Absent or Swinging Prices Keep Consumers Guessing

When a list of holiday toys from Amazon came in the mail in late October, Krista Hoffman saw something wrong.

Lego sets, princess castles, action figures and the impossibly searchable Sony PlayStation 5 offer almost everything – except catalog prices – in 100 pages.

“Initially, I felt like I wasn’t looking close enough, so I turned a few more pages,” Ms. Hoffman, a mother of three living in Spring, Colorado. “Then I realized, ‘Oh, this is intentional.’ Why don’t you put the prices there? “

The absence of prices was not an oversight; That was the natural evolution of two decades of online shopping.

In the early days of the Internet, there was excitement that e-commerce would lead to greater transparency in pricing, allowing buyers to know exactly where to find the best deals. This was supposed to be good for consumers and bad for retailers forced to compete with each other in profit-killing races up to the lowest prices.

Instead, another reality emerges: shoppers are losing sight of the value of things.

Retailers are encouraged to move lenses away from prices, other carrots such as convenience and ease of use. At the same time, buyers are increasingly being influenced by the complexity of product options, prices, discounts and payment plans.

Besides, this is not an easy time to be a consumer. The epidemic has changed shopping habits. The lack of everyday items like toilet paper and disinfectant spray was a painful reminder of the fragility of the supply chain – an issue that consumers are still grappling with as they face delays in everything from furniture to cars. It has contributed to price volatility, which has risen to its highest level in four decades due to inflation – rising energy, food and housing costs.

All of this is happening on top of a system pioneered by Amazon, which keeps prices at an algorithm-fuel pace.

While Amazon raises and lowers product prices millions of times a day using a complex algorithm based on competitors’ prices, supply and demand and buying habits, its competitors often follow suit. And because prices fluctuate frequently, Amazon’s catalog cannot promise a definite price and customers will have to track the swing if they want the best deals.

Glenn Ellison, professor of economics at the Massachusetts Institute of Technology, and Sarah Fisher Ellison, publish a 2018 paper stating that while technology has made it easier to find products, retailers have been pushed back by unclear prices – often at exorbitant prices.

“The more ambiguity that goes on, the more consumers pay for everything,” said Glenn Ellis, adding that consumers also waste time searching for deals or choosing an option they don’t want. “For consumers, that’s almost entirely negative.”

That description – “almost exclusively negative” – ​​Ms. Hoffman, 29, felt about holiday shopping.

“I had to scan each individual item and hopefully the prices don’t fluctuate when I compare it with other stores,” she said.

Amazon’s Price for Pokemon Celebration Elite Trainer Box, Ms. Hoffman’s 7-year-old son was spotted a few weeks before Christmas. There have been at least 14 changes since August, with a proposed retail price of $ 49.99 to $ 89.99 in October. It averaged $ 67.12 during that period, according to CamelCammel, which tracks prices on Amazon.

When she noticed the absence of prices, Ms. Hoffman Asked why on TwitterThe Amazon Customer Service Department responded immediately, explaining that prices are constantly changing because Amazon “works to maintain competitive prices on everything we take.”

In a statement about its pricing practices and price fluctuations, Patrick Graham, an Amazon, said the company’s systems create benchmark prices in other stores to ensure consumers get the best price from Amazon.

“If we can get better prices at other retailers like Walmart, Target, Home Depot and others – if we sell the product ourselves we will match it up or offer a more competitive price,” he said.

Like many other toys on Ms. Hoffman’s children’s wish list, a Pokemon box offered directly by Amazon, was sold. Some third-party vendors who pay a fee to Amazon to list products on its website were charging exorbitant prices. So Ms. Hoffman bought a separate box of Pokemon cards from Target on Black Friday.

Dynamic pricing – when prices move according to market conditions – is the only reason people lose contact with the price of things.

The discounts associated with loyalty programs or annual subscriptions such as Amazon Prime and Walmart + also complicate the math. At the same time, features such as saving time and increasing convenience, such as automatic monthly delivery of household goods, have made shoppers aware of the low cost.

“The typical post-2000 playbook with retail is that everything is about vague prices,” said Jason Murray, who has worked at Amazon for 20 years and is now chief executive of Shipium, an e-commerce start-up. “This is a game that companies are playing by removing reference points so that people feel they are getting a good price.”

Retailers and brands are bombarding buyers with discounts, one-time offers and various tricks that drown out the numbers, giving the impression that they are getting a good deal. And when price comparisons are simpler and more prevalent, such as for airline tickets or hotel reservations, customers get an incomplete picture of the actual price due to add-on fees.

“We’re so overwhelmed with prices, overflowing with numbers, that it’s really hard to stick to any particular number,” said Nick Colenda, author and creator of YouTube videos about consumer psychology and the tricks played by marketers to motivate shoppers. .

The prices of certain commodities, such as gasoline, a cup of coffee or a gallon of milk, are easy to remember because people buy them regularly and face to face. When shopping online, the picture can be blurred – although the experience may not be universal, especially for those living on limited means.

“Losing track of prices has a lot to do with how sensitive a given household budget is,” said Chi-N Yu, who runs the budget tracking application, GoodBudget. “If your home is very sensitive to consumer prices, at some level you do not have the luxury of losing sight of prices.”

It may also indicate that wealthy consumers are buying more online. Unlike physical stores, where changing prices can be cumbersome, the Internet provides a complete sandbox for experiments on what consumers are willing to pay.

In 2000, Amazon became embroiled in controversy when it was discovered that it was charging different prices for a single DVD just moments apart. (Amazon charged a customer $ 65 for a “Planet of the Apes” DVD and another shopper $ 75.) Jeff Bezos, Amazon’s then chief executive, apologized for creating buyer uncertainty with a “random price test.”

When Amazon says it does not practice discriminatory pricing – charging different prices from different people based on demographics – it’s all about dynamic pricing. Profitero, an e-commerce analytics firm, estimated in 2013 that Amazon changes prices 2.5 million times a day. (It is safe to assume that the number has increased.)

The result is that the prices of household goods fluctuate back and forth and at times, the prices commonly seen in ride-hailing services are subject to price increases.

“The problem today is that you have no idea if prices are going up or down. It’s like a stock market, “said Venki Harinarayan, a partner at venture capital firm Rocketship.vc. He was an early employee at Amazon and helped Walmart with its pricing technology.

Paper towels are also subject to bitcoin-like volatility. A year ago, a 12-roll pack of Bounty Paper Towel sold for about $ 30 on Amazon, according to CamelCammel. The price dropped to $ 23 in April and then to $ 35 in October. This past week, it settled around 28.

For the bargain-hungry shopper, the time saved by avoiding online shopping and stores is replaced by the time spent searching the internet for bargains.

The transition to a cashless economy has also eased the psychological pain of paying, said Ravi Dhare, a behavioral scientist and professor at the Yale School of Management. Digital payments and credit card transactions are so free from friction that people lose awareness of their costs.

According to a 2009 research paper by Amy Finkelstein, a professor of economics at MIT, when people use less cash, prices go up. Dr. Finkelstein studied what happened when states introduced electronic toll collections. After enough drivers installed toll readers in her car, she estimated that the toll would have been as high as 40 percent if only cash had been accepted.

As part of his research, Dr. Finkelstein said she asked drivers at a rest stop on a Massachusetts turnpike how much they pay at a tollbooth they just passed. She found that 85 percent of those who paid electronically misrepresented the price, while only 31 percent paid cash.

“People who pay electronically don’t know what they’re paying for,” he said. Said Finkelstein.

Even for price-conscious shoppers, having tabs is becoming more challenging.

“Your average person doesn’t know what the right price is, what to spend, what to buy and when,” said Mike Stober, 32, of Freehold, NJ. Not going. “

Mr. Stuber, vice president of a communications firm, is no ordinary price-conscious shopkeeper. It’s a ringer.

In 2019, on “The Price Is Right”, he took home $ 262,743, the highest amount ever paid to a competitor of the day. He landed on the show stage with the closest price estimate for a diamond tennis bracelet. Then, in a game called Plinko, he accurately predicted the prices of hair dryers, humidifiers and video game consoles to win more chances at cash prizes. (He failed to estimate the true value of the digital meat thermometer.)

These days, Mr. Stouber plays a different kind of game on Amazon with fluctuating prices. He ordered a shower and sink fixture for bathroom renovation from Amazon in February last year. When he found out a month later that the prices of the products were significantly cheaper, he approached the company to see if it would refund the difference – other stores do.

Amazon refused. So he returned the fixture and bought it again at a lower price. Since he was an Amazon Prime customer, shipping was free, and he saved $ 80.

Mr. Stober said. “It’s a game. It’s really just a game.”

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