— -- The name Amazon has become synonymous with online shopping, and there’s one company that is aiming to change the e-commerce game with constantly changing prices to give consumers the best deal.
Pharmapacks, a health and beauty online marketplace in the New York City borough of Queens, has become a multimillion dollar business by discounting thousands of products online.
“Every 45 minutes, our systems are changing prices,” said co-founder Andrew Vagenas. “Whether it’s increasing prices, decreasing prices, market demand or we’re getting better deals or buying better. We always pass the profits straight to the customer whenever there’s a discount given to us, so that’s how we can drop prices.”
Co-founder Andrew Vagenas launched Pharmapacks with his four best friends in 2010. He said he previously owned and operated a retail pharmacy in the Bronx but knew "nothing at all" about e-commerce or technology when they decided to dive into the world of online selling.
But in just six years, the company is the biggest U.S. seller on Amazon, shipping more than 20,000 packages per day.
“We’re currently a $130 million company,” Vagenas said. “We’re going to finish off the year about $160 million. Next year, we’ll be at $280 million, and we’ll probably be at half a billion within the next three to four years.”
Pharmapacks’ computer system can spot a trend for a product that’s becoming very popular. As more people buy the product, Pharmapacks adjusts its price over and over until it becomes the best price on Amazon.
“The platform we built actually organizes it for us in a way where everyone knows exactly where to put what, how many to put and what to take,” Vagenas said. “It self-organizes it.”
Pharmapacks isn’t the only seller on Amazon enticing shoppers. Bargains for trendy items have become a business for people like Ali Levine, a celebrity stylist in Los Angeles who bargain-shops online to find hot looks for a lot less.
Her hacks for finding the biggest bargains include shopping discount websites, buying in bulk and mix-matching high-end and bargain pieces for the best deals.
“‘Discount’ has changed from a word that it used to be before, and now it means ‘inexpensive and chic,’” Levine said. “Chances are 90 percent of the time I’m wearing mostly discounted, with one designer piece. And it’s all how you tie it together.
“My celebrity clients trust me and trust my eye,” she added. “And if I bring them something that’s designer or I bring them something from Amazon and it looks great with their outfit, they’re not going to question it.”
When shopping online, retail analyst Hilta Herzog said, it’s important to pause before buying.
“Amazon is betting on the fact that we’re just out of time and we want to just replenish quickly and be on our ways,” Herzog said. “That ‘buy now’ box isn’t always the lowest price, but it’s a pretty good price.”
It is probably the lowest price compared with retail stores online, she said, but "if you have a minute, scroll through all the different sellers."
Competitive prices combined with convenience for customers is a recipe for success, so it’s no surprise that sellers like Pharmapacks have successfully formulated the tricks of the e-commerce trade to yield the biggest payoffs.
In fact, Vagenas said the company has already outgrown its 30,000-square-foot warehouse and is looking to move into a space five times the size.