Back in July Amazon s profits surged nine-fold to $857 million and CEO Jeff Bezos singles out India for its growth. The company recently announced plans to launch Prime Video in India soon, offering Prime members in India exclusive access to Amazon Original Series and Movies — including original content featuring top Indian creators and talent. Now, according to a study the online shopping portal Amazon’s algorithms make customers pay more for popular products giving prominence to items that benefit the retail giant. The study was published by ProPublica and it reviewed 250 frequently purchased products. In the study they studied the products over several weeks to see what all were chosen to appear in the highly-prized ‘buy box’ that would pops up first as a suggested purchase. Also Read - Amazon Alexa lets you find nearest COVID vaccine or testing centre: Here's howAlso Read - Massive Rs 2,000 flat discount on Xiaomi Mi 11X: Check the mouth-watering deal on Amazon
When customers search for and click on a product, the Amazon algorithm chooses one vendor’s offer to put in the buy box which means that the same product could be offered by dozens of vendors at different prices and with different shipping costs. Having product in this buy box offers a major advantage for the retailer — as most customers end up adding it to the cart and buying it. The study by ProPublica also found that almost three-quarters of the time Amazon would place its own products or those from companies that pay Amazon to fulfil orders into the buy box — even though they might not always be the cheapest. If a customer bought everything recommended by Amazon’s buy box they would end up paying 20 percent more than if the same products was bought at the lowest price on the platform, the study said. Amazon that bills itself as the “Earth’s most customer-centric company”, not only sells products directly itself, but also allows other retailers to sell their own products through its platform.
Amazon, however, offers a tool to allow customers to compare product prices by producing a list that ranks sellers of the same item by “price and shipping”. Although even there, the company gives itself an advantage by omitting the shipping costs for its own products. This would mean the rankings were accurate for Amazon Prime members, who get unlimited ‘free’ shipping for $99 per year, but for anyone else the ranking is misleading. ALSO READ: Amazon invests $300 million in India ahead of Prime launch; will it give Netflix, Hotstar a tough competition?
Amazon insists that its algorithm chooses products to go into the buy box based on a range of factors — including customer service and free delivery. Amazon founder and Chief Executive Officer (CEO) Jeff Bezos had said in 2007 that it uses “very objective customer-centred algorithms” to automatically award the buy box to the lowest priced seller, which is clearly no longer the case. At least 94 percent of sellers who won the buy box placement without having the cheapest listing were either sold by Amazon itself or companies paying Amazon. ALSO READ: Amazon reports nine-fold surge in profits in Q2, bets on India for growth
The companies that do not pay Amazon hefty fees (between 10-20 percent of sales) to fulfil orders, find themselves sidelined. ProPublica concluded that it shows how hidden algorithms govern online interaction from Google search results to Facebook news feeds.