April 19, 2018--Personalized Pricing

I logged-on to Amazon to see about ordering Daniel Stone's new book, The Food Explorer, the story about botanist David Fairchild, who traveled the world during the late 19th century to bring back to America foods such as kale and mangos that transformed what we eat. 

Its list price is $28. If I were virtuous, I would have gone to an independent bookstore to buy it. But since Amazon listed it at $18.45, plus sales tax, nearly a $10 discount, I thought about that for awhile and then, with some guilt, after deciding to buy it from Amazon, was surprised when I went to place the order to see that, including tax, it now cost more, $19.32. The price had jumped almost a dollar. Not enough to write home about or cause me to go out to Shakespeare and Company, but minimally, it was curious.

Then Rona went on line to shop around for a couple of airline tickets for roundtrips flights to Amsterdam. We were thinking about the possibility of heading there for two weeks at the beginning of May.

Not unlike with the book, the price quoted began to bounce around. While online with United Airlines, every time Rona put them on hold to check this or that hotel (before committing we wanted to be sure there were rooms available in the two places we had identified as those in which we were interested) when she returned to the United webpage the price of the tickets had gone up. By the time we were ready to commit, it had risen more than $200 per ticket. As opposed to The Food Explorer on Amazon, real money.

(This became moot as we quickly realized that with all we have scheduled in late April the timing was not ideal for us.)

Previously we had both had experiences of this kind but didn't think much about them until yesterday when the New York Times published another article about Facebook, this time about why it is such a valuable company.

Among other things the article dealt with "price discrimination." The process by which Amazon and other e-commerce businesses use the Big Data they have gathered about us to determine the maximum amount we are willing to pay for any item. These "personalized prices" are becoming ubiquitous and thus are contributing to the bottom lines of United, Amazon, Wayfair, and Overstock.com. 

They determine our personalized prices by aggregating what they can learn about our buying habits, our income, the other goods and services we have shopped for, our age, political affiliation, where we live, if we are married or single, and a whole host of other information that is too subtle for me to either understand or describe.

These practices are not all predatory  Sellers also have the ability to customize prices to make things more affordable to, say, older shoppers (via senior citizen discounts) or those with limited incomes via 20%-off coupons.

But, we know, for the most part, Amazon and others are mainly interested in extracting from us as much as possible. This is partly why Jeff Bezos, is now the world's richest man.