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Online Shoppers Naive About Online Prices
smooth wombat writes "Have you ever been shopping online and noticed the difference in prices for the same item at different stores? Do you realize that not only are the prices different from store to store but they could be different for you compared to someone else who shops at the same store? Nearly 2/3 of adult internet shoppers thought that practice was illegal according to a study (pdf format) conducted by the Annenberg Public Policy Center of the University of Pennsylvania. First-time buyers at a retailer could see higher prices than a firm's repeat customers, and retailers may not offer discounts to consumers who buy the same brands regularly without even looking at alternative products on the same site. From the article: 'The Annenberg study was based on results from a telephone survey from Feb. 8 to March 14 of 1,500 adults who said they had used the Internet within the past 30 days. The margin of sampling error was reported to be plus or minus 2.51 percentage points.'"
Indeed. If find this particularly disturbing.
More than two-thirds of people surveyed also said they believed online travel sites are required by law to offer the lowest airline prices possible.
NEWS FLASH!
Companies like making as much profit as possible! Film at 11. Also in the news... 2/3 of people are apparently very naive and stupid.
Somebody please provide a sample site that does this.
Meh.
I think it is fairly prevalent, which is why sites like http://www.bensbargains.net/ exist. An example I found a couple of years ago : I ordered a flat panel from Dell. When I shopped on their "Home User" site, I got a price that was $300 more than if I put in some bogus corporation name and shopped the "Small Business" site. Guess which one I ended up using? To me, it is repugnant that I had to even go through all of those steps. Volume deals for corporate customers I can understand, but blatant price discrepancies just because you browse a site differently than another single customer is bad business. I don't know if I would consider it illegal, but it is definitely unethical.
:^)
Then again, so is lying to get a better deal on computer hardware.
Only 2/3? I would've guessed that number would be considerably higher, like 4/6 or 8/12 or something...
FTA: They are known within the industry as "bottom feeders" who don't show any brand or merchant loyalty.
The arrogance it takes for an industry to come up with this phrase is just amazing. I think I'm generally more pro-business than most Slashdot readers, and I don't even fall into that category - I'll go with a brand/merchant I've used before even if they are priced a bit higher, if I feel I got good service, because I'd rather deal with a known quantity. But the "bottom feeders" term makes me want to slap some people around.
Perhaps what's really annoying me is that companies don't want to compete and so are doing everything they can to attract their "ideal" customer while saying "screw you" to the other guys. As someone who has been ignored at car dealers on several occasions (usually because of my apparent age or because of the borrowed car I was driving that day), I find the practice of turning customers away arrogant and annoying. Changing prices only makes it worse.
There was a story a few years ago about Amazon charging people different prices on the same items based on the customer's geographical location.
..etc across site, with the cheapest price on top. The information includes shipping costs:
You can use this site to compare prices on books, cds, dvds
http://www.bestbookbuys.com/
You can also blow your cookies and see what the prices are before you sign into your account.
You mean to tell me that everyone doing business on the internet is not Honest?
Interesting coming from someone with a free iPod ponzi scheme ad in their sig....
Monstar L
If you don't like the price that something's being offered at, then you just don't have to buy it.
There's no legal obligation that car dealers have to give everybody the same lowest price that they ever sold a car for.
I'm not sure about the idea mentioned in the article that regular customers will get lower prices though - surely it should work the other way around. You get the customers landed with cheap prices and as they keep coming back you gradually tap them up until their visits start to drop off and then you start to lower them back down.
Put me in your camp -- I bought an engagement ring from a jeweler and have asked several friends of mine to at least stop by and browse because I was so happy with their service and flexibility. I went back to get some items engraved for my groomsmen, and even though they don't normally send items bought elsewhere for engraving, they sent my gifts out, got them engraved, and when I came to pick them up, was told that there wouldn't be a charge.
There's a reason that this is an old practice: it works. Let some schmoe off the street pay retail if he doesn't want to shop around. I told them up front what I'd seen elsewhere, and they decided they wanted my business enough to offer me a nicer ring at a lower price (and yes, "nicer" is my opinion -- but it was also my money).
I enjoy investing a little time to find low prices; others choose not to invest their time in price-hunting and pay a premium for their convenience.
You mean they are tracking my buying history!!! They are giving me a different price than someone else!!! Why that is shocking and outrageous!!! How dare they use age old methods of prefered customer discounts and high-tech haggling. I thought the web was supposed to be the final frontier where all were equal and eveyone got the best price!!! *chuckles ironically*
Madre de Dios! Es El Pollo Diablo! -- Captain Blondebeard
I know the Slashdot crowd has a reputation of living in their parents' basement, but come on. Have any of you expressing surprise and outrage ever shopped in a grocery store? Let's see...
Almost every item is listed as a "regular price" and a "club price". If I possess one of their club cards (i.e. approximation of a frequent shopper), I pay the club price. If I don't possess such a card, I pay far more.
Oh, and then there's the whole coupon thing. Based on my shopping habits, sometimes a coupon prints out, making me further pay less than another consumer for the same item in the same store. Sometimes they even mail me a coupon to encourage me to buy a particular thing!
You can express your opinion on the fairness of this, but expressing surprise or doubt that this occurs only shows you haven't been paying attention in the online OR the offline world.
I'm a big tall mofo.
you mean there are naive people on the internet?
In economic terms, this is called the reserve price, or the price someone is not willing to exceed in order to purchase something. In a perfect economy everyone has their own unique reserve price that they feel is fair for what they are buying. It's been accepted in the airline industry for years, but I guess when it's applied to other items people feel like they were ripped off if they find that they could have gotten it cheaper.
I have to wholeheartedly agree with your comment about eBay. Just last week I was looking at an eyecup for a camera. The seller had the original box with the price sticker on it which said $13.00.
The eyecup eventually went for $14 plus shipping.
This wasn't the first time I had seen something with the original sticker on it go for more than what it originally cost.
I would love to see how much debt these kind of people are in since they apparently don't care how much they pay for something.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
plus or minus 2.51 percentage points
That's odd -- my screen reads "5.21 percentage points."
"How do you expect me to see the forest with all these damn trees in the way?!"
They would send out the same catalog to the same address but would have different prices for the same items depending on how much you had previously bought or were male or female. People began to figure this out and complained.
Link 1 about this issue and another link from a 1998 Forbes article on the issue of price discrimination.
For a more in-depth look at price discrimination, see this link which is a muli-page essay from the Virginia Journal of Law and Technology from 2001.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
How prevalent is this practice?
I've experienced price changes within the span of five minutes, or less. I'll be surfing around to sites, comparing prices, and I'll return to a site I've just visited, and they'll increase the price on me [I've never seen a price decrease].
I think they program the software so that the more hits they get on a product page served to your [preset] "cookie", the more they edge the price up on you, figuring, I guess, that you're really interested in the product, and that maybe they can "scare" you into purchasing it [or maybe somehow bleed that extra $10 of profit out of you on account of your insatiable desire for the product]. And no, I don't think this is primarily a supply and demand thing - I think these price change engines are primarily driven by some [previously arcane] theory of marketing psychology. The airline/hotel reservation systems [Expedia, Travelocity, Orbitz] are particularly guilty of this [and, again, I do NOT believe that it is primarily attributable to a finite supply of airline tickets or a finite supply hotel rooms].
And of course, you also have the phenomenon of e.g. different Yahoo stores [different URLs] that have identical ownership [i.e. identical "whois" lookups], and identical inventory [and, typically, identical SKUs], but which offer slightly different prices on the very same items. Or merchants whose "normal" price on an item differs from their "advertised" price at e.g. pricewatch.com.
Generally speaking, these kinds of gimmicks really tick me off, and tend to push me towards a site's competitor [assuming they aren't playing the same damned game] - and it sure doesn't make a damned bit of difference to me whether I purchase that ticket from Expedia, Travelocity, or Orbitz.
The bottom line is that any service can charge basically whatever they think someone will pay. As long as there aren't fradulent claims (such as a "guarantee" that their price is the lowest", they can charge double the value if they think it will sell.
Normal stores off incentives to returning customers. I get money back at Macy's when I shop there. That is the same as Amazon offering me a better price on a DVD because I am a frequent customer. People get all riled up over things on the Internet that happen every day anyway. Same thing with credit cards online. People are terrified of typing in their credit card number over HTTPS, but will hand their credit card to a random 16 year old kid standing behind a counter.
/. ++
I know what you mean. The first time I used ebay was to buy a WinCE clamshell device. I also wanted to get the memory chip to upgrade it's install of Wince to 2.0 (It shipped with 1.0)
So I found an auction on ebay. Several as a matter of fact, all from the same company. The chips were selling for $90 to $125 a pop. I was a bit put off by this price, and decided to click the "Buy this item direct from our web site" link in the middle of the ebay ad.
This link was in large type, easily five times the size of the surrounding text, red and blinking. Kinda hard to miss.
They were selling it for $25 from their web site.
I can i\only image the laugh they were getting form the ebay auctions. They were doing everything reasonable to make it easy for people to get the lowest price they had to offer, and yet people were paying five times that because they couldn't be bothered to click a link in the middle of the damn ad.
"Live Free or Die." Don't like it? Then keep out of the USA
Volume deals for corporate customers I can understand, but blatant price discrepancies just because you browse a site differently than another single customer is bad business. I don't know if I would consider it illegal, but it is definitely unethical.
Why? I'm not trying to be trite but I see no ethical dilemma here. What you are talking about economists call price discrimination and it is not only not illegal (in most cases) but I would argue it isn't unethical either. (with appropriate exceptions for things like gender or racial discrimination which are genuinely harmful) If you as a customer are willing to pay a higher asking price without any effort at negotiation or alternate sourcing, where is the ethical dilemma? No one forced you to buy from that vendor. It's not as if you can't get a perfectly adequate computer from someone other than Dell. Small businesses are generally willing to pay a different price than large businesses or home consumers. Why shouldn't Dell charge more to those willing to pay it?
Price discrimination makes many people (us Americans in particular) uncomfortable because we have deeply seated notions of "fairness". If I don't get the same price as you we seem to feel that is somehow unfair. But in reality most prices for goods and services are negotiable and we probably don't have the same williness to pay. If I'm willing to pay more for something than you are, what is unethical about someone selling to me at a higher price? Especially if I'm too lazy to look for a better deal. I'll be honest, I don't really care if an LCD monitor costs me an extra $100 if it does what I want and I can get it when I want it. You may feel differently and that's fine, but it doesn't mean I'm being screwed because I'm willing to pay more for convenience or service or even a brand.
First, it is completely OK for individuals to order from the Dell Small Business site. You can just use your full name as the "company" name, instead of making up any bogus company names.
I have ordered many times through the small business site. So did many people I know. I once asked the Dell sales rep assigned to the company I work with. The answer is exactly what I said above.
The Home site and the Small Business site, as well as other ones, are ran by different business units, which are independent of each other. They come up with their pricing, services terms and promotions.
Companies in general are better customers, so it makes sense to court them. They tend to have in-house support so you have fewer clueless people calling vendor tech support. And while they may only be ordering one monitor now, they usually have a lot more to buy than the avearage home user and so getting and keeping their business is worth more.
This post written under Gentoo-linux with an SCO IP license.
What you are talking about economists call price discrimination and it is not only not illegal (in most cases)
I would argue that it's possible to interpret the Robinson-Patman Act in a way such that price discrimination like this *is* illegal, in the United States. It may not be prosecuted much, but the law seems pretty broad and could be interpreted to cover this sort of thing.
- Give a man a fire and he's warm for a day, but set him on fire and he's warm for the rest of his life.
If you buy travel tickets online, be aware that the prices will basically go up as long as you "dilly dally" while booking a flight. These sites use cookies to track individual users and punish those users with higher fares in certain circumstances. To get the prices back down to normal, clear your cookies.
"They are known within the industry as "bottom feeders" who don't show any brand or merchant loyalty."
No, lawyers and marketing dicks are the "bottom feeders." the rest of us are just trying to avoid getting screwed by both parties.
There is this one small collectibles shop I go to frequently. On average I spend a couple hundred there a month. The owner decided to start giving me an extra 10% discount since I buy so much. Sounds good to me and I'm about to drop a few hundred there tomorow. Not sure how many others get the discount, but if someone gives you enough business it can make sense to give them a little extra to keep their business and show them you appreciate them.
Fly me to the moon Let me sing among those stars Let me see what spring is like On jupiter and mars
I find the tone of this whole discussion and /.'ers reactions distateful. While price segmentation is not illegal nor unethical, not telling anyone that a site does that I believe to be unethical and may be illegal.
It's ok to have price differences among different segments of the public, such as seniors versus others, new customers versus repeat customers, etc. What is galling is that these sites don't tell you this. That means the customer doesn't have enough information to do price comparison shopping.
Our system of commerce is based on transparency. The customer has all the relevant facts so that he or she can make an informed decision. When sellers keep information secret that system breaks down.
You cannot haggle on the internet. Most sites do not have a way to offer an alternative price. So the price posted is the one you have to accept if you want to purchase from that site.
Some have said that Dell has two sites - a home user site and a small business site, and that the small business site has consistently lower prices because the two sites are essentially run by separate entities, but anyone can shop at either. Why would anyone use the home user site if that is the case? The answer is that they aren't told otherwise unless they hear it by word of mouth.
This is exactly the kind of situation that the FTC was created to police. Fairness and transparency is the only ethical way and I am not surprised that most shoppers are unaware.
I used to work for a company that was an Amazon store and I know for a fact that Amazon does this.
You don't see it from one computer to the other because Amazon is extremely good at tracking users from their servers.
And sometimes, paying a higher price can be better. The big guys can usually lower their prices more than the little guys. There *IS* an overhead that merchants and suppliers incur, even in online stores. They may not be trying to screw you, they might just be trying to make a decent profit. Just because Wal*Mart can offer you the lowest price, does that mean you should shop there? I don't. I don't like the way they do business, so I avoid them. Lowest price does not always mean best for the customer.
I work in the online retail business, and e-tailers know that there are several factors in getting and retaining customers. One of them is price. Pricing for internet retailers is very very complex, and prices may change daily because of a variety of factors. Each retailer may have their own methods, so to say "the industry" does something is somewhat misleading.
My beliefs do not require that you agree with them.
"That's what price discrimination is"
Fuck price discrimination. Talk about other kinds of discrimination. Like charging higher prices for cosmetics, say, if a woman is buying. Or charging higher prices to teenage kids buying video games (cause they'll be pestering their parents and will often succeed). Or an $ethnic_minority_person walks into a bar and gets asked $100 for a beer. Legal, right?
Price discrimination and bidding should occur only for scarce items. If you have a Picasso to sell, fine. But if you're selling new mass-manufactured goods, price should only be a function of quantity bought. Anything else means the seller is not to be trusted. And don't talk to me about used cars - this is precisely the reason car salesmen are the butt of cruel jokes - because you can't trust them.
"Only the small secrets need to be protected. The big ones are kept secret by public incredulity." - Marshall McLuhan