Amazon successfully fights off pricebots

When Walmart found its price-tracking software blocked, it was reminded how fierce a competitor Amazon can be

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Martyn Williams

One big downside of the plethora of e-commerce shopping bots out there today is that they create the impression of a difference when there may not be one. If I may give my two cents’ worth, is a two-cent difference meaningful, especially when shipping prices are far more than that?

Significant difference or not, shoppers love them. And even more importantly, they act on them. When a bot lists a product and shows 20 different sites, the ranking by lowest price is almost always selected. After price, reputation and customer reviews can play a role, but none persuade as effectively as price.

That’s why Walmart, which wears its tagline about having the lowest prices the way Marley’s Ghost wears his chains (each one is weighed down by bad decisions made years ago), takes pricebots so seriously. Unfortunately for Walmart, so does Amazon. And Amazon doesn’t seem to care one bit for Walmart’s price trackers — and chose to block them all.

This data comes courtesy of an intriguing Reuters story: "Earlier this year, engineers at Wal-Mart who track rivals' prices online got a rude surprise: the technology they were using to check Amazon.com several million times a day suddenly stopped working. Amazon's maneuver that halted Wal-Mart in January took aim at a specialized Web browser called PhantomJS. Unlike, say, Internet Explorer, this browser is designed specifically for programmers — a telltale clue that its users are not typical shoppers. Amazon put up a digital curtain to hide its listings from PhantomJS users, according to three people familiar with the situation."

The Reuters piece also pointed to an older Amazon patent that describes an "encryption technology that would force bots, but not humans, to solve a complicated algorithm to gain access to its web pages.

Not surprisingly, the bot and counter-bot tactics resemble military efforts to thwart missiles. When the technology is launched to thwart the antimissile defenses, it forces the antimissile defenses to create a system to thwart that maneuver in turn.

Ultimately, though, this price bot arms race is futile. The only meaningful long-term strategy has to be on factors other than pricing. Although Amazon is aggressive on pricing, it is rarely the lowest-cost option and it still gets most competitive sales. It wins based on consumer confidence (Amazon's powerful customer support), convenience, ease of ordering and inventory that gets closer to infinite than anyone else in retail, including Alibaba.

Walmart's reliance on pricing as a differentiator is an ultimately losing proposition. But it has a ready-made differentiator that is far more powerful: local stores. There is a powerful comfort factor to knowing that any problems can be resolved face-to-face at a local physical store.

Another Walmart plus that is far better than pricing is reputation. Those pricebot lists of online options will list plenty of sites, but other than Amazon and maybe Target.com, few will have the name recognition of Walmart. That still means a lot to shoppers.

Amazon has heavily invested in technology for decades, and trying to out-program it is simply futile. Why? Because any wins will be short-lived. Why fight Amazon on its terms when retailers can play to their own strengths and win that battle on their own terms.

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