Walmart's Everyday Low Prices Face Amazon's Dynamic Price Push

Report Shows the Retailers Were Neck-and-Neck on Black Friday Dynamic Pricing

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Credit: Luke Sharrett/Bloomberg
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Walmart's classic "everyday low prices" strategy is becoming an everyday price-adjustment strategy.

In what seems to be a direct response to Amazon's sophisticated dynamic pricing, Walmart has been following the ecommerce giant's price fluctuation patterns, suggesting that rather than always sticking to the lowest price, Walmart must follow Amazon's pricing lead to compete.

On Black Friday, for example, around 16% of Amazon's prices fluctuated from the previous day, according to 360pi, an e-commerce data firm. That's no big surprise, considering Amazon's generally frenetic analysis and activity, not to mention the retail hype on Black Friday. But around 12% of Walmart's online prices fluctuated on the same day, 360pi said.

And it wasn't just Black Friday: When 360pi measured prices listed online for 18,000 SKUs on Nov. 14, both retailers repriced around 15% of the products.

Meanwhile, Target altered only around 5% or less of the product prices tracked for most of the month, including on Black Friday.

"Walmart is typically within 5% of Amazon pricing across the board," said Jenn Markey, VP-marketing, 360pi, which tracks which products are moving online and at what cost.

Walmart and Amazon did not respond to requests to comment for this story.

The availability of daily price data gathered by third party data firms crawling ecommerce sites, along with tools to automatically alter prices based on data analysis, is altering the retail landscape. This new reality is changing the rules for Walmart, which followed Amazon's pattern of price alterations relatively closely throughout November as measured by 360pi, not just on big days for sales.

The ecommerce data firm plans to soon publish a report on price fluctuations for 7,200 products tracked during Cyber Weekend, showing that Walmart repriced 9% of those products during the weekend following Black Friday, compared with 11% on Black Friday itself. Amazon changed 13% of those 7,200 products' prices during the weekend and 16% on Black Friday.

"You see an increased level of algorithmic pricing," said Ms. Markey. The company looked at national online prices for Amazon, Walmart and other online retailers. Its numbers did not reflect personalized "in-cart" prices that might be different based on user behavior.

Amazon also displayed what appears to be inventory adjustment prowess, reducing the number of products listed in stock among around 7,000 SKUs tracked by more than 20% on Nov. 25, the Wednesday before Black Friday. The products in stock among those 7,000 then spiked on Black Friday to a level 5% higher than at the start of Nov. 20. At the same time on Black Friday, Walmart's product count continued a steady drop that had begun on Nov. 20, falling by around 10% by midday.

The inventory fluctuations might have been strategic on the part of Amazon, suggested Ms. Markey. If, for instance, price on a popular item dropped below a desired minimum, a company might remove online stock until competitor prices go back up or their inventory is depleted. "It's a bet. You're betting that you'll still be able to move it later," she said.