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Amid Preparations For Hurricane Irma, Amazon Draws Scrutiny For Price Increases

Online giant Amazon is no stranger to public scrutiny, but the e-commerce retailer is facing a new round of accusations as Florida residents prepare for the potential devastation of Hurricane Irma. The company reportedly has allowed prices on basic emergency supplies to surge out of control as the Category 5 storm draws closer to the Sunshine State.

In particular, the cost of water has drawn the most ire. As Kate Taylor of Business Insider reports, customers took to Twitter to share screenshots of water from various brands — for example, Aquafina and Nestlé — priced roughly between $20 and $25 per case. Typically, the same cases of water sell for between $4 and $8, meaning that the screenshots demonstrate an increase in the neighborhood of 500 to 625%. That’s before “extras” such as expedited shipping.

One of the most extreme cases of expedited shipping costs was tweeted by Diana Moskovitz, senior editor at Deadspin, who shared that it would cost her a massive $179.25 to ship a case of Nestlé water (to her family, no less).

Naturally, curiosity got the best to see any of Nestlé’s price fluctuations, so I scouted some historical data from the coupon site, Honey. Turns out, on Sept. 3, that same 24-pack on Amazon was $8.08, and over the last three days, there have been three price increases, resulting in a price of $28.75. No words.

In the case of Fiji (pun unintended), historical pricing was referenced from price tracking platform, CamelCamelCamel, whose data validated that the case increased from $19.99 to $23.99 on Aug. 24 — yes, a day before Hurricane Harvey made landfall.

Amazon works with thousands of third party sellers around the world. Those sellers can and do set their own prices. As Aimee Picchi of CBS News points out, buyers might not realize that it’s not Amazon setting the rates. Picchi also notes that CamelCamelCamel also showed rates comparable to those Amazon customers complained about, reaching $20 per case of water (at the time).

Understanding that Amazon isn’t alone in revealing higher-than-normal costs, companies do look at the general market to determine initial product costs. The trouble is, from there, most modern companies, including Amazon, then allow their algorithms to adjust the price of items based on demand. This process, known as dynamic pricing, is intended to allow the retailers to respond to market shifts easily in real-time without the need for extensive, cost-prohibitive, human-led analyses. That responsiveness, according to many business leaders, gives companies a competitive edge, as the algorithms can compare rates and undercut what other businesses might ask. 

Under normal circumstances, algorithmic processing can result in price shifts ranging from just a penny or two to several dollars, depending on the demand the AI analyzes and the initial price. Increases of triple-digit percentages, however, usually are associated with the holidays, and they typically attach to non-essentials. As an example, in December 2016, Hatchimals, which normally sell for around $60, sold as high as $120 to $350 each through eBay, Amazon, Walmart and Sears.

But in hurricanes and other natural disasters and crises, algorithms break this general rule. Because equipment and supplies that are necessary for human survival get tagged with the increases, the ethics of allowing regular supply and demand concepts to prevail comes into question — at what point, if at all, does it become a retailer’s responsibility, for the sake of social good and compassion, to override its regular AI-based protocols and reset a cost? At what point should CEOs step in, based on an understanding of trauma and prioritization of care, to ensure that their business is not adding to suffering? Personally, I find it appalling and sickening to just ‘blame the algorithm’ and sweep this under the rug amidst catastrophe.

So to Amazon: your algorithm doesn’t have emotions. It doesn’t understand catastrophe. You need to set the precedent that in desperate times like these, measures should be in place to prevent third party sellers from taking advantage of devastation.

Technology has incredible benefits. But situations like Irma, Harvey, and any natural disaster should serve as a warning to all contemporary leaders — whatever you allow your technology to do in a time of crisis is a direct reflection of your values. And customers respond to the values they see. Ultimately, they will decide which businesses have followed the acceptable path.

Source: Forbes

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