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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.)
Yeah, because brick and mortar stores have never had flash sales and temporary price reductions people would literally have to run across the store to take advantage of. And Home Shopping Network, QVC, etc, never reduced prices on things at different times of the day or when inventory didn't sell as expected.
Better known as 318230.
but should you pay more simply because you're using an iphone connected to verizon's cellular data network vs someone using windows 7 on a slow-as-snails pacbell dsl line?
or pay more because you browsed the same item yesterday but didn't buy it at the lower price.. so now they're saying "fuck you, haha, the price is higher now, bitch. but you're back so that says you really want this stupid thing anyway". but if you went there on a different device, perhaps not even changing your provider.. and the lower price is still there.
or..
pay more because third-party database links tell the site you're an affluent white male living in the bay area?
pay more because those same databases tell the site you're gay or transgender, saving the lower prices for straight, white and married?
this isn't fiction. amazon and the like CAN and DO link what they do already know from you with other databases from others, even public records, social media and the web. looking for anything and everything about you. they'll even siphon off your credit history and rating, too, because you fell for their branded credit card or store credit. companies like this know more about you than your spouse, than your family.. and they probably even know things about you that you have forgotten, or wish you had.
Why do you buy things you don't need, and who compels you to do this?
If I absolutely MUST have a new pair of shoes (e.g. airline lost my luggage, etc.) today, I go buy them today. If I can wait, then I may shop around a bit. I am also smart enough to factor in the cost of gas when deciding whether or not to drive to some specific place to shop.
What exactly are you saving for? If you die at 89 year old tomorrow with $10 million in the bank, what good was that $10 million to you?
The only thing I'll give you is saving up to buy versus buying on credit. If you can afford to spend the money to buy a thing that will enrich your life, then you should buy it. If it won't enrich your life, then you shouldn't buy it ever.
I think there is also a Western consumer ideology that "fairness" requires "equal" prices. In cultures that do not have standard prices and the norm is haggling, they usually believe the "fair" price should higher for the richer customer. That is the starting point of negotiations. Of course, the wealthy who exercise foresight may more easily walk away than the typical customer, but convenience may come at a price.
What exactly are you saving for? If you die at 89 year old tomorrow with $10 million in the bank, what good was that $10 million to you?
This is a straw-man. You presuppose conditions that are not only of your own devising, but are highly unlikely and exceedingly rare. Most don't even live to 89, and most that do aren't sitting on that kind of a pile of cash, or if they are it's because they're still earning through their investments and are living the way that they want to, they're not denying themselves.
Most people that make a point of planning their long-term finances do so with an eye toward maintaining a comfortable standard of living throughout their lives, including during retirement. They do not want to lose quality of life when they no longer have an income. This means hitting peak savings at retirement age, where the money plus any further interest or growth will last for the remaining years in roughly the same amount as when one was working.
Saving for the future does not mean having to live like a pauper unless one has a job that pays incredibly poorly, but it does mean having discipline to avoid squandering one's money frivolously.
Do not look into laser with remaining eye.
"The right price" is an euphemism for finding the maximum price any specific customer will pay, IOW the price that hurts the most while not actually stopping the purchase. Price gauging is a way to maximise profits.
If you look at management theory, specifically Peter Drucker says that maximising profits is entirely the wrong focus for the company. The why he explains pretty well himself.
Me, I add that in addition it minimises marginal utility for the customer, thereby making the company more vulnerable to competition. Only one competitor has to figure out how to undercut the exotic price gauger, for example by crawling good prices and locking them in somehow, then offering them to whoever wants to take them. Of course, those with the most disposable income, the rich, are going to make use of this sort of thing first. That makes exotic right price finding a bottom feeder strategy.
No they are NOT. At least not globally.
Take Australia as an example. Adobe software prices are any old MULTIPLE of US prices in a take it or leave it. SAP, Oracle and Microsoft software also have egregious pricing.
US Pharmaceuticals. I like the one where the cancer drug company destroyed stocks so it could and DID charge more , possibly 4000% more.
Maybe Spain will get India to supply directly, citing public health concerns.
Lastly the companies are not looking at last sale age profiles. When I get royally fed up, I don't buy AND stop looking. Malaysian Airlines practices geodiscrimination big time - Chinese - huge huge discount or comes from Chinese IP. Aussie IP, yeah maybe 1% .
Then my expensive dentist. get 1% discount for cash? No. OK, never went back because he did not think a few dollars matter.
Car hire during school holidays is another mystery. The garage was full of unrented cars for weeks, yet the price sky high.
The answer is a VPN, and lately a mobile phone preloaded with outrageous fake contacts - so their marketing database is contaminated, enough for sexual discrimination lawsuits.
Sometimes I ring them up and simply ask for the lowest price, then ask then is it more or less than the last one sold. If they avoid answering, I tell them they are about to loose the sale, because honesty was lost or they are following some script.
It could also mean "he will try to argue every little detail, and it will take ages until a sale is closed. So let's add a fee for the wasted time."
Yes, but not for the same reasons. What the net is allowing companies to do is charge different prices for the same exact product based on their assessment of the consumer. Would you accept a store charging you more for food because their magical sensor at the door (or in your fridge) has detected that your starving, or because they deduced from your clothes that you're more likely to pay more?
"Sir, if you don't like to pay 50 euros for that loaf of bread, I'd like you to know there are tools you can use to look for cheaper deals on bread. Just make sure to clean your cookies and log out of any social networks and put a bag over your head to avoid facial recognition, and remember to enter the store in between 10 and 11:30 and you'll get the maximal discount. But don't be late, the rush hour of bread begins at 11:35 and prices double, or triple for those with a higher education."
Would you be fine with companies treating consumers like this in the physical world? That instead of a price tag on a product conveying the price information openly to everyone the tags would be empty codes that you scan and then get the price, 'tailored just for you' on your phone?
The problem is most people don't realize that this is even happening so many people think the price they're getting from say, some flight booking site is the same as it is for everyone else. They've no idea that the price may well be affected by their past searches on the site and other online behavior.
Currently on products and services using this kind of pricing there's no way for a consumer to know the true 'base price' of the product they're buying. This means that a lot of the price information is completely lost, meaning that the price mechanism no longer functions as it used to. Discount information is always shown to the customer obviously, but under these systems it's possible that even the supposed 'discounted price' you're getting is higher than what the guy next door is paying without any discounts if the price before discount for you was set higher based on your identifier information.
Price search services themselves are not a magical solution to this because they do not remove this issue. You still have no way of knowing whether or not the 'cheapest price' given to you by a search engine is the same as the 'cheapest price' given to someone else using a different operating system or a device and who hasn't queried the same product a couple times before.
I'm no anti-capitalist, but in the name of a free and fair trade I do believe consumers are entitled to equal treatment and transparency when it comes to prices. I'm not saying it's wrong for a company to charge you less/more because of X, Y or Z. I'm saying if that is done you should have access to those modifiers and see why they're charging that extra or giving that discount for you. It's likely true that many of the sites would lose business doing this, but that in and of itself should highlight you the problem at hand: keeping the modifiers secret currently only benefits the sellers and weakens the position of the consumer on the market by hiding information.
"It is the business of the future to be dangerous" -Alfred North Whitehead
Unequal prices can't last in an efficient market. If you sell froods at $1 to the poor and $2 to the rich, then the poor will buy them at $1 and sell them to the rich at $1.50, then $1.10, then $1.01.
Western capitalism has been wildly successful for a number of reasons, but efficient markets preventing haggling and the associated waste is one of them.
Because the browser string tell them that you're shopping from a mac. A mac is a premium device, more expensive than it has to be. So they offer you a higher price because of that. Same for ipad.
You have the proof of that, or is it some confirmation bias fantasy?
The mac shopper is more likely to pay the higher price - either because they're rich and can afford that mac status symbol, or because they think "costly is better" and that is why they got the mac in the first place.
If the browser string indicates windows 7 or some such old thing, well you're the budget guy who can't afford upgrades so they sell cheap in the hope that you buy anything at all. (Still selling with a profit, of course.)
All very interesting, but you forget, some of us have both Windows and MacOS. I just opened browswer windows in both to Amazon, did a search for Wireless headphones, and every price was exactly the same. The only difference was in a few cases, the order of what was shown was different, but had no correlation to the price.
So your hypothesis goes into the category of "Cool story, Bro!"
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.