Gotcha: Your willingness-to-pay is showing …

Punch line: Major retailers are customizing online prices for each user, using users’ information (such as location) to determine different prices for identical items. The goal”higher price realization and higher profits.

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Excerpted from WSJ’s, “Websites Vary Prices, Deals Based On Users’ Information”

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It was the same Swingline stapler, on the same Staples.com website.

But for Kim Wamble, the price was $15.79, while the price on Trude Frizzell’s screen, just a few miles away, was $14.29. 

A key difference: where Staples seemed to think they were located.

A Wall Street Journal investigation found that the Staples website displays different prices to people after estimating their locations.

More than that, Staples appeared to consider the person’s distance from a rival brick-and-mortar store – If rival stores were within 20 miles or so, Staples.com usually showed a discounted price.

Staples acknowledges that it varies its online and in-store prices by geography because of “a variety of factors” including “costs of doing business.”

For years, the Internet, with its promise of quick comparison shopping, has granted people a certain power over retailers. At the click of a button, shoppers could find a better deal elsewhere, no travel required.

But the idea of an unbiased, impersonal Internet is fast giving way to an online world that, in reality, is increasingly tailored and targeted.

Websites are adopting techniques to glean information about visitors to their sites, in real time, and then deliver different versions of the Web to different people.

Prices change, products get swapped out, wording is modified, and there is little way for the typical website user to spot it when it happens.

What economists call price discrimination — when companies offer different prices to different people based on their perceived willingness to pay — is commonplace.

Movie theaters give senior-citizen discounts. One traveler’s willingness to pay top dollar for an airplane seat might mean other people will pay less.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people.

Many sites switch prices at lightning speed in response to competitors’ offerings and other factors, a practice known as “dynamic pricing.”

Other sites test different prices to “map the demand curve” and find the sweet-spot price that maximizes profitability.

Edit  by BJP

3 Responses to “Gotcha: Your willingness-to-pay is showing …”

  1. Tim Says:

    This is very much much what a human salesperson does. A good one anyway – one who asks his prospect questions, learns about their needs and tries to close with a win-win deal.

    Seems like a normal part of the evolution of online retail. Who’d have thought SkyNet would take over the mall first? ;-)

  2. B. Smith Says:

    We’ve seen this manifest at some of the more progressive online retailers, e.g. Amazon, but seeing this at more mundane retailers may be driven by a slightly more innocuous reason.

    “Free Shipping” is the leading “incentive” at virtually every online retailer. The variations in price, especially given the graphic that you have posted, would fit logically into incorporating the differences in shipping costs into the price based on location. For example, for the home depot spool of wire, home depot provides free shipping to products over $50, and monticello, ny, from a shipping perspective, is materially different from Astabulla and Erie which are both very close to Clevland and a major interstate highway.

    Some of the price variations are very well aligned to where you are – one need only look at the price of products for fresh direct in NYC versus peadpod in DC to understand that, but I think other price differences are the retailers trying to incorporate additional marginal costs of incentives into the product prices without consumers being aware.

  3. Connections and Dots – 52 Hours In NYC Says:

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