OnDemand WTP Pricing Research

Don’t get duped by dynamic pricing | TheSpec.com

I’m staring at my online shopping cart in disbelief.

I like to plan ahead and budget my purchases, so I added a $27 pair of kid’s runners to my cart last week. Three days ago the price jumped to $35. Today the price is $24. It’s the same pair of shoes sold through the same retailer.

What gives?

This selling strategy is called dynamic pricing. If you’ve ever bought a plane ticket online you’ve seen how fares can fluctuate based on competitor pricing and supply. Let your cart expire and that same flight could cost more because there may be fewer seats and more demand.

Over time we’ve accepted this algorithmic pricing in the travel and entertainment industries. But now we’re seeing dynamic pricing in retail too, where an item’s price can change dramatically in your cart as you browse away.

When retailers use algorithms to set prices, more may be going on than just supply and demand.

A study by Northeastern University in Boston found that several e-commerce sites, such as Home Depot and Walmart, manipulated prices based on the browsing history of customers. Those who shopped on a mobile browser were further disadvantaged because they were price-steered to more expensive products, paying more due to price discrimination.

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Opinion | Don’t get duped by dynamic pricing | TheSpec.com.