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Amazon Charging Different Prices for Same Items?
Rambo writes "Amazon is apparently researching consumer's buying habits by arbitrarily changing the prices on DVDs and other products. Computerworld has a story here about it. Amazon refused to say when they would halt the practice, or what criterion they used to set the different prices." Of course I haven't spent a nickel at Amazon since that whole one-click shopping thing, but I can imagine ways that this could be good or bad. Imagine I buy a lot of Anime DVDs. They could note this, and raise the prices by a buck or something. I tend not to do real-time price shopping on items like this: I looked at a dozen online stores when I started purchasing, and I settled on the one that had the features & prices I want. But 2 months later they could jack the prices and it would be months before I noticed. Alternatively they could lower the prices, or lower prices on similiar items as an incentive to buy other things. Very odd possibilities and I'm not at all sure about how I feel about it.
While your non-marketeer logic sounds good, effective, and frequent-customer friendly, the opposite is actually the case. Print catalogs have had a long practice of raising prices for regular customers because their market research proves that people still think they are getting the best deal because of that first purchase. J. Crew and L.L.Bean are probably the best catalogs to test this with since regular customers get a new catalog every two months or so, and cold mailings go out to mailing listed potential customers at least twice a year
The company assumes (and their research proves this), that customers are driven to them because of past experience and future expectations of value. Therefore, a regular customer is less likely to shop around for a better deal, because they got great deals the first few times they shopped using that catalog.
Furthermore, catalog companies often have two or more catalogs per season. These will look the same, and many of the prices are the same, but the 'regular' customers mysteriously get the catalog with the higher prices. The logic is that they are already hooked, as I said before, because of prior experience and prices.
If you are a packrat like me, you can check catalog prices. I bought a bunch of stuff from J Crew, the next mailing the prices on many things were slightly-to-considerably higher than the original catalog I had ordered from (same season), my wife (different last name) recieved the same seasons catalog (cold mailing) whose prices were the same as the original catalog I had ordered from.
Actually, every grocery store membership I've seen does indeed change the price at the register. I know here in Texas, for instance, Randall's (now part of the giant Safeway) Remarkable Ripoff-protection-racket card is required to avoid paying *way* too much at the register (fortunately, thier main competitor here, HEB, doesn't play such games, so they get our grocery $$.)
It's not even the profiling I object to (since there's really no way to avoid it anymore anyway, unless you always pay with actual green cash) so much as the attitude that "you must play our game or we'll make you pay through the nose".
This is really the whole point of affinity-group marketing: the price one customer pays for a given product may be different from the price paid by the next customer. The big products companies are using these sorts of systems to target products at particular demographic segments that may be eligible for a discount negotiated though professional organization (say, doctors) or to influence the buying habits of first-time moms with a new baby.
"The future's good and the present is nothing to sneeze at." - Roblimo's last
I can go into Border's and receive 10% off any book because I'm a teacher. I have a card that identifies me as such.
A woman in line in front of me bought Elmore Leonard's "Pagan Babies" for the sale price. I bought "Pagan Babies" for sale price less 10 %. We got different prices on the same day for the same book purely based on some arbritrary criteria.
Another example: I go into Seattle's Best Coffee. A man in front of me gets a latte for list price. I go in, plunk down my frequent buyer's card, get the latte for free because I've bought ten lattes.
Same day, same item, same clerk, different prices.
Since we don't know Amazon's criteria, I'm not sure we can accuse them of discriminating against certian *people*, right? I mean, I've bought a lot of stuff at Amazon, and over the past few days as I've been following this story, I've noticed that I'm received the lowest prices for all the DVDs that they're listing.
They're not lowering the prices because my hair is brown, my eyes are blue, and I write left-handed, right?
They're not lowering it because I'm a democrat and I think the Shrub (Bush) is a dumb, loud-mouthed boor.
They're lowering the price based on whatever information I've given them, my ordered habits over the years, and the books (and DVDs) that I've ordered in the past.
Obviously, they've got some sort of criteria that they've established -- repeat customers, money spent over the past year, orders over the last month, whatever -- and they're applying it to me.
Or maybe they're setting random prices and seeing if it's enough to "catch" me based on my demographic.
Whatever.
But I know that I take one look at the list price, one look at the sale price, and make my decision there. If the sale price is too close to the list price, I won't buy it, period.
If the sale price is 30, 40% of the list price, I'll probably buy it.
I think the issue here isn't that they're doing it -- charging less for some customers, more for others -- but that we don't *know* the criteria.
And of course because we're all good little paranoid Pynchonians (see 'The Crying of Lot 49' or 'Gravity's Rainbow' to see what I mean) we suspect the worst -- that not only are they screwing us and fucking with our privacy -- they're also fucking with our heads.
Bad Amazon! Bad! Bad! Bad!
Simply point out to the NCAA that some student atheletes are getting special discounts because they are coming from an EDU or some such silliness and Amazon will be taken through the ringer. Look what's happening to the guy who gives discounts to everyone at a shoe store in Wisconsin. Gave the same discounts to atheletes and now WI is in prohbation. Think about it.
(`._(`._( , , . JimmyPop[nL] . , , )_.)_.)
And then the store that just give you their lowest price will get the sales because it's easier to just shop there?
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Or, they could notice that you buy a lot of Anime DVDs and *gasp* lower the price by a buck or two to get your valuable business. Why must we always assume the worst about everything?
I tend not to do real-time price shopping on items like this: I looked at a dozen online stores when I started purchasing, and I settled on the one that had the features & prices I want. But 2 months later they could jack the prices and it would be months before I noticed.
That's one of the worst ways to shop online I've ever heard of. First, decide on what you want. Then, find the lowest price from a reputable dealer and buy it there. Try this: pricewatch.com
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Have fun: Join D.N.A. (National Dyslexics Association)
If you read anything regarding this situation, you'd see that Amazon is not a monopoly. While it is true that under a monopoly, consumer prices are higher, that's not the reason behind this case. What they're doing is determining to what extent someone who has a strong preference for a particular product is insensitive to price increases.
Stop by my site where I write about ERP systems & more
There are two fundamentally differences between one-to-many marketing (and pricing) and one-to-one marketing (and pricing).
The first is that one-to-many marketing uses statistical data (think insurance) for determining appropriate price or discount. While one-to-one may use individual buying patterns, browsing patterns, neighborhood or regional criteria, and survey data such as household income. I have taken at least one survey at Amazon.com. Although the information is only as accurate as I want it to be.
The second difference is that collusion can now occur at the individual level. Just last week there was an article on slashdot about Amazon.com planning on selling their customer data. When other retailers discover that you are price-insensitive at Amazon.com you may discover you are paying list price regardless of where you shop! Of course, the government will not allow Amazon.com to sell their data directly to their competitors but other channels (i.e. information resellers) will emerge.
-- My Sig
On a related note, Amazon apparently lied to users when they said that users could be removed from the customer database.
Several months ago I opted to take part in the boycott against Amazon because of their patent stances. I had been a long-time and frequent customer to that point, so I sent a note to their customer service address explaining my position and asking to be deleted. One of their people responded very politely with an explanation of their position on the patent issue. We traded several emails discussing the point. Obviously my position did not change, and the customer service representative agreed to delete my records.
I recently received an email notification from them regarding their change in policy making customer data a saleable asset. This makes it obvious that I was not, in fact, deleted from their database. While they may have "closed" my account to make it inaccessible, they retain my data as an asset.
Bad Bezos, no donut.
One of the ultimate mecas of retail is to charge every customer a different price, and that price is - whatever the maximum they are willing to pay. You can see stores doing this with "customer loyality" cards too. They'll charge outrageous prices, that is, unless you use their card which will bring you down to normal levels. At that point, they carefully record all the purchases and buying habbits you make and will price and discount stuff that they figure you wouldn't have bought otherwise. They also target you heavially to fufill their dream of the ultimate marketing mecca - to be able to target every individual customer with a custom made pitch designed to lure the max in purchases out of them that they are willing to pay. It's sorta cute, but you're rather stupid if you play their game, information technology put's the power in your court - not theirs. If you're always jumping through their hoops you're never going to realize that it is they who should be jumping through your hoops. You should realize that the same technology that allows them to pigeon hole you so well, also allows you to bypass them totally and leave them out of the loop. Orginisations like "Mercata" are one example "Priceline" another, ebay another, and there are a lot of barter and exchange sites on the web where if you do it right you could get a $1000 worth of furniture, someone else could get $1000 worth of computer programming from you - so both of you got $1000 of worth that each of you didn't have before and the IRS is none the wiser. This is what the internet's all about.
Now I don't even have to leave Amazon to do my price comparison
shopping! Just view the site with different browsers and cookies,
and see what kind of deals you can get!
Does this mean we can figure out Amazon's 'pricing scheme' to rip them off?
See:
Profit Maximization vs. User Loyalty
-Jeff
Also, its important to understand that there are two significantly different methods comparison sites use to obtain prices. Sites such as BestBookBuys perform a real-time search, and are therefore going to be the most accurate. Other comparison sites, like shopping.com, or mysimon.com compile records daily, and are not real-time searches. Their data is more likely to be incorrect, however since it is all in their own database, you get a faster comparison.
Real time searches should not be affected too much. Amazon is likely to be taken off of these if the real time search doesn't match their price. It won't matter a whole lot if that happens because people who comparison shop for prices already know the best price is not going to be from amazon.com.
If amazon.com doesn't work well with comparison sites its their loss. Amazon's biggest mistake is that their business plan calls for them to dominate selling on the web. That part of their plan is backfiring as more and more businesses are figuring out how to play the web game. We will end up with a great variety of stores to choose from, and consenquently, sites that analyse the great variety of choices will be popular.
Comparison sites are here to stay. If Amazon refuses to cooperate with them, oh well. There are always the 100 or so other stores in any given category that a comparison shopper can choose from.
No, Thursday's out. How about never - is never good for you?
The good news is that Amazon doesn't have this kind of market power, and it probably won't, because the barriers to entry to this business are fairly low. But if they do get sufficient market power, then they may need to get scrutinized, unfortunate as that may be.
It's really too bad, if you think about it, that vendors keep pushing the limits of fair play. It's just like privacy practices - it's as if they want the heavy hand of the Feds cracking down on them.
sulli
sulli
RTFJ.
News.Com has a story on it -- a little more depth.
-Davidu
# Hack the planet, it's important.
Back in the old days (1998), it was considered easy to manually, personally go to different websites. Man, look how we have progressed.
I wonder if my wooden shoes still fit?
"don't fall into the fallacy of believing that Perl can solve social problems. Maybe Perl 6 can, but that's a ways off"
In the article they mention that the price difference they saw was evident when they made the first request with Netscape (cheaper) and the second with Internet Explorer. Is it possible that one of the criteria Amazon are using in their pricing decisions is what browser you are using?
Like Netscape users are cheap-skates? 'I bought this browser in 1996 and it still works, I'm not gonna buy another one dammit!' etc. Or maybe they assume that if you use Netscape you probably run Linux (yeah I know that its available from the User-Agent header, but if you had to dual boot, you might use Netscape when you were in Windows too for consistency), and maybe they think that if don't pay for software, you're not likely to buy a DVD if it costs a lot?
Brick-and-mortar stores don't usually do it on a customer-by-customer basis though (because it would damn near impossible, esp. with posted prices on the products on the shelves).
Sigh. Look, I'll make it easy. This post describes an example of what I'm talking about. Same company, same state, different prices "for research". Happens all the time.
You would hope so, but the point, as you mentioned, is that we don't know what criteria they're using. Maybe they are charging you higher prices because of your political views, or your taste in music. Both of these, and other attributes, can be guessed with varying degrees of accuracy from your past purchases. Now it probably isn't happening because it doesn't make commercial sense to do so (although it's possible -- here in the UK at least, those leaning to the politic right tend to have a higher disposable income than other, and so would probably worry less about paying slightly more). The point is, we just don't know.
"The invisible and the non-existent look very much alike." -- Delos B. McKown
Would it be possible for an auto-shopper agent looking for a particular item to log onto a company like Amazon.com's as many different individuals, pick the best price offered & buy that?
Personally, I welcome Amazon not working with comparison sites. It will be their loss. There are already over 50 other bookstores that are set up to sell books online. If one single company decides it doesn't want to be compared with the rest, it wont have a great effect on comparison searches.
Folks, there are a great variety of stores out there to choose from. The internet lends itself to variety, not monopolies that dominate an entire area of business. If one company decides to go against the nature of the internet(which lends itself perfectly to lots of businesses and comparison shopping) they are only going to be hurting themselves.
No, Thursday's out. How about never - is never good for you?
California has state law in this area, but I haven't looked it up.
The next step, I suppose, is a browser plug-in that generates a range of different situations involving cookies, browser type, and previous page viewed to see what prices come back.
It's kind of a stupidity tax really. Browse with cookies on, pledge loyalty to a corporation or a brand and pay more.
A Dick and a Bush .. You know somebody's gonna get screwed.
War is necrophilia.
If you don't like it, then shop elsewhere.
Everything in this post is false.
This is absolutely not normal business practice in retail stores. The issue here is not that Amazon is analyzing the buying patterns of consumers in the aggregate and changing prices based on this information. The problem is that they are using some secret criteria to charge people different prices as individuals.
So you are saying this is exactly like buying a car from a car dealership?
(-1 Troll)
I got a unique browser cookie from the Neiman-Marcus e-com server, which is supposed to automatically fool online retailers into giving me their best price.
Well, actually I just got the recipe from them. Only cost me $200, haven't tried it yet.
Don't spread this around.
The airlines and hotels alter their pricing because they have a "perishable" product. An unsold airline seat becomes worthless as soon as the plane takes off. They call it yield management. They alter the price as it gets closer to the expiration date, in order to maximize their revenue.
The technique being used by Amazon is actually quite different, since books and CDs are not perishable. Amazon is altering the price based on who is doing the buying. If they know you are a loyal Amazon customer, they may charge you more because they think they can get away with it. If they know you are a price shopper, they may charge you less, because they think it is the only way they will get your business.
Auto dealers take a similar approach. If you are a loyal customer of XYZ dealership, you will pay more for a car, because that dealer knows you prefer to buy from them.. There is also research that shows women and minorities pay more for cars, apparently because the dealerships (on average) feel that women and minorities (on average) have less bargaining power. Essentially they are taking a profile of what they know about you (previous customer) or what they assume about you (male/female; white/black/brown/tan) and using that profile to adjust their pricing.
What is happening with online shopping is even more insidious. Because online retailers have the ability to create detailed profiles and automatically adjust the prices accordingly, they can really take advantage of the situation. The unfortunate thing is that loyal customers will often get the worst deal.
This is not that uncommon. For example, I think priceline.com does the same thing. The first time a new customer makes a "bid" on a plane ticket, they will usually "win" it. This creates goodwill (loyalty?) on the part of the customer. After that, Priceline will alter their acceptance/rejection of that customer's bids, to determine how price sensitive the customer is. Their subsequent pricing will take advantage of that information. This is not traditional yield management (Priceline does not own the commodity, so from their perspective the commodity is not perishable), rather it is profile-based price management.
So how can consumers protect themselves? The most important thing is to minimize the amount of information a retailer has about you. The less a seller knows about you the better. This is because companies that use profile-based pricing will almost always offer a "new" customer the best deal in the hopes of gaining your trust (so you will hopefully become a "loyal" customer and they increase their pricing and profit later).
Other things consumers can do:
(1) Do not patronize companies that practice this approach.
(2) Publicly condemn companies that take this approach
(3) Utilize price comparison services
(4) Be ruthless about price shopping
(5) Do not become loyal to a single retailer
(6) Shop as anonymously as possible
(6) Just say no
Now go back to amazon as a new user. Are the newbie prices on your favorite items higher, or lower? My guess is your personalized prices will always be lower, because you're a good customer and they want you to come back.
If not, if they've been gouging you, sign up as a new user, get the good price, and send the evidence of rip-off to slashdot as a tell-all expose :)
Most major airlines will guarantee you that, when you call or go to their website, they are offering you the best price available for a given travel date, destination, class of service, restrictions, etc... It sounds like Amazon is simultaneously offering different prices to different people based on aspects of their "electronic persona" that have nothing to do with the level or type of "service" received or volume of business they are doing. This seems inherently unfair, and seems like a stupid move to me, based on the amount of negative publicity it will generate.
Online retailers do have the capability to "personalize" pricing, and doing things like offering additional discounts to regular purchasers based on a structured, frequent flyer-like programs would be a great way to enhance customer loyalty. But there really needs to be a comparable "best price first" guarantee that you're not paying more for an item based on inconsequential factors.
You know you're so angry in both those posts I'm not sure if we agree or not. `;^)
I've seen this with Dell as well. We're a Dell major account customer, but up to this time I've never bought anything from Dell. I was planning on buying a 2U server and was browsing Dell's site looking at the 2450. I spec'd one out and printed the specs on Friday. On Monday I got the company's corporate login for Dell and repriced the same server and LO AND BEHOLD the price went up nearly $1000!
I expect computer stuff to fluctuate (RAM, disks, and CPUs seem to be subject to production constraints and high demand lately) a little, but $1000 over a weekend just seemed wrong. I checked on Dell's consumer site (same machine, natch, I didn't think of them tracking me with a cookie) and the price was the same.
I thought it was really odd, but pity for Dell, they lost the sale to HP after jacking their price on me. After reading this, I'm sure I was the victim of "selective selling". By seeing me as a corporate customer they'd been making money off of they were plenty willing to try to steal from me. I'm glad they didn't.
In retrospect, I kind of wish I would have called the Dell rep to ask WTF was going on with a $1k price jump in 72 hours, but I liked the HP guy better and just blew it off. I suspect that I would have gotten a different, third price from a real person with some room for bargaining.
Do you think that means they'll start making a profit?
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Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
I looked high and low on their site, trying to determine how to erase my (long unused) account. Finally, I had to e-mail them, and they got back to me yesterday. To remove your account, simply e-mail:
account-close@amazon.com
There were no further instructions, so I assume that the removal is done manually by an Amazonling. I used this:
To Whom It May Concern,
Please remove my account from your system. I haven't purchased anything
from you since your 1-click & referral patents, but now that you've modified
your privacy statement to permit the sale of my private information, it's
time to remove my account. Please remove any data that you have under
waldo@waldo.net and waldo@munkandphyber.com, and notify me when you have
done so. Thank you.
Sincerely,
Waldo L. Jaquith
I guess that's sufficient. I encourage all of you to close your accounts, though you'd do well to cite today's news in addition to the modification of their privacy statement.
-Waldo
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The catalogs are not postcode separated. I know this because we get a list of addresses, in a particular location. These span multiple postcodes, and the whole range of areas, right from really scummy parts up to veritable mansion houses.
The catalogs were then collected from large pallets of catalogs stacked at one side, and one delivered per address.
Each catalog did _not_ have a specifc address.
There was no way of making certain catalogs targeted to certain area. [0]
[0] There _were_ differnt catalogs target at different markets, but that's very different from the topic at hand.
Different prices for different people have existed forever. Frequent shopper cards, Buy x Get y free discounts, sales, special handshakes, etc.
:)
Amazon isn't doing anything new, in fact, they're not even the first to do dynamic pricing on the Internet. However, their investors are pissed that Amazon is _still_ losing money, and they haven't had any PR for a while.
Thus, the new pricing schemes. How many people have already gone to Amazon.com to see if they qualify for a low price? How many of those people bought stuff because they felt 3l33t with their "lower" prices?
This is simply another cheesy ploy by Amazon, pity the fools who fell for it
-This sig intentionally left blank
This has been done by many people before. Victorias Secret Catalog has done this for years. They ask for a catalog code when you call in. That lets them know which price they should charge. They do this for marketing purposes to see how much they can charge the consumer for.
They are just trying to maximize revenue. If they find out they can sell it for 20% more and loose 1% of the sales, they will. They are searching for the most profitable price.
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Mike Mangino
Sr. Software Engineer, SubmitOrder.com
Mike Mangino
mmangino@acm.org
Not in the UK
In the UK the major home shopping catalouge firms are all part of the Littlewoods group (Though not all).
A summer job as a delivery driver for that group demonstrates quite clearly that the catalouges are all the same.
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We have fought the AC's, and they have won.
Try doing that on your $99 fare.
Open Source. Closed Minds. We are Slashdot.
I would think that the number of people who *didn't* buy the product would be very important. You could make a graph showing "50% of the people shown price X bought the product, 35% of the people shown price Y bought it, and 75% of the people shown price Z bought it." If an unknown number of people visit the site with no intention of buying anything, it throws those numbers off. If you don't record the non-buyers, all you can say is "30% of the people who bought the product paid price X, 25% paid price Y, and 45% paid price Z." I havn't taken econ since high school, but the first one seems much more valuable to me.
-B
The logical and commercially viable solution here is to lower the price when you buy a lot, because they want to maintain that customer loyalty if it means you're a good buyer. Same way it works with everything else... Buy 1, it's a given price; buy 100, it's a lot cheaper per unit.
I suspect you guys will whine a lot less if this kind of data collection means you'll save on your little anime DVDs, huh?
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All generalizations are false.
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I like to watch.
Great response! I'm amazed by all the whiny hand-wringing here that "someone out there may have gotten a better deal than I did, and it's not faaaaair!" - just like a three year old.
We each strike our own bargains and have no right to complain later just because someone may have gotten a slightly better deal.
That last verse (15) should really be taken to heart by the crowd here.
"The future's good and the present is nothing to sneeze at." - Roblimo's last
For instance, here are 14+ different choices for buying The Matrix on DVD sorted by price.
We're continually adding new merchants and product categories all the time. That's my job actually. In fact, if you know of any good DVD merchants (or any other good web merchants actually) feel free to send suggestions to me in email (see above) and I will look at putting them on our site. (Note that not every web merchant will be able to be listed -- if they have really crappy inconsistent HTML and/or don't list enough identifying information on their pages, it won't work. Perl regexp's are neat but not magical ;-))
Maybe it's annoying that one has to write a perl script to harvest cookies when they could have given us their minimum price in the first place. In general, it makes shopping more time consuming, that's all.
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The first hit is free, after that, the price jacks up. What they do with quantity or more likely cutting the stuff is probably as constant as the price hike. First high-quality free hit to get you hooked, perhaps a few more good quality ones at a given price $n, and then quality-- and n++.
But at some point quality and n become constant as they've hit market values. Drug dealers don't have a monopoly over you, just usually the drug.
Don't you love capitalism? It even keeps the drug dealers honest!! :-)
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Care about electronic freedom? Consider donating to the EFF!
I recently spent $ 191 at amazon.com and they gave me the lower price on the Men in Black DVD.
However, they messed up my $191 order - they sent it late and one of the items they sent was the wrong one. I don't really want to complain since it's not worth the trouble of shipping it back, but I doubt I'll buy from them again.
D
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I do not get it. This is normal practice for normal non-online stores. They analyse customer demand all the time. Some of them have evn gone as far as analyzing customer in store movement using IR cameras. Why do you expect Amazon to behave differently. Just because it is online? ;-) They are just doing business the way everyone else does. A bit more efficiently though as they do not need IR cameras to track customer movements.
Gimme a break
Baker's Law: Misery no longer loves company. Nowadays it insists on it
http://www.sigsegv.cx/
amazon doens't have your credit card number of type or name while you're filling your shopping cart, only afterwards when you sign in your info or use a previously entered profile. or rather, the only way amazon can have a clue who you are is with cookies from previous sessions. so rename your cookie file and try again; if you get a better deal, great; if you get a worse one, you can always put your cookies back.
I don't know if I can full-heartedly agree with your assessment, especially with your recommendations.
A business is not doing anyone a favor if it does not maximize it's profits. It cannot continue to offer you a service, it cannot continue to survive and feed/pay itself, it cannot gain prestive, position, rank, or brand, if it cannot stay in business.
What is *wrong* with different prices for different buyers? I'm not saying more or less, but under what premise is equality of prices a guarantee? If you don't want to pay *more*, then go buy somewhere else. If you don't want to pay *less*, then there must be something wrong with you, I think.
As per the price fluctiations, there are several 'arguments' for. There is no real value assigned to, say, a book. It's value is only whatever a person is willing to pay for it. If that's 25, 26, 28, or 30, that's the 'price'. If you find it for 30, but want to pay 25, then you aren't going to buy it, and they won't sell it. If, however, they will sell it for 25, but you're willing to pay 30, they would be *stupid* for charging less.
Amazon, with this practice, can maximize profits. That's not wrong.
Another issue I can think of is the 'perishability' of their goods. Anything that sits in their warehouse over a certain amount of time is, essentially, a loss. Books that get printed every quarter, year, or even week; the circulation of books, like the circulation of money, is how they make a profit. If they sell 2000 books a month, and get 2000 books in every month, they have 0 inventory, and profit on 2000 books. If they sell 200 books a month, and get 200 books a month, they still have 0 inventory, but only profit on 200 books. It's to their advantage to maintain 0 inventory, before the next shipment comes in, and if that means lowering prices, well, then, it's certainly in their advantage.
As to raising prices, one can *always* go somewhere else. But the assumption is that you're paying money to Amazon to keep them alive. Brand loyalty means you like them, for whatever reason, and if you want them to suceed, you buy from them over, say B&N. If you have no loyalty, then it doesn't matter anyway. Which means you pay a brand tax; and, if they are smart, they use that profit to do something good, to ensure current and new buyers *prefer* Amazon over B&N. If they do something stupid or pointless, or irritating, customers can always leave.
The nick is a joke! Really!
GPL Deconstructed
Evan Reynolds evanthx@hotmail.com
Evan Reynolds evanthx@hotmail.com
Two peanuts crossed the street. One was assaulted.
It's sometimes called beha vioural marketing. It's also called knowing your customer. Supporting this kind of marketing is a burgeoning business for a lot of web companies. The idea is that you track what happens on your site via web, db, phone logs. You segment your visitors according to criteria you make up or you discern from your logs. Aand you devise promotions and marketing programs to attract and retain the customers you really want, and help them get beyond shopping to buying. Duh.
Amazon is not alone in pursuing this strategy. And the article offers almost devoid of factual data on the particulars of Amazon's program. If you want to boycott Amazon, go ahead. They won't care - unless you spend lots of time browsing but never buying. But doing it as a result of this non-information is pretty foolish.
This is absolutely not normal business practice in retail stores ...The problem is that they are using some secret criteria to charge people different prices as individuals.
... that's pretty standard practice in most areas of the world, actually. Hell, even here it is. For any large expense at a retail store, I'll find whoever has authority to cut a deal and I'll cut a deal with them. As long as you can convince them it won't get out, pretty much anybody prefers cash in hand to inventory on the shelf, lowered profit or not.
:)
Ummmm
If I can size up the store and try to chew them down, what on earth is wrong with vice versa?
The way you phrase this, it sounds like you pay label price on everything you buy. You're kidding, right? Are there REALLY people that dumb in the world?
In the old days, the main way that Barnes and Noble sold books was by the B+N catalog (and if you ever bought from them...you would likely still have a couple dozen hidden in your house somewhere.) The B+N catalog had differential pricing in it, in order to purchase an item from them, you had to give them your catalog number. I noticed that the catalogs I would get would have different prices in them from the catalogs my father got, although they did look the same.
Several years ago I was watching...uhh...think it was Montel, as I was flipping through the channels. They had some consumer expert come on and talk about differential pricing in Victoria's Secret catalogs. It wasn't making a big difference unless you spent a huge sum of money. They had this weird example of how one person would save $100 if she bought $500 worth of clothing from one catalog instead of another.
What's deeply funny to me is the way that they scandalized such a good, family, American institution like Victoria's Secret. And I don't care how much lingerie someone owns, they likely do not buy that much of it.
Phew, I was worried for a moment there - I thought you were monitoring me!
The name of the game seems to be comparison shopping. Why hasn't anyone started a service on the web that, for a small fee (or advertising revenue) will find you the best possible price on the web (given your profile, which would be independently tracked by this service)? I know services like pricescan and streetprices are available, but they are limited and don't take advantage of any customization, the use by retailers of which people are freaking out about.
I think this "two-click" approach would work - one click for the best price, another to buy. It would hopefully end up being a web middleman that would be worth using if it consistently got you lower prices.
just my blog and pix
Bricks and mortar stores do this all the time, from store to store, week to week or region to region. The only reason you notice is on Amazon is that it's easy to compare, what with price-finding bots and discussion boards. It's not unethical, or even unusual. Indeed, it's optimal, because it finds the pricing sweet-spot that both encourages consumer purchasing and keeps Amazon in business. This is called efficient capitalism, and that's what e-commerce was supposed to be all about.
Sure, it would be possible to offer discounts for bulk purchases... but that's not guarantee that Amazon will do it. It's all about psycology, I guess.
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With services such as Priceline and EBay, we've seen the ability for buyers and sellers to come to a private agreement about pricing.
Perhaps fixed prices are a thing of the past, a relic of the old ways of doing business. Fixed prices are certainly needed at old-style bricks-and-mortar retail establishments (so the customer can quickly view the price while examining an item) but really aren't required online, where the webserver software can issue a different pricetag for each viewer.
In the future Retail Online Hell, massive server databases will track our every choice, become aware of our every weakness, and know what "must-have" preferences each of us has.
The result: I'll be charged top dollar for things like DVDs, and offered astonishingly cheap prices for, say, scented candles.
But there are also people who will "walk away". And the company would probably rather may a 50c profit than not make the $1 they were originally hoping for.
Of course, this brings us nicely back to the RIAA where people who are walking away are walking away to Napster. If the record companies lowered their prices, they would probably get a lot of these people to come back to purchasing but they may actually end up making less money because the hoards of Brittney fans would be paying slightly less each.
What they can't seem to understand though is that even if they could shut Napster and friends down, those "walk aways" still won't walk back.
Anyway, I digress...
Rich
You don't know what to think of it? I do--it stinks.
Can they do this? Sure. Is this common? Absolutely--it's been done for decades in the real world. Fast food chains are particularly bad for setting prices differently in different areas of a city. We call this "DEMOGRAPHIC PRICING," and the only think that Amazon has done differently is increasing the level of detail/granularity on which they can apply it. Instead of getting people based on their home or work district (and hence, their approximate income, job type, general lifestyle, etc.) they can do it by specific individual attributes.
It could be used for good purposes, but in this case as in most, there's no profit in good behaviour. It's sleazy and wrong, and should encourage us customers to research _every_ purchase we make over some 'throwaway' threshold.
Eventually this will jump up and bite the companies back. Continual comparison shopping and distrust of retailers means no brand/store loyalty, no sense of responsibility, and no loss when the companies die.
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
So what is acceptable discrimination?
According to US federal law, (Civil rights act of 1964) you may not discriminte based on Race, Sex, Marital Status, Age, Religion, or National Origin. The ADA prohibits some forms of discrimination against discrimination against the disabled. And some act, the name of which escapes me at the moment, prohibits descrimination against military status / service.
Other than that, you may discriminate for any reason your heart desires.
DrLunch.com The site that tells you what's for lunch!
Well, I do. It's screwing the business people, and their purchasing departments, as well as the casual last-minute travelers - not because the price reflects higher costs but because they can. Sure, costs are a little higher because there's a higher risk of unsold seats, but certainly not by a factor of 4 as is common on some transcon routes.
Amazon is clearly trying to do the same thing, and for that reason alone I'm less willing to buy from them.
sulli
sulli
RTFJ.
If you read the DVD board, somebody said that while he was not logged in, with cookies disabled, and a netscape cache of maximum 0 size, Amazon fluctuated the prices up and then dropped them. There doesn't seem to be any reasonable criteria dependent on the person. Either random, or raising the price each time to "scare" people into buying it early before it goes higher.
That's just plain dishonest. While you may have special discounts because you are a teacher or have some frequent customer program which has a written out set of rules, it is completely dishonest for a store, for instance, to randomly change prices on people who didn't even want to opt-in.
It's 10 PM. Do you know if you're un-American?
Rich
The practice of charging arbitrary prices based on how gullible a person seems has been around for ages -- just think of the last time (at least in the US) that you went looking for a car at a dealership. The only difference here is that it's impossible to haggle (unless you're willing to use different browsers, play with the cookies cached, and so on... average "Joe User" isn't going to do those things or even know that he should). While giving certain good customers discounts is good business practice, in this case these customers need to know that they've been selected for discounts, or else the entire effect is lost.
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"Go Metallica. Die RIAA." -- Linus Torvalds
Hmm. Perhaps in your country...
in mine (canada) the price on the shelf is what they charge you at the register. If the computer says otherwise, you still get it for the price on the shelf.
I've never heard the expression "chew them down" for bargaining. Is it possible this is a cleaned-up "Jew them down"
... there ARE no Jews in rural BC so there's nothing to be anti about -- local racism is reserved for Indians, er, First Nations people :)
"chew" is a fairly common replacement for "talk" in rural BC where I grew up. As in "Whacha doin? Chewin' wit porges," y'know, eh? I'm quite sure it's just from that and has no anti-Semitic connotations whatsoever. It quite certainly wasn't used like that there
The internet makes it a lot easier for the buyer to browse different prices, without having to pull out of the parking lot, drive to the next store, and find another parking spot. OTOH, it also makes it easier for the store to know what items you looked at and what you lingered over and what you put in your shopping cart before changing your mind - and they'd be fools not to use the information!
Brings to mind the proverb, "Be careful what you wish for -- it might just be granted..."
"I will take the Ring," he said, "though I do not know the way."
From an economic standpoint, amazon are trying to get a handle on the price elasticity of their various goods, perhaps correctly reasoning that tried and true items like Planet of the Apes will be more elastic than hot-off-the-press X-Men (if it's even out yet).
BUT! The normal supply/demand relationships implicitly assume an anonymous purchaser, so the elasticity is some aggregate measure. Of course, that isn't the case when you mix cookies into it (cue ominous strings)
We all know that the seller maximises profit at the intersection of supply/demand vs price curves (elasticity is the slope of the curve). However, for any given price, there are people who are paying "too little". They would gladly pay more for the same product.
If amazon could work demographics into the elasticity estimate -- and this is why they (and double-click) have been collecting info, not for advertising -- they can make better estimate on the maximum price that an individual would pay for the product.
So what they are doing is trying to determine the price sensitivity to various products for various demographic clusters.
I am absolutely amazed. If this is done on a cross industry basis (so instead of just books, also cars, airfare) this is consumer data that companies will kill for.
Or buy amazon for, now that it is a sellable asset
I'm actually really excited about this. It is soo neat. This is a great hack! Evil, despicable and all that too, but neat!
And, yes, you are right: this isn't new to Internet-based sales. Phone companies and others have been doing it for years. That doesn't make it right.
Efficient markets rely on orderly transactions. That's true in the stock market as well as in the consumer market. The more these kinds of practices take hold, the less transparent pricing becomes, the less efficient the market gets. And that's ultimately bad for the economy.
Come on guys, they have a hard enough time actually making money, they have to try whatever it may take to hopefully eventually reach a break-even point. If you feel sorry for them, put up with their slight price fluctuations or send donations to Bezos. If you don't feel sorry for them, then just don't shop with them and let nature take its course, they'll be gone in a year or so if enough people refuse to shop there...
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
How about:
Why do women get paid less for doing the same job as a man?
Why do a pair of women's jeans (typically less raw material) cost 1.5-3 times as much as men's jeans?
Why does an Acura Integra cost 1.5 times as much as the Honda Accord, a fairly identical car, the only meaningful difference being the sheet metal and name badge? (never mind the Cadillac Catera and the Chevy Cavalier!)
Why does an audio cassette of an album cost $10, while the CD costs $18, even though the cassette costs about $2 to reproduce, and the CD about 5 cents?
Why does a VW fan belt for an old beetle cost about 1/10 of what the SAME EXACT PART for a Porsche 356 cost?
Things cost what stupid sheeple will pay for them.
if it ain't broke, then fix it 'till it is!
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Don't even get me started on banking.
Based on the money I have now (stock options) that I didn't have 5 years ago, the banks treat me like royalty now, they know me by name, etc. But it didn't use to be like this - I can bounce checks now, and they give me the benefit of the doubt for a day or two, but man, a few years ago, I could deposit money in the morning, write a check in the evening, bounce it, and rack up a buttload of fees.
I'm tellin ya man, they FUCK you at the drive thru!
if it ain't broke, then fix it 'till it is!
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
IANAL, much less an anti-trust lawyer, but isn't this a pretty gross violation of the Robinson-Pattman Act? (In the US anyway). Not that Robinson-Pattman is ever enforced (or could ever be enforced for that matter), but this one seems a bit blatent.
sPh
Sadly, this is simply an online implementation of a VERY old practice....Victoria's Secret has had something like 3 to 5 catalogs out at any one time, broken out according to zip codes and past buying habits. I've actually gotten two different catalogs from them--they look identical but the prices are different.
Ditto for pricing in supermarket chains...same chain, different branch, different prices.
The nature of cookies, buying patterns, and the Web (remember, pixels are cheaper than paper) means that you'll probably see more of this rather than less in the future...it may pay to surf at such places in a non-signed in state and then sign in to purchase....or add stuff to your cart unsigned in and then sign in just to check out...
OTOH I am SOOOO happy I discovered Fatbrain when I did....
example quote:
It's the opposite of the reason behind all those coupons you get with the weekend paper. Companies offer you a discount to try their product. Once you become a fan of that particular product, they have no incentive to offer further discounts, as long as you keep coming back. It's called discretionary pricing, and it's a great way for a company to improve their bottom line. With the amount of consumer-level information that's becoming available these days, I'm not surprised to see someone try this out.
Stop by my site where I write about ERP systems & more
This is a non-issue. If you agree to a price when you buy something, the only person you can blame later is yourself. So what if they are doing price testing? Shop around. Show them you won't pay the higher price.
This is pure cultural chauvinism -- "That's they way they do it from the time and place I'm from, so it must be RIGHT!"
Do you think that, in the kind of markets that existed for most of humanity's existence, and which still exist in most of the world, the seller doesn't try to charge a guy who looks rich more than a guy who looks poor?
Just because in a handful of cultures for about 100 years there have been one-price stores does NOT make that kind of pricing the "right way" to do things.
Steven E. Ehrbar
This whole analogy with the airlines is wrong.
Airplanes have a fixed capacity of passengers and a fixed cost to fly (fuel, flight attendants, pilots, profit, etc). I'm flying to Toronto in two months. I have three choices:
1) buy a ticket now ($350)
2) wait to see if the plane doesn't fill and get cheaper tickets (since the airline wants to fill all the seats)
3) wait, find out that the plane is full, and miss the plane/pay more a seat because of demand.
If anything, airlines show how supply and demand work. Right now, I can go to travelocity and air canada and find the exact same price for the same flight. If the flight doesn't fill, the price drops. If it does fill and it gets closer (within two weeks) to the time of the flight, the price rises.
Supply and demand has no bearing on what Amazon is doing. I could understand a "good customer" discount (of...say 5%) or something, but arbitrarily changing the price on items doesn't make sense. Perhaps this is to see if people will still buy books at a 25% discount instead of 30%? Amazon is under incredible pressure to announce when it will turn a profit. Given that Amazon is making less than 20% per book, that doesn't give them much to work with.
-- Ever notice that fast-burning fuse looks exactly the same as slow-burning fuse? I didn't... (Edgar Montrose)
The basic difference is that in a regular shop, the same price is advertised to all. You know that they aren't preying on your buying habits. If you send your brother to get something, he'll be charged the same as you would have been. At a .com, it's like the shopkeeper takes a look at what kind of credit card you have and charges you more if it's a platinum. Which Amazon can do, 'cos they've seen your credit card.
It appears that someone at amazon.com reads /. Now when i go to click on the planet of the apes full DVD collection, in IE5.5, i get "Broweser Bug"... Same with mozilla...
Mark Duell
Be a 'good customer' at amazon, get them to lower their prices for you, and then sell your cookies. What is fun is that you can sell the same cookie many times. The only problem is that cookies will probably spoil with use. You can also have special DVD flavored cookies, computer-book-flavoured cookies, etc.
Lets see amazon try to claim that their cookies are not yours to sell.
Get them now! Get them while they last! Fresh cookies from Amazon.com!
Perfectly discriminatory pricing takes the economy closer to the prerequisites for Coase's theorem to apply.
While perfect competition is good because it moves the surplus to the consumer, perfectly discriminatory pricing at least allows the surplus to exist.
In other words, while this may appear to hurt the customer, it helps the economy as a whole. So it's a good thing, since anything Amazon makes eventually trickles back to the consumers (even more so today than before, since more people directly hold stocks).
We're moving to a world where everyone gets the shaft on every purchase, but they're all so wealthy it doesn't matter.
--Kevin
C'mon guys, why is it that you apparently think Amazon isn't entitled to d othe same things any other retailer does - go to Wal-Mart and see how prices fluctuate - all those "roll-back" signs show the ones that dropped (at least temporarily, but there's no notation (surprise, surprise) on the ones that went up a little bit.
This is completely normal practice in the brick and mortar retail business, whay bash Amazon for it? To me, this just shows the juvenile nature of the Slashdot crowd, who apparently just can't stand the fact that Bezos was sharp enough to patent one-click shopping before anyone else. (I'm on the record here as saying I think the patent is (and should be) valid, and the complaints are mostly sour grapes, or the rantings of those that think (wrongly) that patents are a bad thing. See my letters to LWN a few moths back for more info.)
And yes, I have noticed Amazon does this - I bought one the the slick little Linksys broadband routers from them last week, and noticed that delaying my purchase by three days cost me an extra couple of bucks - strange, but hardly anything to worry about, as it's still about the best price out there, and I really *like* one-click shopping - it's one of the reasons I still use and will continue to buy from Amazon. (Also, compare the effort of *cancelling* an order with Amazon to the effort required by other e-tailers for a real eye-opener.) My only complaint with them is that it's too hard to get in touch with a real person if something (usually shipping) goes wrong...
"The future's good and the present is nothing to sneeze at." - Roblimo's last
"Good lord how dare Amazon.com follow a supply/demand model? You mean to tell me that if there is demand (but limited supply) on a particular item that they are raising the price? Personally, I am outraged. I think I should set the price for everything I buy (or steal, in the case of MP3s). I haven't heard of anything this crazy since freshman econ."
OK, without going back and hauling out my econ texts to get the terminology right: this isn't an issue of supply and demand. The most efficent price for society as a whole is set where the supply and demand curves intersect. However, that price does not maximize the profit that the seller can make. The difference between the supply-and-demand price and the maximum profit is the "consumer surplus". The Amazon strategy is an attempt to capture the consumer surplus all for themselves, destroying the concept of the economically efficient price. Which has long been the goal of every business, but which is almost impossible to achieve without the low-cost information and instant feedback that the Internet provides.
Airlines, BTW, claim that they are actually selling different products at different prices, not the same product (seats on a flight) at different products. That is, a ticket for a seat purchased four weeks in advance with restrictions is NOT the same product at a seat purchased one hour in advance. Which is dubious IMHO but at least logical.
sPh
The difference is that your penny-pinching cards are not secretive and you know exactly what you're going into. The secrecy of this situation is what really stinks, a careful consumer has to assume that by not advertising the discount they don't have to advertise the premium and eventually Amazon charges whatever Amazon feels it can without upsetting the herd. This has nothing to do with a little card that says "After 10 subs get one free!"
This is old news. They've been testing random price drops for over a year now. They simply test to see at what price sells the best. From there they can maximize volume to profit levels.
They've done it with books, VHS movies, and now DVD's. It's not a big deal.
Aren't there intelligent vending machines in some places that bump up the price of cold drinks on hot days, and when they're selling a lot?
===
I would imagine, that your average scag head is especially unhappy when prices go up. S/he'd be used to getting her 5$ bag, I'd say a dealers much more likly to stiff on quantity or quality than price, and then who's going to be the biggest sucker, the new kid who's "trying it out", or the old mess-head thats done more dope than Cypress Hill? - No your analogy is poor.
Amazon (et al) on the other hand are in a much better possition to shuffle prices as the see fit. If someone shops there regular it would not be hard to write a learning algorythm (GA, NN, whatever) that fiddles the prices on the "recomended reading" list to maxamises its profit.
I could do it in a weekend ... and, Amazon, if your listening, for, say - ten grand, UKP, I will. :)
Thad
Thad
*Click* **BANG!!!**
*Click* **BANG!!!**
Wonder how many feet Amazon has? (I'm one of the lil piggies that will never shop there again).
Sig it.
Prevent email address forgery. Publish SPF records for y
Airlines do exactly the same thing. You could be paying twice as much or half as much as the person sitting next to you...
This is done all the time with big ticket items (cars, boats, homes). Ever checked your credit report? Ever wonder why your friend gets a lot more calls from credit card companies then you do? (Obviously I don't know you I'm just making an example) My brother who makes a lot more than me get's about 10 gold card apps in the mail a week. This is all based on his buying habits. The BMW dealership dropped a 530 in his lap and let him take it home for the night after checking his credit (No "leaving the drivers license" just let him take it to "see how it felt").
My point is this happens in meatspace as well.
A few Years Ago Coca-Cola was fined a few million for charging different prices from different customers in the EU. (The prices were based on wether or not the customer/retailer also sold concurrence products). In the EU you can only charge different prices, if the reason is transparent and legal. Normally this would be the usual '3 for 2' type of pricing. If Amazon do this with European customers, they might actually be sued.
That said:
13 But he replied to one of them, Friend, I am doing you no wrong; did you not agree with me for a denarius? 14 Take what belongs to you, and go; I choose to give to this last as I give to you. 15 Am I not allowed to do what I choose with what belongs to me? [the whole thing]
If you don't like the (randomly set) price Amazon's charging, don't pay it. But agreeing to pay it and then complaining that someone else got the same thing for less is ridiculous.
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The bottom line is Amazon is not a monopoly, they have plenty of competition.
So they can charge any damn price they want, reasonable or not. If you don't like it, you can do two things with sound moral ground beneath your feet:
1) Stop doing business with them. (I have, long ago.)
2) Discuss it publicly to show your displeasure to Amazon, and to warn other consumers about the behavior.
Amazon is being assholes again. Is anybody surprised?
Stop doing business with them. Try buy.com or FatBrain.
Or even Barnes and Noble, unless they've screwed you too.
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Ferenghis have taken over Amazon.com.
They did the same thing with MP3 players three months ago.
-thomas
"Extraordinary claims require extraordinary evidence."
"And like that
Noting on one hand that Price Discrimination can't occur with perfect competition, but on the other hand that the Web is the most perfect vehicle developed to date to exploit comsumers, Amazon could selectively offer prices based on :
- Region - "Let's charge those dumb Canadians more than the Americans!"
- Group - This is probably the most scary one, since they could segregate the customer based into arbitrary groupings, and charge each the most they would pay, thus maximising revenue
- Time - Charge different amounts based on time of day or night. Is there less price resistance amoung drunks? Amazon could find out pretty easily, noting that most people browing the web at 3AM Saturday morning probably have been drinking.
- Form - Most retailers already do this, but this could be used in combination with the above list entries.
My best guess of what is going on is Amazon is trying to get some empirical data about demand elasticity, and more importantly how changes in price impact demand amoung various groups of people.A message from our sponsor
Right now, I bet they are keeping track of customers that are buying their products irregardless of the price (the price is marked up way higher than other stores). Now that they realize that the customer doesn't care too much about the price As Long As It's Amazon, it systematically marks up every product that customer sees with another $10-20 bucks. Quick easy cash eh?
Isn't this a little like that telephone company called "I don't care" that charges outrageous monthly rates?