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Amazon harnessing price monitoring software

Wednesday, July 11, 2012 - 20:48 by Graham Miller

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It seems that the world's largest purveyor of safe shopping online could be changing the way that prices in its marketplace service are controlled.

Amazon is reportedly implementing software which has previously been used in major stock exchanges, to automate the process of trading on the money markets.

You might wonder what purpose this might serve in an e-commerce environment, but AOL Money reports that it will be used to allow traders to automatically alter their prices on a minute by minute basis, to offer more competitive and responsive costs.

In short, if several traders are selling the same item, the software will allow them to automatically adapt, so that they can undercut one another and vie for position at the top of the search results, even if there is only a single penny separating the price of the products.

In theory, this will be good news for traders because it will mean that they can make their product more visible, while consumers will have the chance of getting the best possible price.

However, not everyone is completely enamoured with the idea of using stock trading software to control safe shopping online.

The Financial Times has pointed out that the software is not completely without its anomalies, which could mean that items might end up being priced insanely high or inappropriately low, depending on the type of error which occurs.

This would not mean that traders on Amazon would be left out of pocket, but it could result in problems associated with reputation and general levels of stock.

Critics have also said that traders could create accounts which offer very low prices, so that rivals are forced to automatically adjust theirs. This rogue trader could then purchase the cut price goods, going on to sell them once they have set the prices back to normal.