Amazon Charging Different Prices for Same Items?

Rambo writes "Amazon is apparently researching consumer's buying habits by arbitrarily changing the prices on DVDs and other products. Computerworld has a story here about it. Amazon refused to say when they would halt the practice, or what criterion they used to set the different prices." Of course I haven't spent a nickel at Amazon since that whole one-click shopping thing, but I can imagine ways that this could be good or bad. Imagine I buy a lot of Anime DVDs. They could note this, and raise the prices by a buck or something. I tend not to do real-time price shopping on items like this: I looked at a dozen online stores when I started purchasing, and I settled on the one that had the features & prices I want. But 2 months later they could jack the prices and it would be months before I noticed. Alternatively they could lower the prices, or lower prices on similiar items as an incentive to buy other things. Very odd possibilities and I'm not at all sure about how I feel about it.

Re:More /. Amazon-bashing

I can go into Border's and receive 10% off any book because I'm a teacher. I have a card that identifies me as such.

A woman in line in front of me bought Elmore Leonard's "Pagan Babies" for the sale price. I bought "Pagan Babies" for sale price less 10 %. We got different prices on the same day for the same book purely based on some arbritrary criteria.

Another example: I go into Seattle's Best Coffee. A man in front of me gets a latte for list price. I go in, plunk down my frequent buyer's card, get the latte for free because I've bought ten lattes.

Same day, same item, same clerk, different prices.

Since we don't know Amazon's criteria, I'm not sure we can accuse them of discriminating against certian *people*, right? I mean, I've bought a lot of stuff at Amazon, and over the past few days as I've been following this story, I've noticed that I'm received the lowest prices for all the DVDs that they're listing.

They're not lowering the prices because my hair is brown, my eyes are blue, and I write left-handed, right?

They're not lowering it because I'm a democrat and I think the Shrub (Bush) is a dumb, loud-mouthed boor.

They're lowering the price based on whatever information I've given them, my ordered habits over the years, and the books (and DVDs) that I've ordered in the past.

Obviously, they've got some sort of criteria that they've established -- repeat customers, money spent over the past year, orders over the last month, whatever -- and they're applying it to me.

Or maybe they're setting random prices and seeing if it's enough to "catch" me based on my demographic.

Whatever.

But I know that I take one look at the list price, one look at the sale price, and make my decision there. If the sale price is too close to the list price, I won't buy it, period.

If the sale price is 30, 40% of the list price, I'll probably buy it.

I think the issue here isn't that they're doing it -- charging less for some customers, more for others -- but that we don't *know* the criteria.

And of course because we're all good little paranoid Pynchonians (see 'The Crying of Lot 49' or 'Gravity's Rainbow' to see what I mean) we suspect the worst -- that not only are they screwing us and fucking with our privacy -- they're also fucking with our heads.

Bad Amazon! Bad! Bad! Bad!

News.com link

News.Com has a story on it -- a little more depth. [cnet.com]


-Davidu

Counter-strategy?

Would it be possible for an auto-shopper agent looking for a particular item to log onto a company like Amazon.com's as many different individuals, pick the best price offered & buy that?

Don't be a sucker.

You missed the most important point. If Amazon tags you as a sucker (person willing to pay more then they have to) then they will most likely sell sucker lists to other e-tailers. You will then start paying more for everything on the internet and not even know it! Mail order companies already do this. They compile lists of people who buy stupid useless stuff (nose hair clippers for one) and sell it to each other. In fact they have "indicator items" (the aformentioned clippers) that they use to flag people as suckers.

It's kind of a stupidity tax really. Browse with cookies on, pledge loyalty to a corporation or a brand and pay more.

A Dick and a Bush .. You know somebody's gonna get screwed.

Re:it's revenue management - think airlines

The airlines and hotels alter their pricing because they have a "perishable" product. An unsold airline seat becomes worthless as soon as the plane takes off. They call it yield management. They alter the price as it gets closer to the expiration date, in order to maximize their revenue.

The technique being used by Amazon is actually quite different, since books and CDs are not perishable. Amazon is altering the price based on who is doing the buying. If they know you are a loyal Amazon customer, they may charge you more because they think they can get away with it. If they know you are a price shopper, they may charge you less, because they think it is the only way they will get your business.

Auto dealers take a similar approach. If you are a loyal customer of XYZ dealership, you will pay more for a car, because that dealer knows you prefer to buy from them.. There is also research that shows women and minorities pay more for cars, apparently because the dealerships (on average) feel that women and minorities (on average) have less bargaining power. Essentially they are taking a profile of what they know about you (previous customer) or what they assume about you (male/female; white/black/brown/tan) and using that profile to adjust their pricing.

What is happening with online shopping is even more insidious. Because online retailers have the ability to create detailed profiles and automatically adjust the prices accordingly, they can really take advantage of the situation. The unfortunate thing is that loyal customers will often get the worst deal.

This is not that uncommon. For example, I think priceline.com does the same thing. The first time a new customer makes a "bid" on a plane ticket, they will usually "win" it. This creates goodwill (loyalty?) on the part of the customer. After that, Priceline will alter their acceptance/rejection of that customer's bids, to determine how price sensitive the customer is. Their subsequent pricing will take advantage of that information. This is not traditional yield management (Priceline does not own the commodity, so from their perspective the commodity is not perishable), rather it is profile-based price management.

So how can consumers protect themselves? The most important thing is to minimize the amount of information a retailer has about you. The less a seller knows about you the better. This is because companies that use profile-based pricing will almost always offer a "new" customer the best deal in the hopes of gaining your trust (so you will hopefully become a "loyal" customer and they increase their pricing and profit later).

Other things consumers can do:
(1) Do not patronize companies that practice this approach.
(2) Publicly condemn companies that take this approach
(3) Utilize price comparison services
(4) Be ruthless about price shopping
(5) Do not become loyal to a single retailer
(6) Shop as anonymously as possible
(6) Just say no

Instructions: How To Close Your Account

I looked high and low on their site, trying to determine how to erase my (long unused) account. Finally, I had to e-mail them, and they got back to me yesterday. To remove your account, simply e-mail:

[e-mail] [mailto]

There were no further instructions, so I assume that the removal is done manually by an Amazonling. I used this:

To Whom It May Concern,

Please remove my account from your system. I haven't purchased anything
from you since your 1-click & referral patents, but now that you've modified
your privacy statement to permit the sale of my private information, it's
time to remove my account. Please remove any data that you have under
[e-mail] and [e-mail], and notify me when you have
done so. Thank you.

Sincerely,
Waldo L. Jaquith


I guess that's sufficient. I encourage all of you to close your accounts, though you'd do well to cite today's news in addition to the modification of their privacy statement.

-Waldo

-------------------

Re:Nothing new here

Not in the UK

In the UK the major home shopping catalouge firms are all part of the Littlewoods group (Though not all).

A summer job as a delivery driver for that group demonstrates quite clearly that the catalouges are all the same.

it's revenue management - think airlines

This sounds like what airlines and hotels do constantly to maximize revenue. You don't even expect to pay what anyone else on your flight or in your hotel paid anymore. It's the same idea applied to a new area. I would expect to see a lot more of this kind of thing in the future, actually. Setting your prices to your target audience is really a good idea for the companies doing the selling - and as a buyer, if you don't like it, remember how easy it is to comparison shop on the web!

Evan Reynolds [e-mail]

An omen of things to come?

With services such as Priceline and EBay, we've seen the ability for buyers and sellers to come to a private agreement about pricing.

Perhaps fixed prices are a thing of the past, a relic of the old ways of doing business. Fixed prices are certainly needed at old-style bricks-and-mortar retail establishments (so the customer can quickly view the price while examining an item) but really aren't required online, where the webserver software can issue a different pricetag for each viewer.

In the future Retail Online Hell, massive server databases will track our every choice, become aware of our every weakness, and know what "must-have" preferences each of us has.

The result: I'll be charged top dollar for things like DVDs, and offered astonishingly cheap prices for, say, scented candles.

Its the next logical step...

Its always an information race, if you will, between buyers and sellers.

The internet makes it a lot easier for the buyer to browse different prices, without having to pull out of the parking lot, drive to the next store, and find another parking spot. OTOH, it also makes it easier for the store to know what items you looked at and what you lingered over and what you put in your shopping cart before changing your mind - and they'd be fools not to use the information!

Brings to mind the proverb, "Be careful what you wish for -- it might just be granted..."

Re:it's revenue management - think airlines

It's nice to see a little sanity here, in your post. Most people act as if Amazon.com was forcing them to make purchases for insane amounts of money more than what others were paying. Folks, that's what capitalism is, an exchange of a good or service for money. The amount of the exchange is based upon two factors:

• What the seller is willing to sell it for
  
• What the buyer is willing to pay

You have a very conscious effort in deciding if you will pay what Amazon.com asks! If you are not willing to buy it, don't, it's that simple. (See #6 above, Just Say No.)

Re:Fundamentally different

How about:

Why do women get paid less for doing the same job as a man?

Why do a pair of women's jeans (typically less raw material) cost 1.5-3 times as much as men's jeans?

Why does an Acura Integra cost 1.5 times as much as the Honda Accord, a fairly identical car, the only meaningful difference being the sheet metal and name badge? (never mind the Cadillac Catera and the Chevy Cavalier!)

Why does an audio cassette of an album cost $10, while the CD costs $18, even though the cassette costs about $2 to reproduce, and the CD about 5 cents?

Why does a VW fan belt for an old beetle cost about 1/10 of what the SAME EXACT PART for a Porsche 356 cost?

Things cost what stupid sheeple will pay for them.

if it ain't broke, then fix it 'till it is!

Jakob Nielsen says -- "Bad Idea"

Jakob Nielsen has an essay [useit.com] on why differential pricing is a bad idea. Although this particular essay of his is fairly low on content, it's a good introduction to some user-centric ways to think about the web.

example quote:

It is also very easy to plot a product's price elasticity curve on the Web: randomly serve up pages with different prices to the first thousand users or so who visit a given product page and measure how many buy at each of the price points. With this information, profits can be maximized by multiplying the profit margins and their corresponding conversion rates and picking the price that comes out best.

Re:It's the other way around...

You really think they're gonna raise the price if you buy a lot? Think again... Think 'bulk purchase'.

The logical and commercially viable solution here is to lower the price when you buy a lot, because they want to maintain that customer loyalty if it means you're a good buyer. Same way it works with everything else... Buy 1, it's a given price; buy 100, it's a lot cheaper per unit.

I suspect you guys will whine a lot less if this kind of data collection means you'll save on your little anime DVDs, huh?

Sorry pal, your simplistic argument falls flat.

Problem: Amazon has made no mention of this to their users. I doubt they would have mentioned it had it not been discovered.

Problem: Amazon has been very ambigious in their answers to queries. This alone warrants suspicion.

Problem: First time users are getting charged varibly. Both high and low. We know this based on the clean cookie tests which have been performed.

Problem: It seems long time users may be getting charged more than even first time users.

Problem: Logic dosent always apply to those who hold the purse strings. And, what may seem logical to you, may not be the case. Indeed, there are many cases where, it would be logical for a retailer to do something, yet does the exact opposite.

You need to pull your head out of the sand here, and realize, that, *any* company, that performs "testing" of this nature, without being forthcoming, either upfront, or when confronted, needs to be taken to task. Period.

I also fail to see how "We've learned that certain aspects of our site resonate with customers in different ways, and we are continually fine-tuning our site presentation to see how these variables affect customers' purchasing decisions," necissitates fluctuating prices. Unless they are testing a theory of "different looks may get someone to pay more", in which case, such a test should be contracted out, and done in a lab type of setting, and not with the general public.

So, please, get a clue here. After their one-click BS, its fairly obvious that they seem to think they can control anything they want.

Compare Prices.

This is a non-issue. If you agree to a price when you buy something, the only person you can blame later is yourself. So what if they are doing price testing? Shop around. Show them you won't pay the higher price.

Fundamentally different

The basic difference is that in a regular shop, the same price is advertised to all. You know that they aren't preying on your buying habits. If you send your brother to get something, he'll be charged the same as you would have been. At a .com, it's like the shopkeeper takes a look at what kind of credit card you have and charges you more if it's a platinum. Which Amazon can do, 'cos they've seen your credit card.

sell your cookies!

That could open up a new market on the net: cookie sales

Be a 'good customer' at amazon, get them to lower their prices for you, and then sell your cookies. What is fun is that you can sell the same cookie many times. The only problem is that cookies will probably spoil with use. You can also have special DVD flavored cookies, computer-book-flavoured cookies, etc.

Lets see amazon try to claim that their cookies are not yours to sell.

Get them now! Get them while they last! Fresh cookies from Amazon.com!

Re:An omen of things to come?

Fixed prices are a thing of the past already in the 'brick' world; you, us, can't tell as easily as with the 'click' world though, because comparison shopping isn't as easy. But, consider these tricks regular --offline-- retailers pull:

By far the most similar to Amazon's flexible pricing: checkout coupons. You know the little coupons you get printed on a tape similar to your bill at a super market? that is a checkout coupon and the contents of those are directly linked to what you just bought (I forget the name of the company who backs these things up with databases).

Membership cards and private credit cards: e.g. a Target card, or say a Macy's card can be used to track your purchases and then target spam (old fashioned direct mail) at you. That has been around for ages and most people are aware of those. Well, what happens when Macy's sends you a catalog with some coupons inside? that is variable pricing, directly aimed at getting you to the store.

Daily discounts. Thin-margin retailers (i.e. grocery stores) will routinely heavily discount --and heavily advertise-- a popular item to get people in the store. Those prices may vary from store to store, and day to day. Again, that is used for promotion, and is an entire science.

The list goes on really... and yes, retailers already use massive databases and cutting-edge data-mining (I should know; you can figure out why). You can't really blame them though; they are plagued by ever decreasing margins, competition by nimbler online stores, and more and more demanding customers (as evidenced by this very thread).

To make you feel better though, let me tell you that I've never seen a retailer that will consciously raise a price to a loyal customer, something that I doubt even Amazon will dare pull. The reasoning is simple: a loyal (i.e. a repeat) customer is far too valuable to loose for a coupla percentage points of profit. Word of mouth and future sales volume is far, far more important.

Old News

This is old news. They've been testing random price drops for over a year now. They simply test to see at what price sells the best. From there they can maximize volume to profit levels.

They've done it with books, VHS movies, and now DVD's. It's not a big deal.

Re:Not necessarily.

websensei [slashdot.org] wrote:

Also drug dealers usually offer great deals for first-time buyers, then once they have a steady customer who's come to depend on them they start the gouging.

Are you talking from experience? Or are you wheeling out old propoganda?

I would imagine, that your average scag head is especially unhappy when prices go up. S/he'd be used to getting her 5$ bag, I'd say a dealers much more likly to stiff on quantity or quality than price, and then who's going to be the biggest sucker, the new kid who's "trying it out", or the old mess-head thats done more dope than Cypress Hill? - No your analogy is poor.

Amazon (et al) on the other hand are in a much better possition to shuffle prices as the see fit. If someone shops there regular it would not be hard to write a learning algorythm (GA, NN, whatever) that fiddles the prices on the "recomended reading" list to maxamises its profit.

I could do it in a weekend ... and, Amazon, if your listening, for, say - ten grand, UKP, I will. :)

Thad

Re:More /. Amazon-bashing

This is completely normal practice in the brick and mortar retail business, whay bash Amazon for it?

This is absolutely not normal business practice in retail stores. The issue here is not that Amazon is analyzing the buying patterns of consumers in the aggregate and changing prices based on this information. The problem is that they are using some secret criteria to charge people different prices as individuals.

Imagining going into Borders and being charged a different price for the same book as the person in front of you in the check out line. That is analogous to what is happening here.

Frankly, if this happened in a 'bricks and mortar' retail store and the store would not release the criteria it was using to make their individual pricing decision how long to you think it would take before someone filed a discrimination suit?

Higher prices for MS users

a search for the Planet of the Apes DVD on the Amazon site that Computerworld conducted using a

Netscape Web browser turned up a quoted price of $64.99 -- 35% off the original price of $99.98, according to the online retailer. But several seconds later, a similar search performed with Microsoft Corp.'s Internet Explorer browser resulted in a price of $74.99 for the same product.

See what happens when you use Microsoft software? You pay and pay and pay... :-)

Re:it's revenue management - think airlines

I would compare it more to car sales.

If I walk on a lot and the prices aren't posted on the cars, I immediately leave. Their goal is to size you up and determine how much they can take you for. For instance, they'll take a woman and try to convince her that the rattling from under the hood is insignificant while ranting over the cool in-dash make-up kit, and try to convince her that this makes the car worth $3000 more than the bluebook value. Totally disgusting behavior, which tics my wife off so bad that I HAVE to go car shopping with her just to discourage the jerks. (Guess what I spent my labor day weekend doing.)

This type of profiling is the same in my eyes. Amazon wants to figure out what you as an individual, rather than the market in general, are willing to pay for an item. It's just that in this case, there is a sticker price in the window so you can fill all secure inside that you are being treated fairly, but the sticker you get isn't the same one everyone else gets.

As for comparison shopping, what happens when this profiling database gets distributed? Everyone knows that you like Anime, and you have to pay twice as much as I, no matter where you shop. Are we back to the situation where only the people who don't need credit can get it?