| 词条 | Draft:The Amazon Effect |
| 释义 |
Alberto Cavallo coined the term, "Amazon Effect", in his journal "More Amazon Effects: Online Competition and Pricing Behaviors."[1] The study was conducted to test whether there has been an increase in price flexibility and uniform pricing resulting in a change in inflation dynamics and market behavior. The two effects were examined by using data of micro-price databases provided by Billion Prices Project (BPP) at Harvard University and the Massachusetts Institute of Technology (MIT). A stated advantage of using the data supplied by these sources is that they are devised through studies of retailers that have both a store-front and online market as well. The first factor that is tested is price flexibility. It is concluded through a regression analysis that products that are both easily found and sold online at both Walmart and Amazon have twenty percent shorter price duration than those just found online at Walmart. The study then goes on to confirm that goods sold by Walmart that are also on Amazon are more likely to have uniform prices and a lower average price difference across regions. The final hypothesis that is tested is the changes in pass-through and inflation as a result of increased price flexibility and uniform pricing. Both these factors contribute to retailers being more susceptible to aggregate shocks which could have played a part in the relatively low inflation that the United States has experienced. Overall, the paper expands upon closely related literature to show how it is applied to multi-channel retailers. The study also focuses heavily on Walmart representing brick and mortar stores with an online presence and Amazon as the model for an online retailer. Brief Description of AmazonAmazon was created on July 5th,1994 by Jeff Bezos and started as an online retailer solely for books. Amazon.com has now become a tech giant and sells products in categories such as music. Movies, electronics, home and garden, beauty and health, toys, clothing and accessories, sports and outdoors, automotive, and industrial. In addition to selling a vast range of third-party products, Amazon also sells its own products that include the Alexa series, Amazon Kindle, Amazon fire stick, Amazon basics products, and Amazon fresh products. Music, movie, and streaming service can also be provided through Amazon. As a result of the diversified market, Amazon has grown to be the biggest online retailer with a traffic share of 54.1% and average monthly traffic equivalent to 1.87 billion dollars.[2] Come February 2018, Amazon had a market value of over 2.5 times more than Walmart.[3] Soon after Apple hit a trillion dollar market valuation, Amazon also hit one trillion with a share price of $2,050.27 becoming only the second publicly traded United States company to hit a trillion dollar valuation.[4] Originally, amazon's IPO was set at $18 a share on May 15, 1997, with a ticket symbol of AMZN. While initially, only being within the United States it has grown to incapacitate eleven global markets. Amazon possesses 109 fulfillment centers, buyers from 180 different countries, and more than 30 listing categories globally.[5] As a result of this global presence, it has become the world's largest internet retailer with Alibaba behind it. Price FlexibilityPrice flexibility can be defined as adjustable prices that can change quickly based on negotiation between buyers and sellers and changes in demand and supply[6]. With the rise of e-commerce, prices have become more flexible because of the ability to change prices in an instant electronically. As a result of the internet making flexible pricing more attainable, it has changed how demand and supply play out within the marketplace[7]. Since prices adjust easier to changes in supply and demand, it makes the markets more efficient. Therefore, both producers and consumers benefit from flexible prices. A significant contributor to the companies being forced to make their prices more flexible is Amazon's ability to change prices to fit demand with little costs rapidly. This allows Amazon to price more competitively and maximize demand. Amazon's competitive prices have trickled into other markets as 80% of consumers check online prices and compare them to the ones in the store.[8] As a result, firms are forced to lower prices in order to stay competitive and not lose demand for their products. Firms operating at lower margins are also more sensitive to supply shocks, creating an environment of increased price flexibility. In the Harvard study, it was found that products in categories such as recreation and electronics that posses a greater online market share had prices that were less stable over time. The opposite is true for products like alcohol who possess a smaller online market share and more stable prices. When looking at products that are both found online at Amazon and Walmart, it is noted that these products have more frequent prices changes.[1] As a result, a correlation can be drawn and would suggest that if one wants to stay competitive in an online marketplace, one needs to be able to have flexible pricing. Effects on ConsumersA marketplace with price flexibility allows consumers to find prices that best fit the value they receive from the product or service. Perishable goods such as airlines seats, hotel rooms, and phone plans are the most susceptible to increase selectivity among consumers[6] . When consumers are able to find products that are priced to fit their utility for that product, overall demand goes up. When demand goes up, the domestic standard of living goes up as they are able to consume more at a lower price. As a result, GDP per capita increases within the economy. Since prices are easily accessible online, consumers are more easily able to avoid overpaying for goods. This has resulted in the practice of showrooming. Showrooming is when a customer views a product within a brick and mortar then buys it online. In the end, customers are left satisfied as they are able to test the product out in store and then end with a lower price by purchasing it online. In conclusion, price flexibility brings significant advantages to consumers. Effects on ProducersIn a market where price flexibility is common, producers have the ability to price discriminate[6]. When a producer practices pricing discrimination, they are able to capture some of the consumer surplus through various practices. One of the standard methods used is quantity discounts. For example, goods in a market are often sold at a lower price per unit when buying in bulk. Since consumers will buy in different quantities, companies are able to capture the different prices people are willing to spend for said good. Another strategy is offering different groups different rates for the same product or service. This can be seen when kids and seniors get discounts at theme parks or on public transportation[9]. One of the adverse effects of price flexibility on producers is that they are more sensitive to supply shocks as explored in the Harvard Study[1]. This sensitivity is due to the companies having lower margins when switching to a flexible pricing strategy. Uniform PricingUniform pricing is when a company charges a universal price for it's good or service regardless of its location. An example of this is when the price of an item of food costs the same at Walmart as any other Walmart. In the study, it is hypothesized that uniform pricing comes as a result of the openness and transparency of the internet.[1] Massive public outcry could result from consumers realizing that they are paying more for the same product than someone else. With Amazon's transparent prices it is forced to price uniformly or it will get backlash such as when it had different prices for the same DVDs in different regions[1]. With most retailers seeing Amazon as one of their biggest competitors, they are opening an online front in order to stay relevant and compete in the online marketplace. When this happens, their prices become transparent to all consumers, making the retailer more accountable if it chooses to price discriminate. Therefore, in order to keep customers satisfied and believe they are getting a fair deal, they are pushed towards uniform pricing. In the short run, producers suffer from these strategies that reduce price discrimination and bring about equal pricing. As a result, companies can also be more sensitive to aggregate shocks when prices are uniform[10]. Inflation and Pass-throughSince 2009 the United States has only gone above an inflation rate of 2.2 percent once[11]. Alberto suggests that the Amazon effect could have had a profound role in inflation dynamics as a result of the increase in price flexibility and uniform pricing[1]. A British study backs this as it was found that during times when prices were very flexible, the Bank of England would overestimate the impact of inflationary shocks[12]. When prices are allowed to float, it results in a faster market clearing. So while prices may be stricken initially by an aggregate shock, they will be adjusted back down to market equilibrium quicker. When prices adjust back down to equilibrium overall inflation will go down as a result of a decrease in prices. Another factor in domestic inflation is a term called exchange rate pass-through. Exchange rate pass-through is any effect exchange rates have on domestic inflation [13]. By looking back at the two categories, electronics (high online market share) and food and beverages (low online market share), the effect on inflation can be seen. While the results showed a relative pass-through of 83% for electronics, it only showed a 38% for food and beverages. Therefore, it is concluded that prices with a higher online presence tend to be more sensitive to fluctuations in exchange-rate [1]. As a result, products are more efficiently pricing causing a reduction in inflation over time. ReferencesThe Amazon Effect |
| 随便看 |
|
开放百科全书收录14589846条英语、德语、日语等多语种百科知识，基本涵盖了大多数领域的百科知识，是一部内容自由、开放的电子版国际百科全书。