Tuesday 20 May, 2014
Have you ever walked into a store and gotten the feeling that the salespeople sized you up and based the price they offered on your appearance? For example, they took one look at your watch and decided you could pay a bit more for their products than the guy/gal before you?
This happens much more often than we like to think it does. What may surprise you is that it happens online as well. For example, if you’ve gotten a plane ticket or hotel room from Orbitz.com, they probably checked you out before offering you a deal.
Introducing Price Customization Software
How do they do this? They do it through price customization software. Several ecommerce software companies including 7 and RichRelevance offer software for online merchants that checks out your web surfing habits and then charges accordingly.
This is done through data mining and gathering data aggregates about your online habits. It uses a number of different indicators to determine whether you’re loaded or not. According to the sales literature, it helps shoppers by customizing the shopping experience for them. This is laughable considering that it never offers you a lower price!
Expensive Surfing Habits
What are some of these indicators? They include things like:
* Your Computer. Some online stores charge a higher price for Mac users than PC users because they supposedly have more money.
* Your Stored Cookies. Were you visiting the Mercedes-Benz website today? Putting in a big Champaign order?
* Your Purchasing Habits. People who purchase goods faster online are gouged because they’re less likely to shop around. Also, if you go straight to the site instead of using a price comparison site (Orbitz bases its pricing on this).
* Your Address. Obviously, where you live is a determiner in how much loose change you’ve got.
There are probably lots of other indicators we can only imagine.
Is It Ethical?
Some people think price customization software is unethical. Companies like Orbitz have gotten flack over it. But unfortunately, predictive analytics is a growing trend in online retail. We’re going to see more of it.
It should be noted that sites like Orbitz don’t offer two different prices for the same product. Rather, they show higher-priced search results closer to the top for folks deemed moneyed. For example, if you’re looking for a hotel in Las Vegas, it won’t show you the same room at the Bellagio for a higher price. But your search results might start with a pricier room.
All companies that use price customization software claim they don’t do this, but you never know. What’s for sure is that the first company caught engaging in this practice (same product, different prices) is going to get publicly flayed by the media.
As more merchants use this software, it will get more media attention. This may or may not lead to some kind of regulation, but it will at least inform consumers that the practice is widespread.