A few weeks ago a postdoc in my lab logged on to Amazon to buy the lab an extra copy of Peter Lawrence’s The Making of a Fly – a classic work in developmental biology that we – and most other Drosophila developmental biologists – consult regularly. The book, published in 1992, is out of print. But Amazon listed 17 copies for sale: 15 used from $35.54, and 2 new from $1,730,045.91 (+$3.99 shipping).
I sent a screen capture to the author - who was appropriate amused and intrigued. But I doubt even he would argue the book is worth THAT much.
At first I thought it was a joke – a graduate student with too much time on their hands. But there were TWO new copies for sale, each be offered for well over a million dollars. And the two sellers seemed not only legit, but fairly big time (over 8,000 and 125,000 ratings in the last year respectively). The prices looked random – suggesting they were set by a computer. But how did they get so out of whack?
Amazingly, when I reloaded the page the next day, both priced had gone UP! Each was now nearly $2.8 million. And whereas previously the prices were $400,000 apart, they were now within $5,000 of each other. Now I was intrigued, and I started to follow the page incessantly. By the end of the day the higher priced copy had gone up again. This time to $3,536,675.57. And now a pattern was emerging.
On the day we discovered the million dollar prices, the copy offered by bordeebook was1.270589 times the price of the copy offered by profnath. And now the bordeebook copy was 1.270589 times profnath again. So clearly at least one of the sellers was setting their price algorithmically in response to changes in the other’s price. I continued to watch carefully and the full pattern emerged.
Once a day profnath set their price to be 0.9983 times bordeebook’s price. The prices would remain close for several hours, until bordeebook “noticed” profnath’s change and elevated their price to 1.270589 times profnath’s higher price. The pattern continued perfectly for the next week.
But two questions remained. Why were they doing this, and how long would it go on before they noticed? As I amusedly watched the price rise every day, I learned that Amazon retailers are increasingly using algorithmic pricing (something Amazon itself does on a large scale), with a number of companies offering pricing algorithms/services to retailers. Both profnath and bordeebook were clearly using automatic pricing – employing algorithms that didn’t have a built-in sanity check on the prices they produced. But the two retailers were clearly employing different strategies.
The behavior of profnath is easy to deconstruct. They presumably have a new copy of the book, and want to make sure theirs is the lowest priced – but only by a tiny bit ($9.98 compared to $10.00). Why though would bordeebook want to make sure theirs is always more expensive? Since the prices of all the sellers are posted, this would seem to guarantee they would get no sales. But maybe this isn’t right – they have a huge volume of positive feedback – far more than most others. And some buyers might choose to pay a few extra dollars for the level of confidence in the transaction this might impart. Nonetheless this seems like a fairly risky thing to rely on – most people probably don’t behave that way – and meanwhile you’ve got a book sitting on the shelf collecting dust. Unless, of course, you don’t actually have the book….
My preferred explanation for bordeebook’s pricing is that they do not actually possess the book. Rather, they noticed that someone else listed a copy for sale, and so they put it up as well – relying on their better feedback record to attract buyers. But, of course, if someone actually orders the book, they have to get it – so they have to set their price significantly higher – say 1.27059 times higher – than the price they’d have to pay to get the book elsewhere.
What’s fascinating about all this is both the seemingly endless possibilities for both chaos and mischief. It seems impossible that we stumbled onto the only example of this kind of upward pricing spiral – all it took were two sellers adjusting their prices in response to each other by factors whose products were greater than 1. And while it might have been more difficult to deconstruct, one can easily see how even more bizarre things could happen when more than two sellers are in the game. And as soon as it was clear what was going on here, I and the people I talked to about this couldn’t help but start thinking about ways to exploit our ability to predict how others would price their books down to the 5th significant digit – especially when they were clearly not paying careful attention to what their algorithms were doing.
But, alas, somebody ultimately noticed. The price peaked on April 18th, but on April 19th profnath’s price dropped to $106.23, and bordeebook soon followed suit to the predictable $106.23 * 1.27059 = $134.97. But Peter Lawrence can now comfortably boast that one of the biggest and most respected companies on Earth valued his great book at $23,698,655.93 (plus $3.99 shipping).
I'm a biologist at UC Berkeley and an Investigator of the Howard Hughes Medical Institute. I work primarily on flies, and my research encompases evolution, development, genetics, genomics, chemical ecology and behavior. I am a strong proponent of open science, and a co-founder of the 
169 Comments
There is no mystery to how repricing works. You can purchase very good, but expensive (for most resellers), software to do this for you.
wow – thanks for busting this author’s fantasy about value of his books…
Wonder if Apple can show DOJ eBook pricing is also set by an algorithm gone awry:)
I have had interesting experiences with Amazon changing the prices on items that are either in my shopping cart or wish list. On certain used items, the price changes every single day without fail. The pattern I recently saw with a high end TV I had in my cart for about a week was that it slowly climbed about $10 to $20 per day and then suddenly dropped about $100 one day and then the next it jumped up more than $200. I’m not too familiar with the science behind the pricing game being played here, but I am certain that it is designed to mess with consumers’ heads.
I saw a book today for 189.93 and contacted the seller. he said it was a book that only had one in stock which is why it was priced so high. It was abook under 60 pgs published in 2005. I then replied asking….Are you sure this book wasnt printed in the 1700s, is it gold leave covered? lol…Im sure they are just the ebayers of Amazon, they could care less about the book and hopefully some moron will pay for it….
just stumbled on to the interesting post and had to check prize now. A year after the record breaking demand, the book is prized about $200-$450. I am disappointed
http://www.amazon.com/gp/offer-listing/0632030488/ref=dp_olp_new?ie=UTF8&condition=new
Thanks for this info. I did notice this happening to my books on my wish list a couple of years ago.
Last week, like Daniel, I ordered a book – Master and his emissary – at $26 from AmazonUS because it was cheaper than local bookshops or eBay, only to be told it was no longer available from the seller, but other Amazon sellers now had it on sale from $56, (that’s more than local or eBay) to well over $1000!! – not only that, the eBay and local Dymocks copies had now disappeared!! I have found a Collins copy for $36, I hope my order can be fulfilled!
This is disgraceful and stupid behaviour by Amazon and I have officially given them big fat side eye, and will seriously consider ever buying from them again.
I am not concerned with articles like these. I want to know when the price of expensive books are ‘algorithmically’ lowered to something like 10 cents. Then you have yourself a winning article.
makes me wonder if the text on the internet is worth $23,698,655.93
If you find a case like this, you could turn the situation around and make money off it. Simply list a book at a high price, wait until someone offers it at a higher price relying on buying it from you, and then you buy the more expensive copy. The seller would buy the book from you, and once you receive the book, you return it. If your (initial seller) return period is shorter than that of the seller, he won’t be able to return the book to you, so you will have sold the book at a very profitable price.
I requested Amazon’s policy on pricing and after 10 emails back and forth with their staff unable to actually address my question, they escalated my enquiry to their copyright department. With their own staff repeatedly tripped up by this simple question, with their lack of ability or concern to eliminate psychopathic sellers – how can Amazon REALLY become the best online shopping destination? Oh that’s right, it’s not to be the best, it’s to be the biggest – quantity not quality – of course.
Alas, this is what’s happening nowadays in the STOCK MARKET too! Really depressing… but congrats to the author on his multi-million-dollar book!
Looks like the system that priced these books is the same as runs the stock market LMAO
I was looking to buy a domain name on a Godaddy auction site. It was offered at a minimum bid of $60. As it would have been for a business I though that was OK and put in my offer of $60 expecting a counter offer of maybe $70 – $100 like in a real offer. The counter came back at $26,000. I think I know where Godaddy can go.
I’ve also seen things like this and I always wonder how the seller is in the business. We must be constantly updated in this type of information.
Consider what they are doing as selling forward contracts on books instead of the books themselves. Just as traders sell forwards on commodities they don’t own in financial markets, with the right delivery/payment terms, you can sell a “forward” on a book, camera, or anything you don’t actually have in hand. I would not be surprised if they are using a simple forward pricing formula to arrive at the price they set.
Couldn’t help to search Amazon for their most valuable books, the record is at one trillion for a vampire story… funny enough there is only on seller:
http://www.amazon.com/Midnight-Collection-Crimson-Awakening-Rising/dp/B00855JYLI
i wonder which one of the merchants corrected there price..
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