NEW YORK - Online shopping has become as volatile as stock market trading. Wild, minute-by-minute price swings on everything from clothes to TVs have made it difficult for holiday shoppers to "buy low."
A growing number of retailers are using software that changes online prices based on demand, competition, inventory and other factors. The main goal is to undercut rivals when necessary, and raise prices when demand is high and there's no competitive pressure.
But the new tools can change the price on a single item - say, a sweater - dozens of times throughout the day. And that can leave shoppers confused about when they can get the best deal.
Take Aishia Senior, who recently watched the price on a coat she wanted rise and fall several times between $110 and $139 in a span of six hours on Amazon.com. She was so frustrated by the price fluctuations that she ended up not buying the coat on the site.
"It's definitely annoying," said Senior, of New Haven, Conn. "What exactly is making it go up and down?"
The idea of minute-by-minute monitoring of online prices started with Amazon.com, which for years has used its own software to do so. Scott Stanzel, an Amazon spokesman, said: "We have a cost structure that allows us to adjust our pricing quickly."
After years of losing customers to Amazon because of its ability to offer deep discounts, Wal-Mart and others have started following the online retailer's lead. Eric Best, CEO of Mercent Corp., a software company that changes prices on two million products every hour, said the majority of his clients, which include Office Depot, Guess, and HSN Inc., make minute-by-minute pricing changes.
Wal-Mart Stores Inc. built its online price monitoring tool two years ago. And since overhauling its e-commerce business last summer, the world's largest retailer now can make price changes in a few minutes for what used to take up to 24 hours. "We have the ability to make thousands of changes on any given day," said Ravi Jariwala, a spokesman.
All the price changing has made it difficult for shoppers to predict when they can get the lowest prices, said William Poundstone, author of Priceless: The Myth of Fair Value. After all, he said, retailers don't know themselves. "It's like high-speed trading," Poundstone said. "Sometimes you lower the price. Then, you may raise it back up. The average consumer doesn't understand it."