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Ecommerce Forum

Dynamic Pricing

 11:11 am on Sep 27, 2000 (gmt 0)

With its detailed records on the buying habits of 23 million consumers, Amazon is perfectly situated to employ dynamic pricing on a massive scale.




 1:49 pm on Sep 27, 2000 (gmt 0)

You know, I've been watching this. I think it has the potential to grossly undermine consumer confidence in e-comm.


 1:54 pm on Sep 27, 2000 (gmt 0)

You are so right about that.
Anyone can build a database that takes Census Data from Zip Codes Areas and prices products based on the consumers ZIP


 2:28 pm on Sep 27, 2000 (gmt 0)

As traveling people know depending on were you are effects the price of say a pack of cigs.. This is expected but people never would think that way when shopping on-line. I could see where dynamic pricing could be construed as the same parralell for the bean counters/bottom line people. However that's what e-comm. eliminated. All I can say is this is the second time I have read this with Amozon. Guess the wife will no longer use them. Gotta love the PR spin on it though (as far as them saying it was a one weekend thing). Burn...;)


 5:27 pm on Sep 27, 2000 (gmt 0)

I expect this to parallel the privacy issues. It'll take something like the DoubleClick match-you-to-a-database incident to provoke the public's wrath. But, in the end, those dabbling with dynamic pricing are going to find that
Hell hath no fury like a CD buyer screwed!


 1:37 am on Sep 30, 2000 (gmt 0)

rcjordan, Take a look at [angara.com...] Engage seems to have expanded their profile matching into e-commerce... interesting stuff.


 1:53 am on Sep 30, 2000 (gmt 0)

Shri, Nice find!
The anonymous online profiles in Engage Knowledge contain rich, dynamic behavioral data that is processed based on: type of content viewed, the time spent viewing as well as the frequency and recency of visits to a particular interest category or site - all of which are based on 800 interest categories. To maintain consumer privacy, the profiles contain no sensitive data or personally identifiable information, such as names, addresses, social security numbers or e-mail addresses.
-press release [angara.com]

This looks as if they'll be profiling the publishers by the demographics they can deliver. This could be a factor dynamic pricing and privacy issues, too.

wait a minute: after taking the tour, I'm not so sure that this isn't click-tracking without (supposedly) PII.


 3:23 pm on Sep 30, 2000 (gmt 0)

There may also be the possiblity that this is illegal and discrimatory pricing models that Amazon is pondering. Rarely enforced by authorities, but on the books none-the-less.

A guy walks to the counter in a suit and tie and pays $2 for a cup of coffee, a guy walks to the counter in raggy blue jeans and is charged $1 for a cup of coffee - that's illegal.


 3:36 pm on Sep 30, 2000 (gmt 0)

I read that they stopped this practice and will refund the overcharge.

[can't find the resource]


 3:37 pm on Sep 30, 2000 (gmt 0)

Doubt its illegal. The owner took pity on the guy who could not afford to pay $2 and charged him half price.

Corporations are all ruthlessly data-mining as much information they have about you as a consumer everyday and using it. Why not Amazon?

McDonalds costs a whole lot less here in Hong Kong than say Seattle. However the same pair of dockers pants cost more here in Hong Kong than they cost in Seattle.

Heck... e-bay changes prices dynamically based on demand on virtually everything they have listed (ok a warped example) and no one seems to complain.

Amazon's system was a bit flawed because it was too 'micro' in nature. They should have been targetting broader bands (i.e. people who buy from Microsoft's IP blocks may pay more than people who buy using AOL. Hong Kong users are more likely to pay for xyz than Iowa based users...). The problem was that their targetting was based around a fragile cookie... and it crumbled.


 4:19 pm on Sep 30, 2000 (gmt 0)


You are absolutely right that big companies are salivating over data mining, and "customer based management" as it is usually referred to.

Personally I can accept geographic differnces in pricing, there are factors that make sense to me on why pricing would be different for some items. But if companies become too granular they are in for a big shock.

What I see is that these companies don't have a clue how much damage they can do to themselves in the virtual world, they are very adept at dealing with these same issues in the brick and mortar world, but that's an entirely different kettle of fish.

If you ask any of these companies they will tell you that they are doing it to serve the customers better. I have seen companies that tracked everything that was purchased and could tell all kinds of things about "you" just by what you bought when. The intent was to customize promotional offerings and pricing.

Many products give this away, if you suddenly start buying baby formula then you must have had a baby, if you buy certain medications, products at particular times of the year, month, etc. it is all associated with trigger events that give them information about you. This is why many companies tie in a customer loyalty program in their brick and morter outfits with an online redemption or points tracking presence.

Everytime you hand them that points redemption card, another data point is created to identify something about you. Their hope is to convert it into a customized shopping cash cow, when and if you convert to their online shopping sites.


 12:34 am on Oct 1, 2000 (gmt 0)

Air, so why is Amazon being looked upon as an 'evil' entity? I see nothing unusual about what they're doing ... specially with the so called financial pundits insisting that the new economy companies learn their lessons from the brick and mortar economy.


 1:00 am on Oct 1, 2000 (gmt 0)

Just a thought.

In the brick and mortar economy, do you see a customer with a chip imbedded in his/her head [cookie] walk into a department store and ALL the prices in that store change?

I could see price differences between cheap-stuff.com and dinks-stuff.com


 1:14 am on Oct 1, 2000 (gmt 0)

No, in most cases the price changes have been put into place well before the customer entered the store (think macro pricing based on IP blocks mapped with GIS information..).

I am actually pretty interested in the possibilities as I sat through a presentation last week about how a certain company in Asia changes Oil pricing in micro-amounts based on the time of the day and location of the fuel pump. The pricing structure is not dynamic to the extent it changes by the purchaser. It is however dynamic based on GIS data and broad statistical information.


 2:01 am on Oct 1, 2000 (gmt 0)

>Air, so why is Amazon being looked upon as an 'evil' entity?

Well it doesn't change from evil to angelic just because many companies are gearing up to to the same.

My concern with it, is that I don't want to be influenced to that degree on what I purchase, when, and at what price.

It may not be true, but I like to think that today I go to the impulse buying zone on my own, it does not come to me, armed with my weak spots, and ready to do psychological battle. I prefer the model of supply and demand to determine price equally for all.

I can only guess, but I think that this perceived invasion of privacy, coupled with it's apparant unfairness and the ability to target at the individual level in the online world, makes some label it as "evil".

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