Price competition has been in existence since mankind started to trade. How has the price war evolved with the advent of artificial intelligence?
It is said that Amazon adjusts its pricing over 2.5 million times each day. By optimizing its pricing strategy, the company manages to increase its profits steadily.
According to industry news website Retail Dive, 12 out of 13 broad categories of Amazon merchandise are generally priced lower than Walmart or Target.
Because of this, along with its customer loyalty program, promotions and free delivery, Amazon is able to retain customers and gain new ones better than the competition.
Walmart is trying to catch up. Aside from trying to match Amazon’s prices, the world’s leading retailer has created an analytics hub called Data Café to gain insights from the huge amount of transactional and other data the company has.
Fighting an online price war is by no means an easy feat. Imagine the complexity involved as Walmart monitors the pricing of Amazon products on a real-time basis, tracking more than 600 million items on the latter’s website, spotting the price differences and then coming up with a pricing strategy in response.
Basically, it’s a race of technology and financial resources.
The full article appeared in the Hong Kong Economic Journal on Sept 27
Translation by Julie Zhu
[Chinese version 中文版]
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