Typically, as online consumers, we assume that everyone is getting the same deal, regardless of location; after all, we’re all shopping through the same medium. It seems, though, that isn’t always the way that online retailers see it.
If you think about it, it’s not that big of a surprise; after all, different retailers in different locations will offer different price points to cater to their location. It simply hasn’t occurred to most of us that these sales tactics—or “dynamic pricing”—would be applied to online shopping, as well.
Here’s the skinny.
Online usage of “dynamic pricing” was first tested back in the year 2000 by Amazon, specifically for their DVD sales; they offered their DVDs at multiple price points based on location. For example, they sold the Complete Second Season of the X-Files at the following price points: $89.99, $97.49, and $104.99.
This practice, however, was short lived; Amazon quickly received criticism and backlash from consumers, scaring off any other retailers from looking into the model. Or, at least, so it appeared.
In 2005, a study performed by the University of Pennsylvania discovered that a whopping 70% of online consumers had no idea that some retailers were still using this practice; specifically, a few camera and computer retailers, who have not been directly revealed.
However, it wasn’t until 2010 that the phenomenon behind “dynamic pricing” really started to gain steam. Here’s an excerpt from a research piece compiled by the news media website and blog, Slate:
One computer scientist who builds smart sites for online retailers—with a nondisclosure agreement, hence the anonymity—says that concerns about different customers getting different price quotes for the same good are probably overblown. Some retailers do it, particularly when gauging the market for certain items… major retailers are getting much more sophisticated and subtle about ways to game their shoppers. It’s common for big retail web sites to direct different users to different goals, offers, or items based on their purchase histories or cookies… and companies frequently offer special deals for customers with a few items in their shopping bags—from discounts on additional items, to free shipping, to coupons for their future purchases. Ingenuity, rather than price-tampering, is now the name of the game.
As of 2012, The Wallstreet Journal reported that the practice was alive, well, and gaining steam:
The Journal identified several companies, including Stamples, Discover Financial Services, Rosetta Stone Inc. and Home Depot Inc., that were consistently adjusting prices and displaying different product offers based on a range of characteristics that could be discovered about the user. Office Depot, for example, told the Journal that is uses “customers’ browsing history and geolocation” to vary the offers and products it displays to a visitor to its site.
How would a company like Office Depot decide which prices go where? They would analyze the average income of a specific area and adjust prices accordingly. Or, other methods are used.
As part of the study conducted by The Wall Street Journal, they discovered that certain retailers will offer more discounts if the user is accessing their website through their mobile app. Also, Orbitz—a popular travel accommodations aggregator—has been tapped as an online retailer that will offer Mac users higher price points on hotels, flights, and cars, because on average, Mac users are more financially endowed.
How You Can Make Sure You’re Getting the Best Deal
You’re not powerless to stop this, and you might not want to, depending on your location and settings. You might already be getting the best deal! Lets say you wanted to find an Accor hotel room in Tasmania, though, here are your options.
- Change Your IP Address—You’re either entering your zip code, or the retailer is finding out what it is through your IP address. Set up a Proxy Server or VPN; you can obscure your IP address.
- Browse in Incognito Mode or Disable Cookies—By analyzing cookies, retailers can track your spending habits and adjust prices accordingly. To defend against this, you can either block third-party cookies, or you turn on “Incognito Mode” in your browser. If this sounds like a pain, a suggestion commonly offered is to use one browser for shopping and another browser for everything else.
- Double-Check Mobile/PC Pricing—As mentioned, some retailers will alter pricing based on what operating system you’re using. Check the pricing from your phone, or if you have a Mac, check the price from a PC, and see if there is any difference.