Thursday, December 01, 2005

Hidden Traps

We all shop online. The sequence is usually to scan through all the possible websites which offer a product and choose the one with the best price and have a reliable background. Once we do this exercise couple of times, we end up with a preferred vendor with whom we trade often. As a preferred customer, we would hope that the vendor gives us reasonably good deals. But, that is not entirely true.

As I just heard recently, internet based online shopping companies use some dubious strategies to price a customer.One of the common method followed is that, the online retailer looks at your stored cookies to find out how many other similar sites you have visited for a given product. If they know that you have been doing a lot of searching, they try and give you the best deal. If not, they raise prices. Apparently, a customer who was searching for a product in "amazon" found to his surprise that the price dropped by 15% as soon as he cleared off his cookies in the internet browser. If you log-on to a vendor's website, you are the all the more sure to get a not-so good deal. This is one of the many tactics used by vendors as a strategy to do product pricing. I am sure there are many similar tactics used. So, make sure that you do a reasonably good comparison before buying a product online. A "preferred customer" might be the first one to get ripped off afterall...

4 comments:

BrainWaves said...

I read about this couple of months back and the article mentioned that online retailers are thinking of implementing such thing.
Did not realize it is already done. Wow!

But again, is it not illegal (esp. for companies like Amazon) to look into our private cookie folders etc?

Overall, the problem with online shopping (and less human interaction in general) is lost privacy. Someone somewhere knows your credit card information :)

sdpal said...

Oh man..idhula evvlo vishayam irukkaa..
Anyhow.. I normally find a deal in deals2buy or edealinfo or in similar sites.. then tend to buy that. Avoid, any sites, which isnt famous, even if they have better deals.
But good to know..

Suresh Sankaralingam said...

I googled about this and found that it is called "Dynamic Pricing" or "Price Discrimination" dates back to as early as 1999 and 2000 (online shoppers). Following is a paper which discusses about some underlying details. Read it when you find some time....


Dynamic Pricing Paper
Economist - Price Discrimination
Academic View on Price Discrimination

bumblebee said...

When I first heard about it, I cried, "That's unfair!". But then how can we define "Fair"? In free-markets, buyers and sellers decide on the price. The buyer always (or almost always) has the choice to not buy, but then if he decides to buy, then that means he's amenable to the price. Of course, your article is a good reminder of being smart buyers. Caveat Emptor.