How Amazon wages price war with Walmart
Retailers interested in fine-tuning their digital pricing strategies may want to look at a new index called the Price Perception Index.
The index, created by e-commerce startup Bommerang Commerce, measures how retailers optimize prices to attract buyers, compete with other retailers and build their business on a mix of profit margins and volume.
The first Price Perception Index looks at the complex competition between Amazon.com and Walmart.com.
"Competitive pricing has moved beyond weekly adjustments and price matching," said Guru Hariharan, founder of Boomerang Commerce. "The PPI sheds light on the complexity and the speed at which retailers adjust their pricing to drive buyers and revenue."
Amazon undercuts Walmart's prices by 4% on the most popular products, while Walmart is following a price matching policy with 63% of its products at the same price as Amazon's. Additionally, analysis shows that Amazon has a sophisticated pricing strategy to own a majority of the SKUs for the most popular items and undercut 3rd party resellers on those products. Third party resellers offer more products in the lower demand product areas.