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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.)
"Standard prices and simple discounts are giving way to far more exotic strategies, designed to extract every last dollar from the consumer."
You mean they want your money and will do anything to get it? Shocking, simply shocking.
Just cruising through this digital world at 33 1/3 rpm...
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.
Because I hate to tell you, but stores in Beverly Hills charge more than they do in Compton for the exact same product.
And their are these things called "sales" and "coupons" to differentiate pricing even at the same store.
Yes, online makes it a bit more obvious, and yes, smart people can kill the cookies that are more likely to raise your price than reduce it (they assume no cookie = new customer, so they offer lower prices).
Study should be redone, comparing price differential online with those off-line.
excitingthingstodo.blogspot.com
"Mozilla/Linux"
He's a cheap SOB and will expect everything for free.
Have gnu, will travel.
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.
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.
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.
It is sort-of new, depending on your time frame. A 10% profit used to be the respectable and moral price. Now it's a numbers game and the well being of the customer doesn't even enter the picture. Go read the stories from sales, marketing, and product engineers from some of the large companies. They do whatever it takes to gain a few percentage points as it's all gamified. The fact that some of their pre-packaged meals are known to have effectively no nutrients is just a way to keep costs down. They're not feeding it to their kids so no worries.
One of the current business fads is to push for the no. Meaning continually up-selling until the target gives you a firm no. Basically its a strategy to pray on the people pleaser segment of the population as they have trouble saying no to people. The last sale guy I talked to got upset that he spent XX minutes talking to me and I didn't buy anything thus he his wasted time. He tried to make me feel bad for not doing whatever the cold caller asked for. Sales people and the management above them are all scum.
Much of the world still considers haggling over price a shopping standard. From open air butchers auctioning off product, to roadside vendors dickering over price. If you pay asking price you are very likely over-paying.
errr....umm...*whooosh* *whoosh* Is this thing on ?
I stay away from retailers with auto pricing algorithms that run non stop. Looking at you newegg. Used to be a good store. Now it's just irritating because any time there is s good deal the computer starts jacking up the price until it's not so good anymore.
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.
In 1988, Diamond Shamrock paid Frontier Capital (San Antonio) to develop an automated gas pump pricing system. Included in this system was the ability to alter pump prices on a minute-by-minute basis according to time of day. Seven stations in San Antonio deployed a system that bumped gasoline prices between $0.06 and $0.12 during rush hours, 07:00 through 09:30 and 14:30 through 18:00. This system was based on Gilbarco gasoline pumps and custom microprocessor boards based on Motorola 6801 CPUs.
Development of this system proceeded through early 1990, when the decision was made to delay rollout of these systems indefinitely. In 1996, Canadian company bought Diamond Shamrock and decided not to acquire the technology developed by Frontier.
Nothing new. It's more visible now, though.
Don't take life too seriously; it isn't permanent.
This. Also, standardized pricing is a relatively new phenomenon as far as global history is concerned and even today is mostly true of mass market items only. If you live(d) in a bartering society merchants would absolutely sell you the same thing at different prices different times of the day, etc. Furthermore, in any sort of person to person transaction you are sized up as to what you will pay and that (or a bit more) is probably the price at which it's offered. In dealing with a lot of sales of professional specialized items to small businesses, sole proprietors, non-profits, etc. really anything where you get a "quote" first the price might vary depending on what your ability to pay is.
This type of "big-data pricing" might be doing these things on a larger scale, and it's probably too early say definitively whether this is good or bad for the average consumer (on average it may actually be the same as the current average sales price of a given product), but it's not fundamentally new.
Why is there a large margin of white space on the right? How can I make this go away?
I'm a minority race. Save your vitriol for white people.
That I only ever browse Amazon anymore to browse and then go get the same thing on eBay or locally only cheaper and with much faster shipping.
New movies... Well lets see $20 on Amazon assuming they will even sell it to you without prime... $7 for same thing on eBay.
I think it will be a very long time before machine learning algorithms are able to deal with conflicting information or do anything other than seek locally optimal solutions.
This is a variation of the same old story where stores use "big data" to only stock shelves with what has been shown to make the most money only for customers to get annoyed they don't have everything on their list and shop elsewhere.
When enough people get annoyed at the games enough to modify their behavior and go elsewhere as I have done all their super fancy algorithms and or cheap genetic A/B schemes still won't have a clue on earth why.
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
It's entirely new. Because it's NOT the highest price the market will bear. It's the highest price YOU PERSONALLY will bear.
The only places that has previously existed is big-ticket items where corporations are rarely involved - like selling a house and trying to negotiate the highest price a potential buyer may pay, but at least that was a negotiation between relative equals. You were both just individuals without an army of lawyers, and both at least economically strong enough to buy a house like that.
Unicode killed the ASCII-art *
Oh, and if you hired a P.I. to find out everything he could about the potential buyer to help you push the price up - that would be a fellony. That's exactly what these companies do - and it ought to be just as illegal.
Unicode killed the ASCII-art *
Unfortunately groceries kind of suck online in the UK.
Seriously? Between the major supermarket chains and Ocado all providing online order / home delivery, none of them works for you? I'll admit, I gave up on Tesco repeatedly sending me things that were one day away from their use-by date, but there's a reasonable amount of competition.
I am TheRaven on Soylent News
For what it's worth, I've had under a dozen substitutions in five years of using Ocado (fewer than I got in any six month period with Tesco before that) and things always come with long shelf lives. They also have excellent customer support and will quickly fix anything that they get wrong.
I am TheRaven on Soylent News
"(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.)"
Perhaps Amazon can explain why the price shown to me for individual music tracks is .30 higher ( each ) than it is when my other half looks at the exact same track. Not that thirty cents bothers me, but they most certainly do not treat all customers the same and I'm curious what the algorithm is.
I havent looked at other goods they offer because I'm too lazy, but they aren't losing money.
I saw this in action a year or two ago (variable pricing online) and asked about it on a couple tech forums, and everyone who responded had no idea WTF I was talking about. And I could not find any explanation for it...
It's basically variable pricing that is based on your browsing history. That sounds simple enough, but different websites seemed to be using the opposite algorithms,,, if you visited a site now and checked the price on something, and then checked again in an hour, the 1-hour price might be a few percent higher. -Or lower... And likewise, if you checked back in a day, or 3-4 days from now, you might get two more different prices. That may be higher or lower than the [now] price, and the [1-hour] price.
I don't blame anyone for trying to use optimized pricing strategies.
The reason I was curious about it, was because I was wondering what is the process used and more importantly--how can one take maximum advantage of it? Of course at that point I was assuming there would be one method that was pretty similar across sites, but there does not seem to be. If you check a price for a particular item and then come back an hour later to that same item's page, the price may be higher, or may now be lower. Not a HUGE amount; you might have a $25 item get lowered to $22 or bumped up to $27. Or maybe $32. But something here is definitely going on, and some of the bigger online PC parts places are doing it.
Somebody already mentioned one place you see this in action: Newegg. I believe I was shopping for desktop PC parts when I first saw it, so you might keep an eye out when browsing those sites. I've not noticed it at other sites yet, but then, I do a lot of comparison shopping when I'm buying PC parts. And I use Google for normal searches, and that may be playing a big role in the process.
Don't lie to get the cheaper insurance. It'll invalidate it entirely.
Instead, take the expensive insurance from the second cheapest provider. Use the fact you're now insured to get a valid cheaper quote from your favoured insurer. Now use the 14 day no-fee "I changed my mind" option to cancel with the first insurer.
All legitimate and side-stepping inane ways to measure risk.
Me paying what I am willing to pay for something I want isn't making me a sucker.
It's really the most ideal, individualized capitalism possible.
If I pay more than Mary or Bill, it's because either I have more resources and prices matter less to me, or I want it more. You can't really get more essentially Adam Smith than that. Universalized consistent pricing is a relic of the industrial era.
-Styopa
depends on your laws - here in the UK, you can't call something a 'sale' item, or state a 'previous price' unless you sold it at that price for a couple of months previously.
If you're reasonably intelligent, you can use the same type of mindset in reverse for your own personal benefit. This is all part of Game Theory. You either learn how to play the game or the game plays you. The option that's not on the table is to end the game or exchange it with a more reasonable game. Such is life.
We'll make great pets
Would you be fine with companies treating consumers like this in the physical world?
One of the grocery stores (Kroger/King Soopers/City Market group) here is getting close to that with their loyalty rewards program. You can get personalized coupons through their phone app. I'm sure a number of the variables you listed, and others, play into what coupons, and at what discounts, are provided to individual users. I don't have the app, only a card with no phone number attached, so I couldn't elaborate much more. I'm aware of this b/c my neighbor was explaining all the ways the app kept track of her shopping habits and then gifted her with coupons. She went on and on about how wonderful it all was to only have to bring her phone and not keep track of physical coupons.
file:
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?
Not too many years ago, those were, in fact, standard practices by nearly all merchants. It's only been for the last century or two that stores have gotten in the habit of having fixed, marked prices. Before, prices were negotiated and you can bet that the merchant took into account everything he could see about the customer when deciding what price he could get.
The modern version is a little different, of course, because the online retailer *appears* to have a fixed, marked price, and there isn't an opportunity for interactive negotiation. But it's also different because the customer can easily shop a dozen other stores almost effortlessly. The customer can also do something like "wishlist" an item, which is a signal to the seller that the customer is interested in buying, but not willing to pay the posted price right now... which means there's a good chance that a slightly lower price will generate a sale.
So, I think buyers who are willing to be a little careful can effectively negotiate, and arguably hold the stronger position against online retailers. Buyers who are willing to take the first price offered, on the other hand, will pay in dollars for the time they save.
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