Beware of Personalized Prices
Did you know that prices you pay for online purchases can be affected by your zipcode, your computer's operating system, using a smartphone for shopping, and other mysterious factors? Read on to find out why, and what you can do about it...
Location, Location, Location
I've always been suspicious of websites that want to know my location before showing me their prices. Cellular carriers and supermarkets have done this for as long as I can recall. Home Depot also insists on a zipcode before showing prices. Why do they need my zipcode to give me their best deal on carrier service, carrots or carriage bolts?
Now researchers at Northeastern University have discovered that a great many other factors about you influence the prices you are shown on many e-commerce websites. For the same product, you may see different prices depending on whether you’re using a mobile or desktop browser; the operating system of your browsing device; what you have clicked on in the past; and what you have purchased in the past.
Similar secret algorithms “steer” you to certain products based upon what they know about your online activity; but that’s what “personalization” is supposed to be about. It’s supposed to anticipate your interests and show you a power tool instead of a network appliance when you search for a “router,” or vice versa.
I’ll even allow that it’s permissible to steer a customer who always buys top-of-the-line routers (of either type) to top-of-the-line other types of products that cost more than average. If quality matters more than price to a shopper, show him quality first.
But personalization is not supposed to be about gouging extra dollars out of a customer for a given product just because his dossier says you can probably get away with it. That’s what appears to be happening on a broad variety of e-commerce sites.
What is Price Personalization and Discrimination?
You'll need a degree in statistics to interpret much of the data in the Northeastern study, but their summary claims that "there is mounting evidence that e-commerce sites are using personalization algorithms to implement price steering and discrimination" and they found evidence this on four general retailers and five travel sites.
Travel sites are infamous for “differential pricing,” of course. The researchers found that Travelocity charged iPhone and iPad users an average of $15 less than others paid. (Must be a bug in that algorithm; everyone knows that Apple fans are spendthrifts.) Cheaptickets.com charged “guest” shoppers who were not logged in to an account on the site an average of $12 more than those who registered. Prices paid by users of Expedia, Priceline, and Hotels.com seemed to be tied to the presence of certain cookies on the users’ devices, but the researchers could not divine why.
The researchers also looked at 10 large retailers including Walmart, Staples, and JCPenney (but not Amazon). Home Depot steers customers to higher-priced products based on their browsing histories; as much as $80 higher, the study found. Because the researchers could not actually buy things on these sites (budget constraints) they were unable to explore how past purchases affected current prices displayed. Travel prices were tested by booking and then canceling reservations.
There’s nothing illegal about charging an Apple fan less than a Windows user, or steering customers to higher-priced options based on past purchases. But it certainly feels arbitrary, unreasonable, and unfair. The distinction between mobile and desktop browsers is baffling, too. But avoiding such price discrimination is difficult, even if you are one of the few consumers who realize that it's happening.
To get the best price, the researchers recommend checking the same item on the same site with both mobile and desktop browsers; using incognito mode to elminate cookies from the equation; and having a friend check the price from his/her machine. But there's more you can do to make sure you get the best price when shopping online. See the inset above for a link to my Ten Tips for Online Holiday Shoppers.
Your thoughts on this topic are welcome. Post your comment or question below...
This article was posted by Bob Rankin on 14 Nov 2014
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Article information: AskBobRankin -- Beware of Personalized Prices (Posted: 14 Nov 2014)
Copyright © 2005 - Bob Rankin - All Rights Reserved