At some point in the next 5 years, I predict there will online services that will "proxy-shop" for you. They will specialize in building profiles (cookies, logins, etc) that get offered low prices, then use these to purchase products on your behalf. Perhaps a browser plugin, so that at the moment you go to check out on a product, you send the product's link to the service and they get it for you at a lower price.
Then retailers will attempt to bring legal challenges against them for breaking terms of service, that will be interesting...
These services already exist, although I don’t believe they use the implementation you describe. Instead they’re basically coupon collectors. They just find the lowest available price and route you to it, or something like that. (I don’t use any of them, but they advertize to me relentlessly. I should probably try them out, actually.)
I have been thinking about that exact service for a while. One big issue is that you need the reverse engineer the pricing models of retailers, i.e. mapping out a high-dimensional space. For that you need a lot of data from the retailers. They could probably ban you quickly if you start pulling price quotes en masse. Then you need to invest a lot in cloaking techniques etc.
why have something/someone purchase for you on your behalf when you can browse through aggregators to find what you like?
For instance, there's shopittome. I'd much prefer to select from a list of offerings and sources rather than pay premium for someone/something placing the order and then having to navigate obstacles to return (where accepted) if the item is ill fit.
Not just limited to fashion here... electronics, tickets for inconvenient travel time, food, etc.
The extent of my profile that can be built (and is probably available) is absolutely insane. Picture this: most people use a single email ID to register anywhere. Dating sites, e-commerce, social networks, banks, and even offline stores. My online purchases can be linked with my preferences on OKCupid that can be linked to ads I am clicking that can be linked to my offline behaviour. Personalised pricing is direct result of that. Who knows what other interactions are being shaped by it. Because the power of having this profile is limitless.
There's a Gmail trick to avoid it by using "+random_name" suffix but that is easy enough to circumvent. Disposable email IDs are banned from most sites and I never found it easy to integrate in my workflow. I have been pondering about building a service that acts as a mask to your real email ID, can be configured to forward emails to your real ID and can work with your personal domain name. I know some people who are running similar kind of setup here; a service might be helpful for those who don't might not want to go through the trouble.
Whether on Google Apps or using Exim, all my domains have a catch all address so emails to unmatched local names (addresses) are sent to a single inbox. I then use [email protected] for registration at each service.
It's not much more difficult to circumvent than gmail's +randomname but a little fuzzier. There's no way to know from the outside how many people are using each domain.
It's not email addresses they want most dearly though (although it is used and correlated of course) it is that nice unique identifier that is your (mobile) phone number. For smartphone apps it is the default (and often only) identifier (and conveniently, it is also the one identifier nearly always present in the contact lists they guzzle in).
A lot of services on the web want your phone number too; as a contact on the shipping label (often a required field), as part of the authentication scheme (out-of-band text messages with OTP codes to confirm certain actions), or as an account recovery option. A person's phone number is a unique numerical identifier that doesn't change often, if at all (in the EU you tend keep your mobile phone number when switching telco's).
I run my own email server and set up a catch all address so I can give any website a new email address at my domain. It was a bit of a pain to set up initially, getting other servers to accept sent emails, but maintenance is pretty straightforward.
I do this with one of my domains. Setting it up was just adjusting some forwarding preferences in my registrar's web interface. Not sure how a separate service could make this easier, I'd presumably still have to login to my registrar to point an mx record at it.
Orbitz also played with how they rank search results. After finding Mac users were likely to spend 30% more on a nightly room rate, they started putting higher priced rooms at the top when Mac users searched.
Take that idea in the other direction. Vendor tie-in with browser maker to grant users a decent discount for use of IE or even the new and allegedly compromised Opera? I'll give it a shot on your site.
I wonder how sustainable some of these approaches are and how often people will just stop buying from places that prey on them too much. For example, I'll often end up paying more for e.g. flights if it's not too costly and it removes the hassle of comparing days/large numbers of airlines to save 50 bucks. But if they started charging me double what others were paying, I'd just stop using that airline.
Likewise, I've noticed a similar behaviour with ads on youtube. If you always click the skip ad button, you'll always get the 15s unskippable ads, or 30s ads. But when I stopped for a while (because a lot of the channels I watch are solely supported by them), YouTube kept pushing the line until it was showing 5 minute ads for 10 minute videos. So now I skip them again to avoid the gradual creeping increase in ad length.
There must be some incredible data being mined by Amazon via Whole Foods. At the Whole Foods in Palo Alto, there seems to be an elaborate pricing experiment in the ice cream department. Entire brands (Talenti) are dropped in price 70%. Other times, particular flavors are reduced that much, sometimes less so. For Talenti, the entire brand is sold out. Some of the on-sale flavors go quickly or are also sold out while others are completely ignored, despite the discount (namely anything from Three Twins, who's blurb on their ice cream and their shop at SFO make them sound like assholes). Maybe 25% of the options in that section are discounted, and the amount of discounts varies as well, with a number of different steps like (80%, 50%, 35%, 20%, 10% or similar). Nothing else in the shop is stratified like that. Beer and wine might have 2% of the options on sale. Ditto produce and meat. Most departments offer no discounts.
Alternatively: Amazon has decided certain brands won't be carried anymore. Therefore those brands are getting steep discounts to clear the stock and Wholefoods' legacy contracts quickly.
To your point on beer and wine: state liquor licensing boards control retail pricing structures pretty heavily. In Tennessee for example (the state I’m most familiar with), the price of beer can be set at whatever, but liquor can’t be sold below cost and wine can’t be sold below a 20% markup over cost. It makes discounting a bit tricky, to ensure you stay compliant. Especially if you already have competitive pricing.
Summary: Except for auto dealerships, retailers don't use personalized prices.
What a terrible article:
1) Its first example of "personalized pricing" isn't actually personalised: it was the result of an A/B test.
2) It says 'Outsize profits can be extracted from “top of the demand curve” customers' when, in fact, the top of the demand curve is normally when price is zero. The author seems to acknowledge this as they reference 'the downward sloping demand curve highlighted in Economics 101'.
3) The only convincing example given in the article is that of 'auto dealerships', which are the least typical retailers there are. People hate going to auto dealerships, but they love doing other types of shopping, in-person or online. Part of the reason is the personalized pricing (and process of haggling), but this has existed for many years, and the rise of the internet has actually made it easier for consumers, not harder, to get a reasonable deal.
4) "A key question is whether personalized pricing, on the web or in-store, is ethical." A better question would be 'How do retailers use personalized prices?'. That's the question I thought would be answered, given the title. The author's answer seems to be "Except for auto dealerships, they don't".
I don't think grocery retailers "raise prices" across the board.
I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time.
The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.
Do you know this, or are you assuming this? It is certainly possible that, at the margin, someone is willing to spend money on a charity but not spend that same money on the product. Although I suppose there's probably a correlation between donating and willingness to pay more.
Slightly related. I regret not having taken a screenshot to prove it, but oh well. A friend and I both open google.com and type weather. We are on the same Wifi, both using chrome, both signed in, and we each get our very own current temperature for the exact same city. Different by a few degrees that is. We hard refresh, we sign out, we clear cookies, still different on each machine.
With personalisation I wonder if they go as far as telling you how hot it feels for me as opposed to how hot it is.
Some stores offer coupons and price matching guarantees to attract price sensitive customers. Some stores tout that every customer gets "the same low price."
Slightly related: I was just looking to buy Microsoft Office 2016 for Mac for my mother. She's American, but I'm currently in Bulgaria. The Microsoft web store says it's $149 but when I add it to my cart it becomes 289 Bulgarian Leva, which is about $174 (and the whole page annoyingly switches to the Bulgarian language). Then I look on Amazon.com and see you can get it for $129. God I hate digital software pricing.
I'm surprised no one is talking about how progressive this is. Rich people (or people who signal 'rich') pay more and facilitate discounting at the low end. Companies discount to increase marketshare.
Several pricing methods together for close to optimal price discrimination.
1. Scientific experiment to determine the price. With enough customers, it's possible to determine optimal price level using scientific method. Vary the price and see how it affects demand and discover what customers are willing to pay.
2. Divide customers into segments, and apply scientific pricing into segments. Segmenting can be heuristic based on devices used and behaviour.
3. Personalization comes last. It's segmentation in the finest level. If user be identified, his social networks analyzed etc, it's possible to model his behaviour and determine users price sensitivity and how the user perceives value. Triggering purchase decision can be personalized. For some people showing generated review or rating helps to make a decision, for some you need to show purity values (images of people in white clothes in the sun), for some you must indicate that they are able to "win" over the seller. Access to the mobile gaming data with in app purchases is massive leg up in personal profiling. Data from mobile gaming can be used to experiment and model personal behaviour and personality.
Is this legal? Can they really code in a different price based on the end user's profile? That sounds super shady to me. I know there have long been suspicions that Amazon does this but I thought all of them turned to be false. If a company as big as Orbitz is doing it, are there other companies that do it too? I am surprised this has not come out sooner.
I expect this to have a large downside in that it introduces a negotiable element into the price. And as such you'll see it become mandatory that you negotiate (just as frequent flier miles became mandatory) and as a result margins will decrease.
Also, while people here are thinking mostly about retailers like Amazon, I'd say that even with all the data they have and the processing and engineer power they throw at it, they still haven't caught up to the airlines in terms of efficiency at determining how much people are willing to pay for something.
Airline yield management -- which includes both setting the price buckets for different fare classes, and deciding which flights/routes get allocated certain numbers of seats in different fare classes -- is a dark art.
And in case someone happening by is confused by that, I'm not talking about economy class versus first class here. In the US, for example, there may be a dozen or more different fare classes which all book the same type of seat in the same cabin of the same aircraft, but which have different prices attached to them. This is the source of a lot of (inaccurate) advice to do things like booking tickets on certain days of the week or at certain times to try to get the lowest price. Airlines dynamically allocate and re-allocate differently-priced fare classes to flights all the time, and unless you really really know what you're doing, have time (which isn't free) to spend on it and pay (which also isn't free, obviously) for a service that lets you scan inventory by fare class, you're not going to reliably get the lowest price.
For example, by my count currently American has 14 fare classes which initially book into the economy cabin (and with different rules about how and whether they upgrade to a different one), Delta has 15, and United has 17. These vary by level of discount, restrictions on change/refund, who they're offered to (Delta has some which are known to be explicitly a "we only use this to indicate a fare where we're trying to price-match another airline on the same route", for example, and all three have fares for things like government and military travel), etc. and price differently.
On a related note - Recently I've noticed that pricing, or more specifically menu selection, is also happening in brick and mortar shops.
Going to a McDonald's, I noticed their menu boards went displaying children's meals or value items during my last visit - looking around the window and floor ads, I did see mention of discount items available but nothing in the menu-board slideshow.. Didn't think of asking at the time, thought it was odd, now I have come to realized they were gaming me for higher sales items.
Now will stick to establishments with printed menus and non-video menu boards.
I have recently learnt it is same with energy companies. My monthly contract prices were hiked up to get more out of heating bill for energy company. I was left disgusted since we live in a relatively warm house and energy bills are minimal. After spending an hour with support - it became clear that prices are tailor made for postcode - read each individual home.
At least where I live, gas and electric are pretty heavily regulated, and fees are itemized to where I can tell you how much I pay per kilowatt for decomissioning hydroelectric dams.
PG&E does offer equal payment plans, where you pay the same amount every month, but they still track usage and bill/credit you every year for the difference between their estimate and your reality.
[+] [-] bo1024|8 years ago|reply
Then retailers will attempt to bring legal challenges against them for breaking terms of service, that will be interesting...
[+] [-] tessierashpool|8 years ago|reply
[+] [-] baxtr|8 years ago|reply
[+] [-] Jommi|8 years ago|reply
[+] [-] astura|8 years ago|reply
What's old is new again, I guess.
[+] [-] bogomipz|8 years ago|reply
Are there reasons why this wouldn't work?
I am curious what would the legal challenge be if dynamic pricing on the sell side is considered acceptable?
[+] [-] amelius|8 years ago|reply
[+] [-] smn1234|8 years ago|reply
Not just limited to fashion here... electronics, tickets for inconvenient travel time, food, etc.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] shubhamjain|8 years ago|reply
There's a Gmail trick to avoid it by using "+random_name" suffix but that is easy enough to circumvent. Disposable email IDs are banned from most sites and I never found it easy to integrate in my workflow. I have been pondering about building a service that acts as a mask to your real email ID, can be configured to forward emails to your real ID and can work with your personal domain name. I know some people who are running similar kind of setup here; a service might be helpful for those who don't might not want to go through the trouble.
[+] [-] blfr|8 years ago|reply
It's not much more difficult to circumvent than gmail's +randomname but a little fuzzier. There's no way to know from the outside how many people are using each domain.
[+] [-] vtail|8 years ago|reply
Edit: it's actually 600 aliases now: https://www.fastmail.com/help/account/limits.html
[+] [-] Freak_NL|8 years ago|reply
A lot of services on the web want your phone number too; as a contact on the shipping label (often a required field), as part of the authentication scheme (out-of-band text messages with OTP codes to confirm certain actions), or as an account recovery option. A person's phone number is a unique numerical identifier that doesn't change often, if at all (in the EU you tend keep your mobile phone number when switching telco's).
[+] [-] sleavey|8 years ago|reply
[+] [-] imron|8 years ago|reply
Sign up for fastmail. Integration is completely painless. https://news.ycombinator.com/item?id=15525512
[+] [-] c22|8 years ago|reply
[+] [-] twhb|8 years ago|reply
Also, the plus thing isn't Gmail-specific, it's part of the email protocol.
[+] [-] ben1040|8 years ago|reply
http://www.npr.org/sections/thetwo-way/2012/06/26/155756095/...
[+] [-] bubblethink|8 years ago|reply
[+] [-] howard941|8 years ago|reply
[+] [-] Macha|8 years ago|reply
Likewise, I've noticed a similar behaviour with ads on youtube. If you always click the skip ad button, you'll always get the 15s unskippable ads, or 30s ads. But when I stopped for a while (because a lot of the channels I watch are solely supported by them), YouTube kept pushing the line until it was showing 5 minute ads for 10 minute videos. So now I skip them again to avoid the gradual creeping increase in ad length.
[+] [-] laxatives|8 years ago|reply
[+] [-] mjmahone17|8 years ago|reply
[+] [-] cosmie|8 years ago|reply
[+] [-] rahimnathwani|8 years ago|reply
What a terrible article:
1) Its first example of "personalized pricing" isn't actually personalised: it was the result of an A/B test.
2) It says 'Outsize profits can be extracted from “top of the demand curve” customers' when, in fact, the top of the demand curve is normally when price is zero. The author seems to acknowledge this as they reference 'the downward sloping demand curve highlighted in Economics 101'.
3) The only convincing example given in the article is that of 'auto dealerships', which are the least typical retailers there are. People hate going to auto dealerships, but they love doing other types of shopping, in-person or online. Part of the reason is the personalized pricing (and process of haggling), but this has existed for many years, and the rise of the internet has actually made it easier for consumers, not harder, to get a reasonable deal.
4) "A key question is whether personalized pricing, on the web or in-store, is ethical." A better question would be 'How do retailers use personalized prices?'. That's the question I thought would be answered, given the title. The author's answer seems to be "Except for auto dealerships, they don't".
[+] [-] alex_young|8 years ago|reply
[+] [-] daveFNbuck|8 years ago|reply
[+] [-] zeamaize|8 years ago|reply
[deleted]
[+] [-] huffpopo|8 years ago|reply
[+] [-] DrScump|8 years ago|reply
I think the "charity bundling" concept is just for P.R. The company presents the big check at the end of the campaign, and the public then credits the company, even if the company itself contributed nothing beyond a little (deductible) personnel time.
The Ronald McDonald House perfected that mechanism. Some retailers used to do the same with pooling customer MDA donations, then showing up to the telethon with a big check... with the company name on it.
[+] [-] adamzerner|8 years ago|reply
[+] [-] fjsolwmv|8 years ago|reply
[+] [-] bogomipz|8 years ago|reply
[+] [-] PenguinCoder|8 years ago|reply
[+] [-] firefoxd|8 years ago|reply
With personalisation I wonder if they go as far as telling you how hot it feels for me as opposed to how hot it is.
[+] [-] dogruck|8 years ago|reply
A new facet on the old games.
[+] [-] bluetwo|8 years ago|reply
In fact they are finding the lowest prices, then trying to maximize the amount you pay for it.
Disgusting.
[+] [-] aorth|8 years ago|reply
[+] [-] golemotron|8 years ago|reply
[+] [-] Nokinside|8 years ago|reply
1. Scientific experiment to determine the price. With enough customers, it's possible to determine optimal price level using scientific method. Vary the price and see how it affects demand and discover what customers are willing to pay.
2. Divide customers into segments, and apply scientific pricing into segments. Segmenting can be heuristic based on devices used and behaviour.
3. Personalization comes last. It's segmentation in the finest level. If user be identified, his social networks analyzed etc, it's possible to model his behaviour and determine users price sensitivity and how the user perceives value. Triggering purchase decision can be personalized. For some people showing generated review or rating helps to make a decision, for some you need to show purity values (images of people in white clothes in the sun), for some you must indicate that they are able to "win" over the seller. Access to the mobile gaming data with in app purchases is massive leg up in personal profiling. Data from mobile gaming can be used to experiment and model personal behaviour and personality.
[+] [-] nimbius|8 years ago|reply
[+] [-] yalogin|8 years ago|reply
[+] [-] ChuckMcM|8 years ago|reply
[+] [-] ubernostrum|8 years ago|reply
Airline yield management -- which includes both setting the price buckets for different fare classes, and deciding which flights/routes get allocated certain numbers of seats in different fare classes -- is a dark art.
And in case someone happening by is confused by that, I'm not talking about economy class versus first class here. In the US, for example, there may be a dozen or more different fare classes which all book the same type of seat in the same cabin of the same aircraft, but which have different prices attached to them. This is the source of a lot of (inaccurate) advice to do things like booking tickets on certain days of the week or at certain times to try to get the lowest price. Airlines dynamically allocate and re-allocate differently-priced fare classes to flights all the time, and unless you really really know what you're doing, have time (which isn't free) to spend on it and pay (which also isn't free, obviously) for a service that lets you scan inventory by fare class, you're not going to reliably get the lowest price.
For example, by my count currently American has 14 fare classes which initially book into the economy cabin (and with different rules about how and whether they upgrade to a different one), Delta has 15, and United has 17. These vary by level of discount, restrictions on change/refund, who they're offered to (Delta has some which are known to be explicitly a "we only use this to indicate a fare where we're trying to price-match another airline on the same route", for example, and all three have fares for things like government and military travel), etc. and price differently.
[+] [-] LarryMade2|8 years ago|reply
Going to a McDonald's, I noticed their menu boards went displaying children's meals or value items during my last visit - looking around the window and floor ads, I did see mention of discount items available but nothing in the menu-board slideshow.. Didn't think of asking at the time, thought it was odd, now I have come to realized they were gaming me for higher sales items.
Now will stick to establishments with printed menus and non-video menu boards.
[+] [-] rahulchowdhury|8 years ago|reply
[+] [-] samblr|8 years ago|reply
[+] [-] jldugger|8 years ago|reply
PG&E does offer equal payment plans, where you pay the same amount every month, but they still track usage and bill/credit you every year for the difference between their estimate and your reality.
[+] [-] efrafa|8 years ago|reply