Decryption: How does Amazon use robots to maintain pricing advantages?

Earlier this year, Wal-Mart engineers who tracked competitor prices online were amazed that the price comparison technology they used to check Amazon's website suddenly took the plunge. The inability to access Amazon's data is not trivial. Like most large retailers, Wal-Mart relies on computer programs to scan prices on competitors' websites so that it can adjust its rankings accordingly. Even a 50 cent spread can cause it to lose customers. But a new strategy from Amazon uses robots to block these related programs and interfere with Wal-Mart.

According to a person familiar with the matter who did not want to speak publicly, the company's technical department @walmartlabs could not bypass the blockade in a few weeks, forcing it to retrieve Amazon's data from a secondary source. This undisclosed event provides a classic example of how Amazon's technical capabilities help it dominate the retail industry. As the world's largest online retailer, Amazon is known for its fast service, vast catalogue and ambition to enter the field of original TV programming. However, its mastery of the complex back-end technology of modern e-commerce is equally important to its success. With the flexibility of robots, Amazon can not only see what competitors are doing, but also keep competitors in the dark, making them unable to control their pricing strategies. Former Amazon manager, Guru Hariharan, CEO of Boomerang Commerce, a pricing software company based in Mountain View, Calif., said it would be difficult to grab Amazon's benchmark price.

A Wal-Mart spokesperson declined to discuss the January event, but said the company regularly improved its technology and had multiple tools to track the product. He said that the company not only maintains its advantage through pricing strategies, but also provides in-store pickup and other benefits. A spokeswoman for Amazon said the company realized that competitors would use robots to check their product lists and denied any "activities" to stop them. She said that the way we recently managed robots on our website has not changed. However, she said, “We prioritize manual strategies as needed.” Robots slow down the access of a website, which is a huge incentive for retailers to stop them. Reuters interviewed 21 people familiar with the situation, including current and former Wal-Mart employees, former Amazon employees and industry experts, to discuss how these robots work. Many people speak anonymously because they are not authorized to discuss these issues publicly.

Most people point out that Amazon is a leader in the emerging robot competition. The company's technological advantage is good for its profit margin, which is good news for investors. Since the stock market bottomed out in March 2009, the Internet giant's share price has risen about 15 times, while the Standard & Poor's 500 index has more than tripled. Amazon said Amazon's sales reached $100 billion in 2015, faster than any other company in history.

Beautiful new world

Since Amazon began practicing robot pricing strategies more than a decade ago, it has brought about tremendous changes in the retail industry. Traditionally, product prices in physical stores have changed more than once a week because of the time and expense of manually replacing labels. However, in the world of e-commerce, retailers can easily update prices every day, sometimes several times a day. This algorithm considers inventory levels, sales forecasts, and competitor pricing data. To maintain this competitive advantage, companies such as Boxed, a New York-based online wholesaler, rely on a variety of methods, including robotics, to ensure that their products do not lag behind others' price changes in 20 minutes.

For product pricing, a short Christmas is a complete life cycle, and Chieh Huang, a retail company executive, points out that his company sells commodities such as toilet paper and pet food. If our pricing is not reasonable, we will see a drop in sales soon.

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