Dynamic Pricing in Online Gold Trading
Usman Ahmed University of Turku, Finland
Abstract In this paper we identified the dynamic pricing implementations in a UK based gold trading corporations, BullionVault. BullionVault is a one of the largest online gold trader in the world which have vaults located in several cities, including London, New York and Zurich. We studied and observed their price strategies for 34 days and analyzed their dynamic pricing strategies for two regions,United Kingdom and United States, the pattern from its pricing strategy for both regions to maximize its profit, and also the possible result of this pricing strategy. Keywords: Dynamic Pricing, Gold Trading, Price Discrimination, Regional Price
The advancement of information technology, makes it easier for companies to adjust the price of their product or service in real time according to the current supply and demand, or in other words performing dynamic pricing for their product or service. The practice of dynamic pricing in airlines industry has been known for quite some time. Recently, hotels, sport teams, electric companies and many other industry starts to adopt this strategy as well. Dynamic pricing allowing the companies to increase revenue while balancing supply and demand at the same time. From company’s point of view, it is a very beneficial strategy if implemented correctly. Despite the promise of lucrative benefits which makes more and more companies adopt dynamic pricing, these pricing strategy also possess potential harm. Selling the same thing at different prices makes some customer treated unfairly. Some were even say that this strategy is immoral. In this paper we try to discuss about the implementation of dynamic pricing performed by BullionVault, a UK-based online gold and silver trading company and also discuss some possible result of the strategy.
2 Literature Review
In this section, we review some literature related...