Variable Online Pricing Gaining More Attention
More websites are offering different prices for different consumers based on their browsing history, location, and even the device they’re using. Not surprisingly, the news is not pleasing privacy advocates.
Highlighting the practice, a Wall Street Journal investigation found that a number of websites — including Staples, Home Depot, and Rosetta Stone — display different prices to shoppers based on their location.
Staples acknowledged that it varies its online and in-store prices by geography because of "a variety of factors" including "costs of doing business." The Journal’s research found that the single factor explaining the pricing pattern at staples.com was by far the distance to a rival’s store from the center of a ZIP Code. Office Depot also told the Journal that it uses "customers’ browsing history and geolocation" to vary the offers and products it displays to a visitor to its site.
The practice is legal with some exceptions for race-based discrimination and other sensitive areas. Some say the brick & mortar world already behaves this way, with prices among stores differing due to real estate costs, inventory, competition and other factors. Finally, utilizing such browsing and purchasing data could lead to more relevant and personal online offers to consumers than ever possible at a store.
Still, the Journal pointed to inherent privacy concerns in the practice as well as how such online behavior can "reinforce patterns that e-commerce had promised to erase: prices that are higher in areas with less competition, including rural or poor areas. It diminishes the Internet’s role as an equalizer."
The investigation came after another Journal article in June found that Orbitz began showing consumers browsing with Apple devices spent more on hotels than Window device users. Browser history, such as whether the shopper has already searched for a particular item, is also reportedly used to fine-tune prices.
In late November, U.K.’s Office of Fair Trading (OFT) said it was exploring whether consumers "are being treated unfairly" through personalized pricing. In the U.S., regulators are pushing internet companies to install "do not track" systems to protect against such use of privacy data.
Writing on his blog, Mitch Joel, president of digital marketing firm Twist Image, contends both marketers and retailers will have to be more open about how they’re using online consumer information.
"Instead of trying to brush it under the carpet, they are going to have to be more transparent about how their price structure works, and how that varies from physical store to digital entity, and from location to location, and person to person," wrote Mr. Joel. "If they don’t (and something tells me that they will not), it’s going to force government intervention."
- Websites Vary Prices, Deals Based on Users’ Information – Wall Street Journal
- How the Journal Tested Prices and Deals Online – Wall Street Journal
- How technology opens the door for personalised pricing – BBC
- How the websites you visit (and even the gadgets you own) could change how much online retailers charge you – Daily Mail
- On Orbitz, Mac Users Steered to Pricier Hotels – Wall Street Journal
- Britain Looks at Online ‘Personalized Pricing’ – The New York Times
- Shopper Alert: Price May Drop for You Alone – New York Times
- The Future Of Personalized Pricing – Twist Image
Will much greater transparency around pricing strategies be required for consumers to accept variable online pricing? How should the tradeoffs and benefits of more personalized online deals be explained to consumers?