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Are You Paying More To Shop Online?

You’ve just purchased a product online using your desktop computer. A friend buys the identical product, from the same retailer but uses their iPhone and is charged 20% less. How do you react? This is just an example of a practice that a recent US university study has show is more common than not. Leading companies are experimenting with how much they charge different shoppers online. It follows on from a Wall Street Journal investigation in 2012 that resulted in a similar finding. It is known as “price discrimination” and it’s almost impossible to determine whether an online retailer has adopted the practice. This is because different sites use different criteria to determine what price a shopper might see. The criteria used can also vary over time.

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The university study looked at 16 websites and found that 9 websites had adopted some form of online price discrimination. When it came to online travel sites the study found that those who searched using a mobile device were more likely to see a lower price than those using a desktop computer. Sometimes the discount was as large as 50%. The Wall Street Journal study found that geography was also a variable commonly used by online retailers. When they looked at US office supplies retailer Staples they found that the closer the online shopper was to a competitor’s brick and mortar store the bigger the discount shown. Conversely those who lived further away from Staples competitors were shown a higher price. One of the Internets great advantages is as an equalizer, reducing the disadvantages posed by geography. This practice appears to negate this benefit. The practice is legal however and some argue it is akin to the different prices charged by the same petrol station in different suburbs.

So we know that some online retailers have adopted the practice of price discrimination, but how do they do it? They implement the practice by tracking the sites we visit as we browse the Internet. They do this through the use of cookies. Cookies are pieces of code attached to our web browsers. Retailers argue that the use of cookies allow them to offer a more fulfilling shopping experience online by tailoring products, specials and offers to match our preferences. Privacy experts argue though that retailers are building up detailed profiles of us as individuals, to the point where they could even pinpoint our identities.

What can we do about it? Turning off cookies may not be the solution as it may limit the functions of the browser. In most cases online stores will not allow you to complete a purchase if cookies have been disabled. The researchers of the US study advise that the best ways to increase the likelihood of lower prices online are:

  1. Use a browser over an app
  2. Shop online using an “incognito” window
  3. Use a mobile device

The evidence is there, some online websites vary their price according to a range of factors. Next time your shopping online remember these tips. Also, we’d love to hear your thoughts when it comes to shopping online and the practice of price discrimination.

 

Sources: http://online.wsj.com/asia, http://www.huffingtonpost.com/, https://www.privacyrights.org/