The new trend of US electric quotient: Pricing According to customer's position and income

Tencent Science and Technology (Mowgli) Beijing time December 24 news, according to foreign media reports, the Wall Street Journal a recent survey showed that more and more shopping sites will be based on the location of users of the same product to provide different prices. The idea of a fair and objective Internet may be giving way quickly to a tailored, targeted, real-world network. The following is a summary of the article content:

The same is a swingline stapler, Kim Wompol (Kim wamble) on the computer to see the price is 15.79 dollars, but within a few miles, Trude Frizers (Trude Frizzell) on the computer to see the price is 14.29 dollars.

The key difference is that American stationery chain staples may think they are geographically different.

The Wall Street Journal survey found that after assessing the location of the client, the Staples site showed users different prices for their products. Not only that, Staples also seems to take into account the user and the competitor OfficeMax or the office physical store distance. If the competitor's store is within 20 miles, the staples site usually displays discounted prices.

"How can they get away with it," said Frizers, who works at Texas State Bergheim. "The Staples pricing strategy has an unconscious negative impact – just as retailers compete with rivals – The Wall Street Journal survey also shows that users in high average income areas often see discounted prices on staples sites. , users in low-income areas often buy products at higher prices.

After seeing the findings of the Wall Street Journal, Staples was forced to admit that the company was geographically responsible for setting different sales prices for its products in the web and retail outlets, due to a range of factors, including "operating costs". ”

Over the years, the Internet has given consumers a specific right that some retailers have not provided, with its promise to quickly compare the price of its products. By clicking the button, shoppers are able to find better trading prices elsewhere without around.

But a fair and objective Internet concept is rapidly giving way to a tailored, targeted, real-world network. The technology currently used in the Web site can instantly collect information about the users visiting the site and then provide different versions of the content to different people. Price changes, product adjustments, wording to modify, when all this happens, typical network users can hardly find the difference.

The Wall Street Journal surveyed several companies, including Staples, the Discovery Finance Service (Discover Financial Services), the language software developer Rosetta Stone and the Odie office. The results show that they all consistently adjust to different prices and realities based on a series of features found in the user. For example, Odie office told the Wall Street Journal that it would use the customer's "browser history and positioning" to show each user a different product.

It is legal to offer different products to different people, in addition to racial discrimination and other sensitive issues. Several companies say their online price adjustments reflect only the real world. Retail stores regularly adjust their prices according to local needs, competition, store locations, and other factors. Few people would be surprised if a gallon of petrol is priced differently in different parts of the same chain.

But the price adjustment in the network is not welcomed by buyers. About 76% of American adults said it would be very annoying for buyers to find that other people bought the same product at a cheaper price than their own, says Annenberg Public Policy Center at the University of Pennsylvania's Allenborg.

"I think it's very discriminatory," said Wompol, an insurance company account manager who lives in Texas State. "The place where Wompol lives is only 10 miles away from Frizers's home, but the price she sees on Staples's website is higher than Frizers," she said. The test products include a box of ballpoint pens, a box of sealing adhesive paper and so on.

It is not clear what formula staples used to set the net price of the product. Staples declined to make a clear answer to the Wall Street Journal's findings. The company told the Wall Street Journal that "the difference in retail prices of physical stores and shops is mainly due to a variety of factors, including rents, labor, channels and other business costs." ”

Staples's network pricing formula may also use other factors not identified by the Wall Street Journal. The Wall Street Journal tests included population, local income, neighboring Staples stores, ethnicity and other demographic factors. In terms of data, the strongest correlation involves the distance between the ZIP Code Regional Center and the competitor's physical store. This simple factor can explain more than 90% of the staples pricing model.

What economists call price discrimination--when companies offer different prices for products based on the willingness of consumers to pay--are already commonplace, and businesses can benefit from them. Theaters offer discounts to seniors, and travelers are willing to buy tickets at high prices, which may mean that others are unwilling to pay a high price for their tickets. In other cases, however, shoppers may become the losers. On the same flight, the spenders may buy a ticket at a high price, while the prices of other people's tickets will not change.

Of course, not all price differentials apply to price discrimination. For example, competition-induced product price downgrades cannot be considered price discrimination.

Location-based Network Product Prices For many reasons, from the cost of delivery to the local popularity of a particular commodity and so on. Some retailers may naturally divide certain areas--such as the booming suburbs--forcing them to offer discounted products.

But using geography as a pricing tool strengthens the pattern that E-commerce has pledged to eliminate: cheaper areas of competition are more expensive, including in rural or poor areas. It reduced the Internet as a function of the equalizer.

In the Wall Street Journal's survey of Staples's online product prices, according to the ZIP code, the higher the average income area usually gets discounted products, while lower-income products sell at higher prices. Staples is not able to set the price of a product according to revenue, only to say that the company to provide users with low-priced goods.

In the early days of the internet's formation, online commerce had experimented with such bespoke ways of selling goods. In 1997, an innovative enterprise named Personify began selling software that could personalize Web pages for merchants. Eileen Gittins, former chief executive of Personify, said that for example, people entering a website via a specific path could be labeled as price-sensitive. "This idea is much more advanced than the technology that was supported at the time," Giddings said. "Today, Giddings runs a web company called blurb, which allows people to make books out of their own photos."

In the 2000, Amazon angered many users by selling DVDs at different prices to different groups of people. Amazon then said it was only a test and eventually refunded the difference to users who bought a DVD at a high price.

In 2010, the Wall Street Journal reported that credit card company Capital One Financial Corp. (hereinafter "Capital One") used personalized technology to decide which credit card to show to users of their first visit to the company's website. Subsequent tests by the Wall Street Journal show that whether it's a "reputable" or "reputable" first-time visitor, the credit card company will show a different credit card Capital One says that when a user visits a company's web site, they collect data about the user, and then use this information to provide them with different products. "We didn't use that data when we issued credit cards," a Capital One spokesman said. We just have to speculate on what users will like. ”

Researchers in Spain surveyed more than 200 internet retailers this year. The results show that some of these retailers offer price differential products, including staples--, which appear to offer differentiated product prices depending on the location of the user or other factors. These findings suggest that Staples's price-adjustment strategy has been at least since the beginning of this summer.

For online buyers, it is hard to know why they are buying more than other buyers, many of whom don't even know the price of buying the same product as others. The price of many Web sites can be quickly adjusted by the prices of competitors ' products or other factors, a strategy known as "dynamic pricing." "Other sites are testing different pricing strategies, but they don't take into account the characteristics of buyers," he said.

By using different computers to access various e-commerce sites, the Wall Street Journal found that price differentials were not just the result of "dynamic pricing" or "random testing". If the same item on a website shows a different price, the Wall Street Journal analyzes the computer code for the site and then carries out further tests.

The Wall Street Journal test began in August this year and ended in December. The results show that some large retailers are experimenting with offering different pricing and products to different users. For example, some websites offer discounts based on whether or not a user uses a mobile device. When users search for hotels via an iphone or a Web browser on an Android phone, Orbitz and CheapTickets offer them a maximum of 50% discount, says Orbitz, a travel website. Orbitz says ipad users can enjoy the service if Orbitz applications are installed.

"Many hotels are willing to offer discounts to mobile sites, and Orbitz hotels in mobile sites may target shoppers in a particular region," said Chris Chiames, vice president of Orbitz. "This is largely determined by the physical location of the user and other factors.

Sites often modify content according to their geographic location. Exploring financial services, for example, will provide the company's new credit card to Internet users in California State cities including Denver, Kansas City and Dallas. The same information is not visible to users in Scranton, Tennessee Kingsport and Los Angeles, Binnefania state. A spokeswoman for the exploration of Financial Services said the company was testing the credit card, but because of the competition, the company would not comment further on "Acquiring a new customer strategy".

Lowes Cos, the second largest home repair chain in the United States, also offers different prices according to the location of the user. For example, a refrigerator in Chicago, Los Angeles and Ashburn price of 449 U.S. dollars, but in the other 7 test cities, the price is up to 499 U.S. dollars. Lowes Cos. In this regard, online shoppers or physical store shoppers will see different product prices because of the difference in postal codes.

The Home Depot website also offers different product prices because of the presence of a physical store near the user. A 250-foot-long wire. The price of the Home Depot is divided into 6 categories, of which the price of Ohio Ashtabula is 70.80 USD, the price is 72.45 USD in Yili, the price is 75.98 USD in New York State Olympus, and the price is 77.87 USD at New York State Monticello. Home Depot said the company used an "IP address" to try to match the distance between the user and the nearest retail store before adjusting the network price.

For a multinational company, geography seems equally important. The Wall Street Journal survey found that Rosetta Stone, which sells software to language learners, would offer American or Canadian users up to 20% of German-language course discounts, but would not offer such discounts to British or Argentine users. Rosetta Stone said the company had something to do with different map tests and offer different "bundle" products. In addition, Rosetta Stone will provide personalized advice on how visitors visit the company's website-whether through search engines, social media links, mobile devices or PCs. "We are focusing more and more on segmentation and target selection," said a spokesman for the company. Every consumer has a difference. ”

A survey of the Staples website found that the company adopted a very complex pricing model. The Wall Street Journal conducted a mock visit to the Staples Web site in more than 42,000 zip codes in the United States, testing 20 times for the price of the Swingline stapler. In addition, the Wall Street Journal also carried out 10 tests on more than 1000 items of the Staples website in the selected 10 zip code area. The results of the survey show that there are 3 different prices for individual items. Frequent user visits, see the price of the product will be associated with the ZIP code. The test results also show that Staples is trying to focus on the user's IP address to reduce the reliance on the ZIP code. Although this method is more precise, it is not simple.

The Wall Street Journal survey found that about One-third of the more than 1000 products tested differed in price. The average gap between the discounted price and the top price is 8% of the price.

At the end of the test, the Wall Street Journal ordered two Swingline from the Staples website in two adjacent zip codes, one for $14.29, and another for $15.79. The two products are delivered on the same day, and there is no difference between them.