart. And we all buy tickets online from the lowest cost at the moment we are buying.

Today, people shop Amazon because they think they will get a good price. When they no longer believe that, do you think Amazon will be more profitable?

Ed Gilstrap, Marketing Analyst, Masco

The value Amazon receives from these price trackers (price elasticity statistics, referrals, etc.) currently outweigh the obvious margin hits. If that equation moves out of Amazon's favor, they will limit, but probably not eliminate, their access.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

Generally speaking, I agree with most of the comments here. The fact that camelcamelcamel continues to be able to provide their service is an indication that Amazon is either benefiting from the transparency and/or traffic it provides, or at the very least that it is not a sufficient nuisance for Amazon to step in to shut it down.

On the positive side, there is an argument to be made that camelcamelcamel increases business to Amazon by bringing in traffic that would not otherwise purchase. We all have products that we might be interested in buying, but only when they get to a certain price. If Amazon goes to that price, then it is clearly willing to fulfill demand at it, regardless of the source.

Furthermore, Amazon can track the sources of all of its traffic. It certainly knows which traffic comes in from camelcamelcamel, and may use that information to test price points from the patient, frugal psychographic.

As for camelcamelcamel being a profit drain for Amazon, I don't see it. According to the Chrome store, it only has 137K installs of the Chrome plugin. The site traffic also does not look very high on compete, though to be fair, that data has been known to be erroneous.

I think it is safe to say that camelcamelcamel exists because Amazon benefits, or at least does not lose, from its presence, and as stated by numerous others, Amazon can easily revoke its affiliate status if it deems it to be a threat to its strategic interests at some point in the future.

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Alexander Rink, CEO, 360pi

I fail to understand why anyone still uses Camel, Keepa, Traktor, etc. They're all clones of each other, and they all only support Amazon.

Sites like Pricezombie support many more stores. I'd be more interested in seeing how Google search is keeping out-of-date websites in on the action for stores like Amazon.

'dschmitty'

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