When you go online and check out the various online bazaars displaying their wares, what you may not know is e-retailers sometimes ‘personalize’ their pricing. That means person X might get a different price on the same sweater as person Y.
That wouldn’t sound so bad for the person getting the better deal. But for shoppers who might be getting inflated pricing, that doesn’t seem fair – even if it’s personalized.
Jessica Leber of Fast Co.Exist writes that researchers at Northeastern University have been looking into price discrimination. In a new report presented at a conference in Vancouver last week, the researchers showed that retailers will either charge customers different prices on the same product, or they will display different search results that may range in pricing – depending on who’s doing the searching.
As part of their study, researchers picked 300 volunteers to scope out pricing on different sites. Controlling for factors like the volunteers’ location, the researchers wanted to check if shoppers would get different pricing based on personalization.
What they found was travel sites were the most likely to either overcharge or undercharge specific customers. For example, Travelocity would charge iOS users about $15 less than other people, while people who weren’t logged onto Orbitz or Cheaptickets would be charged an average $12 more per night when booking their hotel rooms.
There were other cases where price differences were there, but weren’t as clear cut. Expedia and Hotels.com would serve some people more expensive search results, depending on the cookies on their browsers. And Priceline would change its search results based on when users’ past clicks and purchase history, as it keeps tabs on them using cookies.
Other retailers outside of the travel industry were not immune. Home Depot sent its users to more expensive products, though it was the only major retailer out of the 10 surveyed that did so. Researchers couldn’t find those practices at Walmart, Stapes, and JcPenney, though they didn’t check out Amazon, Leber noted.
Technically, offering customers different prices online is legal. However, retailers should note customers probably wouldn’t be very happy to find out their friend or family member scored a better deal – even if it’s slight – just based on personalized experiences. After all, most consumers understand personalization as a way of offering a shopping experience that is more tailored to what they like, but that’s not understood to include pricing they probably won’t like.
There’s also the transparency aspect to this. If customers feel like they’ve been kept in the dark, retailers may lose their trust – and that probably won’t ensure either their loyalty or that they’ll come back any time soon.
