25 February 2012

How and why robots buy books

It's not just the stock and derivatives markets where robots do the buying and selling.  It also happens at Amazon, as explained by the business editor at GOOD:
Bueno set the price of the book at $14.95 and has sold about 1,000 copies. But in the last few weeks, Bueno has seen his book become the center of a strange phenomenon on Amazon: the bot market. A reseller... appeared, selling for $14.94—lower than the retail price. Another was for sale for $12.50. The only way these resellers could profit would be through excessive shipping and handling charges...

Amazon, he points out, is getting in on the bot action. In response to the apparently illogical prices offered by the robotic resellers, it cut prices, too, now selling the book for $10.76. That surprised Bueno, who thought he had set the final price, but Amazon’s price matching algorithm works automatically. Bueno was pleasantly surprised to find that the cut doesn’t come out of his royalties—Amazon is eating the cost of matching the prices of these fake-book purveying bots. Bueno estimates that Amazon is losing $4.19 of profit each time it sells the book at the discounted price.

Bueno and his friends have speculated that perhaps the point of these bots isn’t actually to game Amazon’s markets, but to use them for other purposes, perhaps laundering money from stolen credit cards by purchasing goods from fellow conspirators at inflated prices. Some of the resellers are based internationally; perhaps they are gaming exchange rates.
Additional details at GOOD Business.

1 comment:

  1. Was confused at first by the article...since 'Bueno' means 'Good' in Spanish. Also happens to be my maiden name, oh the joy of getting rid of that last name when I married!


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