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How Online Shopping Makes Suckers of Us All (theatlantic.com)
Thelasko shares an excerpt from a report via The Atlantic, which describes how price discrimination is used in online shopping and how businesses like Amazon try to extract consumer surplus: Will you pay more for those shoes before 7 p.m.? Would the price tag be different if you lived in the suburbs? Standard prices and simple discounts are giving way to far more exotic strategies, designed to extract every last dollar from the consumer. We live in the age of the variable airfare, the surge-priced ride, the pay-what-you-want Radiohead album, and other novel price developments. But what was this? Some weird computer glitch? More like a deliberate glitch, it seems. "It's most likely a strategy to get more data and test the right price," Guru Hariharan explained, after I had sketched the pattern on a whiteboard. The right price -- the one that will extract the most profit from consumers' wallets -- has become the fixation of a large and growing number of quantitative types, many of them economists who have left academia for Silicon Valley. It's also the preoccupation of Boomerang Commerce, a five-year-old start-up founded by Hariharan, an Amazon alum. He says these sorts of price experiments have become a routine part of finding that right price -- and refinding it, because the right price can change by the day or even by the hour. (Amazon says its price changes are not attempts to gather data on customers' spending habits, but rather to give shoppers the lowest price out there.)
The actual article is much more nuanced than the headline. The most interesting thing that was found with large retailers and price discrimination was not that people saw different prices for the same thing (that apparently seldom happens - to easy for people to get upset about) but that, based on your consumer profile, the particular models of whatever you are looking for are different. If you are high income and searching for headphones, you will see different models (and different brands) than if the system has you as low-income. That is, the system will nudge you towards higher-margin items if they think you have the money; if not you will see lower cost variants. Of course the market segments that way now anyway - Ford vs Lexus vs Maybach. But there is a lot of effort going into gaming your snap decisions.
The easiest way to see price discrimination is to go to the rich side of town and go to the grocery store. Observe the price of milk, hamburger, cheese and gasoline. Now to to the poor side of town, repeat.
Clue - if the rich folks think the price is too high on common items, they have the means and time to seek a lower price on commodity items. The poorer side of town is usually time and/or mobility constrained and won't do so.
I noticed that on different platforms (Windows, Mac, Linux), I will see different prices on things like airline tickets or car prices. (You'll need to use source obfuscation - EG hide your real IP). Hint - most car sites are run on exactly the same back ends as all the others.
Also - if you notice a letter code on price tags (pretty rare now days) think I N T R O D U C E S. 10 letters. assign a number for each. This is the cost of the item to the store. Stupid store owners will use 0 - 9 in order. The most common is to assign either even or odd numbers to the first 5, then vice versa.
Smart shop keepers use an initial digit or code, then pick any 10 letter word with no repeating letters. There are over 80 words starting with "B" that don't repeat letters - BLOCKHEADS is one. I like to find these shops, figure out the "code", then consistently offer the owner (Never an employee that might not know the code) exactly one cent above their cost. I like to see just how long it takes the shop owner to figure out I know what he's doing. My all time best effort is 22 years and counting - but he may just be playing stupid. When I have a special order I can't get anywhere else, I'll pay for it up front and don't haggle the price.
That said, I'm a firm believer in enlightened self interest. In my hobby, there are a lot of things I could order on line and save about 40%. But I still buy local and pay full retail. While I could save some bucks by ordering a week in advance, it's in my interest to have it local, where I can walk in and walk out with what I need.
Sometimes a cheap price hurts me more in the long run than other considerations. Besides, despite violently opposing political views, this is a guy that I could call at 3AM and know he'd come help.
And vice versa.
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.
Now it's a numbers game and the well being of the customer doesn't even enter the picture.
When, pray tell, was your mythical golden age when corporations put the "well being" of the customer before profit?
Go read the stories from sales, marketing, and product engineers
Go read The Jungle, Unsafe at Any Speed, or King Leopold's Ghost and perhaps you can disabuse yourself of the notion that greed is a new phenomena.
Now this takes a couple extra minutes. If the convenience of not price shopping appeals to a person, then they pick one vendor and pay what they are told to pay.
This ain't rocket surgury.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.