Dynamic Pricing Engine Price Locking Mechanism
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Solution Overview
Problem
The electronic marketplace service provider incurs significant processing expenses due to excessive merchant pricing updates, especially for low-demand items, which can be wasteful and costly.
Innovation Solution
A dynamic pricing engine is implemented to reduce processing requirements by sending offer requests to merchants, scoring received offers based on various factors, and locking the item price for a predetermined time, thereby ignoring subsequent triggering events and offers during this period.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If merchants continuously update offer prices through scraping and price checking, then pricing information accuracy is improved, but processing expenses and system load increase significantly
Solution Approach 1:
The system performs preliminary actions by proactively sending offer requests to merchants before price changes occur, and by pre-establishing price lock periods. This prevents the need for continuous reactive scraping and price checking, reducing processing expenses while maintaining pricing accuracy.
Solution Approach 2:
The system implements periodic action through time-based price locking mechanisms where prices are locked for predetermined durations. This periodic locking reduces the frequency of price updates and processing operations, thereby reducing processing expenses while maintaining acceptable pricing information accuracy through periodic refreshes.
2Speed
If the system processes every triggering event and price update request in real-time, then pricing responsiveness is improved, but processing load and expenses increase
Solution Approach 1:
The system sends offer requests to merchants in advance before actual price updates are needed. This preliminary action ensures that pricing information is ready when needed, maintaining responsiveness while avoiding the processing load of handling every triggering event in real-time.
Solution Approach 2:
The system dynamically adjusts processing behavior based on price lock status. When a price is locked, subsequent triggering events are ignored, dynamically reducing processing load. When prices are unlocked, the system responds normally, maintaining pricing responsiveness. This dynamic approach balances responsiveness with processing load management.
3Loss of information
If merchants scrape and update prices for all items including low-demand items, then pricing completeness is improved, but processing expenses increase unnecessarily
Solution Approach 1:
The system extracts and processes only the essential pricing information needed for high-demand items through targeted offer requests. By taking out only the necessary price data rather than processing all item prices, the system maintains pricing completeness for relevant items while reducing processing expenses on low-demand items.
Solution Approach 2:
The system applies different processing qualities to different items based on demand characteristics. High-demand items receive frequent price updates and thorough processing, while low-demand items receive reduced processing. This local quality approach maintains pricing completeness where needed while reducing processing expenses where unnecessary.
Data Source
AI summary
A request to view an item may be received in an electronic marketplace. The request may cause an offer request to be sent to one or more merchants. The merchants may respond with corresponding offers. Upon receipt of the offer, so long as the offered is received during a time when offers are being accepted, a price may be determined for the item based at least in part on the received offers.