
Online shopping: prices and discounts are giving way to more exotic strategies - eckza
https://www.theatlantic.com/magazine/archive/2017/05/how-online-shopping-makes-suckers-of-us-all/521448/?single_page=true
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lawrencewu
This article paints a pretty good description of how price discrimination is
used in online shopping and how places like Amazon try to extract consumer
surplus. I don't know if I agree with the title's claim, though. If a product
is shown at a higher place and you click buy, you're still choosing to buy the
product at an accepted price, i.e. the value of the product is still worth
more than what you're willing to spend, otherwise you wouldn't have bought it
at all. How does that make you a sucker? Because someone else might be getting
it for cheaper? That might seem unfair at first, but ultimately it's
irrelevant. Other people have different opportunities for a lot of things.
Complaining about what price someone is _voluntarily_ willing to pay for a
good is probably near the bottom of my list of injustices.

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jonahhorowitz
It goes against our sensibilities of fairness. We expect that all consumers
should pay the same price for a the same item, regardless of age, race,
gender, or browsing history.

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lawrencewu
So is it unfair when someone uses a coupon they found in a flyer? They're not
paying the same price for the same item as someone without a coupon, and
people using coupons are likely to be less affluent.

And what about student discounts? Is it unfair that students get better deals
on Photoshop and Microsoft Office?

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jonahhorowitz
I think the issue is more _secret_ discounts - people who dont't clip coupons
know they could. People accept that students might get discounts (or seniors,
or whatever), but the idea that a website might give you a different price
just because it thinks you will pay more rubs people the wrong way.

~~~
lawrencewu
It rubs me the wrong way too. But rationally, it's just your classic price
discrimination tactics (coupons and special discounts) on steroids, so if you
aren't upset by those, you shouldn't be upset by this.

I guess my main issue here is the clickbaity title, since I don't think Amazon
is making us suckers. The consumer ultimately has the upper hand since they
can just choose not to purchase the product, or use a price search engine to
find a better deal (which is akin to using a coupon - people that are price-
sensitive are more willing to put in effort to save money).

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Larrikin
I know that if I browse coupon sites, I can get a discount. If I'm a student I
know there are certain discounts, same as a senior. But what are my options
when Amazon and others have logged my IP addresses and flagged my account and
have determined I can afford to pay extra for everything?

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malandrew
Your option is not to buy if the price is greater than the value you feel you
will derive from the purchase.

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bbctol
I don't think people realize how much dynamic pricing disrupts what we think
of as capitalism, and many of the benefits it creates. The idea of goods
having singular prices, determined by the market, has been taken for granted
by proponents of the "invisible hand" and so forth.

Now we are returning to a world of haggling, but a world in which the
cognitive abilities of the haggler can be purchased: more sophisticated
algorithms can out-maneuver a human in a business transaction just as they can
a chess game. The struggle between buyer and seller resumes without any hope
of a truce, and any new businesses trying to sell their product without
cognitive advantage can never compete. I mean, I'm definitely letting myself
wander into science fiction land here, but this is a pretty big shift and I
don't know how it can end (unionized consumers is the tamest way of describing
a complete revolution of economics.)

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tutufan
Arguably this _is_ how capitalism works, at a very retail level. If your
counterparty isn't trustworthy, though, it's more like a market for lemons.
Which as you are thinking, might not be good for either party.

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Theodores
Big retailers know what they are doing (one hopes!) however, as for most
businesses and their online ventures, I see anything but sensible pricing
strategies and I rarely see how anyone in these businesses can price correctly
given the information they have available to them.

For instance, how do you calculate the cost of selling a given SKU,
particularly if bought with other items? Has money been made when you take
away the cost of the warehouse, the cost of the shipping to the warehouse, the
cost of the actual product, the cost of that 'adword' to get the sales lead,
the discount you gave to the customer for their first purchase, the affiliate
marketing cut that you have somehow incurred along the way, the cost of the
transaction with the payment provider and whatever else? Note this excludes
other 'costs' like the marketing spend and partnership programmes with other
companies.

Add to the mix currency fluctuations and limitations of the accounting system
you have to work with (e.g. unable to do fractions of pennies/cents) then
factor in that the people running the show are managers, therefore of no
technical competence, and there is no way whatsoever that costs for selling a
given product to a given customer at a given point in time can be known.

Then add returns to the confusion. It becomes even harder to actually know
costs on that fine-grained SKU level.

Plus sometimes you cannot sell less than what you are allowed to sell at. Your
supplier will not like you if you sell at less than cost and will not supply
you if you upset all the other retailers of the product. So the price is
essentially set, discountable when the next model range comes out but not
before.

If you have to sell at 'list price' then how do you compete? Do you pay £70 to
people for those people to buy your £25 products at list price? Yes, this
craziness happens when you have people of the non-technical marketing type
decide to 'invest' in 'marketing'. These same people will send out ever
fancier boxes and other packaging junk never thinking about the costs.

A company has to be of a certain size before it can have the people able to do
the maths properly, to get professional about it. Otherwise costs are not
realistic for the online operation and profit is not what it should be. This
article tars ecommerce with the same brush, a large amount of it is utterly
clueless and far from smart.

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_rpd
> Our ability to know the price of anything, anytime, anywhere, has given us,
> the consumers, so much power that retailers—in a desperate effort to regain
> the upper hand, or at least avoid extinction—are now staring back through
> the screen. They are comparison shopping us.

It's worth being aware of price discrimination, but in the end, the only
"suckers" are those who don't use price search engines.

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dublinben
Can you provide some examples of good price search engines?

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Humdeee
Somewhat related, I use Honey as a browser extension to automatically apply
trivial coupon codes to online purchases, but I must admit I was hoping it
would work more than I've seen. I'll still always run the product through
though.

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eveningcoffee
This is another example of "I have nothing to hide" strategy not giving good
results.

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eckza
Would you mind explaining yourself a little? I'm not sure what you mean, but I
feel as if I want to know.

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eveningcoffee
I believe that many people think about privacy in the axis of sexuality or
political views but completely overlook the commercial axis or are buying into
marketing that knowing more about them would provide them with better
product/service.

The problem I see it is being singled out. The more singled out you are and
more you stick out specifically, the worse.

Paying more for something is one thing (and it does not mean that you have
more resources but simply less advantage to bargain) but not seeing
products/services that do not "fit" your profile is ever worse.

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anotheryou
At least I can compare prices and order from china directly.

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jrocks94
Sounds like a plan -- for you -- a protected buying experience if you have a
back-up there or contacts. For the typical shopper, that is not the case. In
my case, I need to go through intermediaries i.e. Amazon, a big-box store
where my money is protected and there is some quality assurance. That is what
the price difference pays for between what you would pay directly buying in
China and what I would pay for the same item through Amazon.com. If I get free
shipping with Amazon, then that is an added value -- bonus.

As I have an associate who ships internationally thru an online store portal,
I am aware of how a typical $1 - $2 per order overage on shipping costs can
add up in bottom-line revenues year-over-year. Even so since I do not buy
enough to justify paying for the Amazon free shipping service, their prices
are generally a good buy.

An exception everywhere now in my experience is clothing made in China by
Chinese designers that has yet to reach the quality standards I will pay full
price for in women's apparel. The problem I have read in Comments and have
experienced is the difference in size between American and Chinese or Asian
women.

That's where for me Ross for Less, Marshal's etc. come into the picture.
Sometimes I buy quality through trusted online sellers (J.W. Crew, Land's End,
Eddie Bauer, L.L. Bean, etc.). But even then the quality of workmanship and
fabric can be wildly varied despite the price of the item.

The global economy does have its challenges. The current state of the consumer
economy has forced me, therefore, to buy less, and to make what I have last
longer through care and cautious use, as well as periodic maintenance where
appropriate.

~~~
anotheryou
But still you have some choice, while in a physical store you don't. Not even
reviews or ratings.

Of course I pay extra for good support and free shipping too. Stuff over 30eur
I only buy in shops I trust. For something like a laptop I'd only buy from 3
sites or do extensive research on how good the support is.

