Tatyana Deryugina (Twitter: @TDeryugina)

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Amazon quantity "discounts"

Posted 27 May 15 by arbelos

I am an avid Amazon shopper. We currently buy most (non-perishable) household necessities from them, as well as many non-necessities. My overall impression of Amazon is that it is extremely well thought-out. So when I encounter strange phenomena on the website, I assume they are deliberate. However, in some cases it is really hard to see how something is not a mistake.

For example, basic household products like paper towels and diapers are often available in different-sized packages. You would think that a package with, say, three times as many diaper wipe packs, would be at most three times as expensive. However, that is often not the case. For example, as of this writing, a 7-pack of diaper wipes was $10.99, while a 21-pack was $89.99. One jar of diaper cream was $12.80, while a 2-pack of the same diaper cream was $35.75. A 4-pack of OxiClean spray was $20.18, while an 8-pack was a whopping $104.92! It’s very easy to find other examples, so this isn’t some rarity. And this is not like comparing a 2-liter bottle of soda to two 1-liter bottles of soda - the package units are identical, so you can replicate the larger set exactly by buying multiples of the smaller set.

Normally, we expect some price dispersion because there are search costs – you wouldn’t drive to another store to see if something is cheaper there unless you expect it to be much cheaper. But in this case, the prices for both sets are easily visible (you don’t even have to click on the other set to see what the price is). In all the examples above, shipping is free for both sets (though in some cases only for Prime members or orders over $35). And while it may not be easy to recognize that, say, that $43 is bigger than $13.85*3, it’s very obvious that $10.99 times 3 is less than $89.99.

As far as I can tell, only two explanations are possible. One is that consumers are so inattentive that they don’t notice these pricing discrepancies. However, given the size of the discrepancies and the ease with which you can see them, I would be surprised if that were the case (if you work for Amazon and can tell me how often people buy the more expensive version, please do!). The alternative explanation is that sellers are not paying attention to how their pricing compares to Amazon. In all the examples above, the more expensive product is sold by someone other than Amazon (though sometimes Amazon is the one shipping the orders). Perhaps their pricing algorithms are not working as well as they should. Or maybe there’s another, less boring, explanation, but I can’t think of it. Please let me know if you can and watch out for this strange pricing!


Views : 1380 | Tags: online shopping, price dispersion, amazon
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