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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.
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
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.
"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.
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 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.
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
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
When you give up your right to check the Internet to find out what their competitors are shopping then I'll agree we should fight their ability to investigate you when setting pricing.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke