Price Customization on the Net

"...most of us are clueless about how much personal information is collected, let alone how it can be combined with other personal data to give businesses an edge." source.

I'll never forget a trip I made to Russia in the early nineties. We visited the newly minted commercial district in Moscow where merchants sold many things, mostly to tourists. Young men on the street were eager to make deals if only to trade a watch for a belt. (He pointed to my belt and showed me a variety of old KGB watches. I took the deal.) There were a few old style Soviet stores with minimalist shelves and gruff attendants; no prices were marked, you had to ask the attedant. Our Russian student hosts told us that if we saw something we liked in such stores, we were to tell them and they would independently enter the store and buy the item we desired. If you didn't speak flawless Russian, the merchants practiced price customization, a different price for foreigners and a different one for locals.

A recent study called "Open to Exploitation" has revealed that Russian stores aren't the only ones practicing price customization. Internet retailers have been quietly collecting information on our spending habits and sites visited to get a business edge. This article tells us: "The Internet empowers careful shoppers to conveniently compare prices and features across thousands of stores. But it also enables businesses to quietly collect detailed records about a customer's behavior and preferences and set prices accordingly." In case you are not aware, your internet habits are carefully watched through "cookies".

Customers' internet buying patterns are often predictable; people like to travel well worn paths. Despite the ease of comparison shopping on the internet, consumers still have "brand loyalty" to their favorite sites. Retailers know this and often raise the price of an item the more often you visit their site. A guilty party: Amazon.com. Reports tell us that Amazon charged different prices to those consumers on computers whose cookies had been erased, while the loyal customer paid more and more. Amazon.com brushes it aside as "random experimentation".

Just because something is sold on the internet does not mean it has the best price. The opposite could very well be true: Because it is sold on the internet, it has the price customized especially for you: the highest price you'll pay. Businesses are clever and its their job to squeeze the highest possible amount of money from you while your part in the game is to get the lowest possible price.