<https://themarkup.org/ask-the-markup/2020/04/28/why-am-i-paying-60-for-that-...> After hovering at around $10 consistently, the price of a five-pound bag of Nishiki medium grain rice shot up to $30 on Amazon.com in March and hit a peak of $59.99 at 9 p.m. on Saturday, March 21, according to the Amazon price tracker Keepa. As of Friday, April 24, the bag of rice was priced at around $20. Some prices have shifted wildly since COVID-19 hit the U.S. Prices on Amazon have been volatile since the outbreak of COVID-19 in the United States. By the end of March, Keepa’s data revealed, an eight-pack of Barilla spaghetti, whose price normally hovers around $10, shot up to $49.25. The cost of an eight-pack of Skippy Superchunk Peanut Butter nearly quadrupled, from $12.52 to $45. COVID-19 has made the public more aware of price fluctuations on basics like toilet paper, hand sanitizer, and dried goods, as demand for those products surged beyond expectations. But limited inventory is not the only reason that the price of pasta (or toilet paper, peanut butter, and rice) is shifting so drastically on Amazon. Experts say the fluctuations on Amazon are often a result of the algorithms sellers use to optimize their sales. How Does Dynamic Pricing Work? Dynamic pricing (or algorithmic pricing) relies on algorithms that can synthesize lots of information about the marketplace and then change the price of something based on what’s happening hour to hour or even minute to minute. Dynamic pricing is already common for items like plane tickets and hotel rooms. As the supply gets smaller or if there’s more demand—a big conference is going to be in town that weekend, for example—then prices go up. If demand goes down because, say, a pandemic has stopped people from traveling, then prices drop. But dynamic pricing isn’t quite that simple on Amazon because of its Buy Box. When shoppers click the “Buy Now” or “Add to Cart” button, they are selecting a specific vendor. There’s usually an option to consider other vendors, but most users—by some estimates 80 percent—make their purchase through the Buy Box. To determine who “wins” the box, Amazon uses its own algorithm, which it does not reveal to the public but which observers say includes more than price. “The Buy Box depends on fulfillment speed, channel, your reviews and rating, availability within a certain period of time,” Victor Rosenman, CEO of Feedvisor, a company that creates algorithms for Amazon sellers, said in an interview. Amazon does provide tools that help sellers use dynamic pricing on the Amazon marketplace. Sellers can set pricing rules based on the Buy Box or on the lowest price for that item, and they can change those rules based on the fulfillment channels of their competitors. There are also independent companies like Feedvisor and Sellery that create pricing algorithms for Amazon third-party sellers. In 2016, researchers at Northeastern University tracked the prices of more than 16,000 of the most popular items on Amazon and collected information about the top sellers for those products, including their ratings. While sellers who use traditional pricing methods rarely change prices, this study found that the more than 500 sellers who do use dynamic pricing would change their prices tens or even hundreds of times every day as they wrestled for the Buy Box. Those sellers were more likely to win the Buy Box and to earn revenue. [...]