Technology

Absent or fluctuating prices leave consumers guessing

When a holiday toy catalog from Amazon arrived in late October, Krista Hoffmann noticed something was off.

In 100 pages of unseen Lego sets, princess castles, action figures and Sony PlayStation 5, the catalog covers everything – except prices.

“At first, I thought I wasn’t looking closely enough, so I turned a few more pages,” says Hoffmann, a mother of three in Colorado Springs. “Then I realized, ‘Oh, this is intentional.’ Why don’t you put a price there? “

The absence of price is not an oversight; it’s the natural evolution of two decades of online shopping.

In the early days of the Internet, there were suffocating excitement that e-commerce will lead to more transparency in pricing, allowing shoppers to know exactly where to find the best deals. This is arguably good for consumers and bad for retailers forced to compete with each other in a profit-killing race to get the lowest prices.

Instead, another reality emerged: Shoppers are losing sight of the prices of these things.

Retailers have an incentive to shift lenses away from price, dangling other carrots as convenience and ease of use. At the same time, shoppers are increasingly overwhelmed by the complexity of product choices, pricing, discounts, and payment plans.

Also, it’s not an easy time to be a consumer. The pandemic has changed shopping habits. Shortages of everyday items such as toilet paper and disinfectant spray are a painful reminder of the fragility of supply chains – an issue consumers are still grappling with as they face face delays on everything from interiors to cars. It has contributed to price volatility, exacerbated by inflation at a four-decade high – driving up the cost of energy, food and housing.

All of this is happening on top of a system pioneered by Amazon that keeps prices moving based on algorithms.

When Amazon raises and lowers product prices millions of times a day using a complex algorithm based on competitors’ prices, supply and demand, and shopping habits, their competitors often follow. And because prices change frequently, Amazon’s catalog can’t promise a specific price, and consumers must watch for changes if they want the best deals.

Glenn Ellison and Sara Fisher Ellison, professors of economics at the Massachusetts Institute of Technology, published an article in 2018 that said while technology has made it easier to find products, retailers have pushed back by pushing prices too high – often a precursor to higher prices.

“With increasing confusion, consumers pay more for everything,” said Glenn Ellison, adding that consumers also waste time looking for deals. translate or choose an alternative that is not quite what they want. “For consumers, it’s mostly just negative.”

That description – “almost only negative” – ​​is how Ms Hoffmann, 29, feels about holiday shopping.

“I had to look at each item individually and hope that the prices didn’t fluctuate while I compared them to other stores,” she said.

Amazon’s price for Pokemon Elite Trainer Box Celebration, an item on Miss Hoffmann’s 7-year-old son, who was born a few weeks before Christmas. There have been at least 14 changes since August, from a suggested retail price of $49.99 to $89.99 in October. The average over that time was $67.12, according to the report. CamelcamelcamelPrice tracking on Amazon.

Noticing the absence of prices, Mrs. Hoffmann ask why on Twitter. An Amazon customer service account was quick to respond, explaining that prices change all the time because Amazon “works to keep prices competitive for everything we carry.”

In a statement about its pricing practices and price volatility, Patrick Graham, an Amazon spokesman, said the company’s system standardizes prices across other stores to ensure customers receive the price they pay. The best from Amazon.

“If we find a better price at another retailer, like Walmart, Target, Home Depot and others – we will systematically match or offer a more competitive price. if we sell the product ourselves,” he said.

Like many of the other toys on Miss Hoffmann’s children’s wish list, the box of Pokemon offered directly by Amazon has sold out. Some third-party sellers, who pay Amazon a fee to list products on their site, charge exorbitant prices. So Miss Hoffmann bought another box of Pokemon cards from Target on Black Friday.

Dynamic pricing – when price moves in line with market conditions – is just one reason people lose touch with the price of things.

Discounts tied to loyalty programs or annual subscriptions like Amazon Prime and Walmart+ also complicate the math. At the same time, features aimed at saving time and enhancing convenience, such as automated monthly household deliveries, have made shoppers less price-aware.

Jason Murray, who has worked at Amazon for 20 years and is now the CEO of Shipium, an e-commerce startup. “This is the game companies are playing by removing the reference points so people think they’re getting a good price.”

Retailers and brands are bombarding shoppers with discounts, one-time offers, and various gimmicks that overwhelm them with volume while giving the impression that they’re getting one. good contract. And even when price comparisons are easier and more common, such as airline tickets or hotel bookings, consumers still have an incomplete picture of actual costs due to additional fees. .

Nick Kolenda, an author and YouTube video creator on consumer psychology and the tricks of marketers to entice shoppers.

The prices of some goods, such as gasoline, a cup of coffee, or a gallon of milk, are easier to remember because people buy them frequently and directly. When shopping online, the picture can get hazy – although the experience may not be universal, especially for those living on limited means.

“The loss of price tracking has a lot to do with how sensitive a given household budget is,” said Chi-En Yu, who runs Goodbudget, a budget tracking app. “If your household is quite sensitive to the prices of consumer goods, then to some extent you don’t need to let your guard down on prices.”

It can also indicate that wealthier consumers tend to shop online more. Unlike brick-and-mortar stores, where changing prices can be laborious, the internet provides the perfect sandbox for experiments on exactly what consumers are willing to pay.

In the year 2000, Amazon caused outrage when it was discovered charging different prices for the same DVD only one time apart. (Amazon charged one customer $65 for the “Planet of the Apes” DVD and another $75.) Jeff Bezos, then Amazon’s chief executive, apologized for the creates uncertainty for buyers with a “random price test”.

While Amazon says it doesn’t practice discriminatory pricing – charging different people with different prices based on demographics – it’s all based on dynamic pricing. Profitero, an e-commerce analytics company, estimated in 2013 that Amazon adjusted prices 2.5 million times a day. (It is probably safe to assume that the number has increased.)

As a result, the price of household goods fluctuates back and forth and sometimes suffers from the price hikes commonly found in ride-hailing services.

“The problem today is that you don’t have any idea of ​​whether the price will go up or down. It’s like the stock market,” said Venky Harinarayan, partner at Rocketship.vc, a venture capital firm. He was an early Amazon employee and helped Walmart with its pricing technology.

Even paper towels are subject to Bitcoin-like volatility. A year ago, a 12-roll pack of Bounty tissues sold on Amazon for about $30, according to Camelcamelcamel. The price dropped to $23 in April and then rose to $35 in October. Last week it paid out around $28.

For the avid shopper, the time saved shopping online and avoiding the stores has been replaced by time spent searching the internet for a bargain.

Ravi Dhar, a behavioral scientist and professor at the Yale School of Management, says the transition to a cashless economy has also eased the psychological pain of payments. Digital payments and credit cards make transactions so conflict-free that people lose awareness of their spending.

According to a 2009 research paper by Amy Finkelstein, an economics professor at MIT, when people use less cash, prices go up. Dr. Finkelstein studied what happened when states introduced electronic toll collection. She estimates that once enough drivers install toll readers in their cars, tolls will be up to 40% more expensive than they would normally be if they only accepted cash.

As part of her research, Dr Finkelstein said, she asked motorists at the Massachusetts Turnpike rest stop how much they had to pay at the toll booths they had just passed. She found that 85% of those who had paid electronically had the wrong price, compared with only 31% of those who had paid in cash.

Finkelstein said: “People who pay crypto have no idea what they are paying for.

Even for price-conscious shoppers, it becomes difficult to keep tabs.

“Your average person won’t know what’s the right price, what to spend, what to buy, and when,” says Mike Stouber, 32, of Freehold, NJ. people won’t notice or notice. “

Mr. Stouber, vice president of a media company, is no ordinary price-conscious shopper. He is a bellman.

In the program “The Price Is Right” in 2019, he took home $262,743, the most money ever awarded to a contestant by day. He made it to the exhibition stage with the closest estimate for a diamond tennis bracelet. Then, in a game called Plinko, he correctly guessed the price of hair dryers, humidifiers, and video game consoles for an extra chance of winning a cash prize. (He couldn’t guess the exact price of a digital meat thermometer.)

These days, Mr. Stouber plays another game with fluctuating prices on Amazon. He ordered shower and sink fixtures for his bathroom refurbishment from Amazon last February. When he noticed a month later that the prices of the products were significantly cheaper, he contacted the company to see if they would refund the difference – something other stores still do.

Amazon refused. So he returned the furniture and bought it back at a lower price. Since he’s an Amazon Prime customer, the shipping is free and he’s saved $80.

“Consumers want a deal and companies want to figure out how to get the most money out of you,” Mr. Stouber said. “It’s a game. It’s really just a game.”

https://www.nytimes.com/2022/02/26/technology/price-swings-amazon.html Absent or fluctuating prices leave consumers guessing

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button