Ethical Issues with Amazon’s Pricing Algorithm- What is the company saying about the situation?

In today’s post I will discuss what Amazon itself says about the issue with its pricing algorithm. As one can read in the article “Amazon Says It Puts Customers First. But Its Pricing Algorithm Doesn’t” by Julia Angwin and Surya Mattu on September 20, 2016 “Amazon often says it seeks to be “Earth’s most customer-centric company”. As an example of that, Amazon’s founder and CEO, was known to leave an empty seat during meetings to remind their workers to always think of the customer needs. But as the authors mention, they appear to be using their power over other retailers and algorithm to take advantage of customers.

Erik Fairleigh, (Amazon’s spokesman) said: “The algorithm that selects which product goes into the ‘buy box’ accounts for a range of factors beyond price. Customers trust Amazon to have great prices, but that’s not all. Vast selection, world-class customer service and fast, free delivery are critically important. These components, and more, determine our product listings” (Amazon’s statement http://www.propublica.org). Amazon’s spokesman refused to get more detail when answering questions “including the ones about why Amazon’s product rankings excluded shipping costs only for itself and its paid partners” (www. http://business-ethics.com).

Image result for amazon ceo (Jeff Bezos- Amazon’s founder and CEO)

When one of the shareholder’s asked about Amazon’s practice of promoting products sold by other companies on its website. Bezos (Amazon’s founder and CEO) said “Amazon uses very objective customer-centered algorithms’ that automatically award the “buy box” to the lowest price seller, provided “they actually have it in stock and can deliver it” (www. http://business-ethics.com).

In other words, Amazon stands strong behind their pricing algorithm, refusing at the same time to get in detail while explaining how it works. I think in this situation it is fair to say that they are basically avoiding explaining their actions.

I personally think that Amazon is not dealing well with this issue. If majority of customers claim to be used/ cheated they should have a way of assuring them of their loyalty and honesty. Reading Amazon’s explanations makes me question their actions even more.

Thanks for reading!

Stay tuned to find out what other people are saying about this issue.

Sources:

http://business-ethics.com/2016/09/20/12675-amazon-says-it-puts-customers-first-but-its-pricing-algorithm-doesnt/

https://www.propublica.org/documents/item/3111034-Amazon-Statement.html

Amazon Sales Rank: Taming the Algorithm

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9 thoughts on “Ethical Issues with Amazon’s Pricing Algorithm- What is the company saying about the situation?

  1. This is truly and interesting read! I find it interesting they apparently leave an empty seat at meetings as a reminder of customers needs. Do you think they just say that to look more customer friendly or do you believe they actually do that considering what is done?
    They seem to really be avoiding a direct answer to their questions to help their customers that felt they ordered products under a false pre-tense of the lowest price. Although, I do think it is important for Amazon to sort items based on good ratings and free shipping, but that should be mentioned, instead of falsely stating it is simply the cheapest price.

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    • Interesting question! I am not sure if they actually do leave an empty seat at the meetings- after all, all we have to prove that is their word. And as we noticed in the past- they are not so truthful about everything they say.
      As you mentioned, they do avoid the actual answer to the question of abusing their workers and the pricing algorithm.
      So now, before I make my decision about buying something for a cheaper price, I need to ask myself: “Do I really want to give more money to a company that abuses their workers?”. Maybe consumers, by buying less form Amazon, can push them to change their actions.
      Thanks for reading!

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  2. In my opinion it never looks good when you can’t explain on something you say. Take the presidential candidates for example. Both say they will do this and they will do that, but when it comes to the greater details of how they are actually going to do it, they deflect the attention to some other topic. It looks as though Amazon is covering up the real reason behind their pricing algorithm, and it makes me think that people would not be too happy with them if they knew why.

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    • I completely agree with you! At least if Amazon could explain their actions, they could improve their reputation. But by acting in a “sketchy” way they only add onto the suspicions that customers and public have about them. I wonder how many people would stop purchasing from their website if they only knew the truth about their actions. Thanks for reading my post! Stay tuned for more 🙂

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  3. As I read this I had one constant thought: Do they truly believe this? Perhaps they do truly believe the algorithm and other practices are in the best interest of the customers… or perhaps they are framing their decision in a positive light and have hidden ulterior motives. It’s so hard to tell, especially when we’re consumers getting our information through a grapevine.

    I can’t help but consider the three aspects of fraud– pressure, opportunity and rationalization. The one that particular jumps out at me in relation to this article is rationalization. Amazon managers could be doing a great deal of rationalization. “No, trust me, this is for the good of our customers!” Whether it is or not… who knows.

    Thanks for another informative post!

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    • I am glad that you enjoyed it. And I agree- the managers might personally believe that they are actually working for the customers, and that they are helping us out! After all, this is one of the major reasons why people commit fraud.
      Stay tuned for more info in my next posts!

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  4. I can understand customers frustration, but Amazon’s Answer is a valid one in my opinion. They could have been more open about the details of the algorithm, but I don’t think they want to tell other competitors about their model for them to copy. Imagine this was a Soft Drink Company, and people want to know what’s in the drink. The Company Should tell the customers what’s in the drink, but if they go into specifics, people will copy at a lower price and they would lose business. It’s a vague answer, but it’s business vague which is an understandable reason to divulge to much.

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