MONEY
New technology means that the amount you pay depends on where you live, the time of day you buy, and your shopping history. ::
Brave New Retail World of Dynamic Pricing
BY TROY ANDERSON N
ot so long ago, shopping was easy. Goods had a set price, and if customers liked the
price, they bought the item. If they didn’t, they went elsewhere. Today, prices can change from
hour to hour — even minute to minute. They can be higher or lower, depending on your ZIP code, your shopping history, and even what kind of computer you use. Known as dynamic pricing, more businesses are employing this algorithm-based technology that often results in customers paying vastly different prices for the same products and services. “A lot of people don’t
know about it yet, but it’s happening,” says Michelle Madhok, an online shopping expert and founder of
SheFinds.com, a New York City-based deal site. This pricing
strategy has been used by the airline and hotel industries and online retailers such as
Amazon.com for years. In fact, anybody perplexed over airline
fare fluctuations has experienced dynamic pricing. Armed with a vast amount
of information about consumers, e-commerce companies adjust prices based on where customers live, and their IP address, their browser history, their spending habits, and a host of other factors.
ARMS RACE This past Christmas shopping
season witnessed a growing number of retailers adopting this complicated pricing model. “There is an arms race among
retailers around dynamic pricing and price
intelligence,” says Eric Best, who is chief executive officer of Mercent, a Seattle-based company that provides e-commerce marketing software to retailers. This escalation is largely a result
of the growing role online retail giant Amazon and the search engine Google are playing in determining where people decide to make a purchase. “While the order may not flow directly through Google or Amazon, consumers began shopping by searching for products at one of those two websites,” Best says. “They do that 40 percent of the time before making a purchase.” Z. John Zhang, a
SMARTPHONE = SMART SHOPPER When comparison shopping, a simple trick like using a cellphone for finding the best price can save big.
74 NEWSMAX MAXLIFE | MAY 2013
professor of marketing at The Wharton School of Business at the University of Pennsylvania, says that while electronic
BALLOONS/ISTOCKPHOTO / WOMAN/UPPERCUT IMAGES/GETTY IMAGES
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