Adaptive web: Inside online shopping’s new pricing trend
While Australians rushed online to snare a bargain during last week's botched Click Frenzy, in the future our ability to save dollars net shopping might have more to do with who we are, where we live and what we buy.
A website can now raise prices for a shopper from a wealthier suburb, or one who spends a lot.
The next evolution of the web, called ''adaptive web'', is personal. It allows for the tailoring of web pages based on a shopper's online habits.Adaptive content has been most commonly used to display personalised recommendations based on a customer's online behaviour but it also allows retailers to personalise pricing.
The co-founder and chief executive of the e-commerce technology company BigCommerce, Eddie Machaalani, said variable pricing was more common than people realised.
"It hasn't hit the mainstream, but definitely a lot of retailers have done it. It is also a very dangerous topic, and a lot of larger players have shied away from it because of the public outrage that it gets,'' he said. "With social media, forums and people communicating online, word spreads, and you as a merchant would look really bad and lose a lot of clout with your customers."
In August The New York Times reported how supermarket chains Safeway and Kroger were experimenting with different discounts based on the shopper's habits. And CNN has reported that as far back as 2000 Amazon was raising its prices for a regular customer.
Earlier this year the Wall Street Journal reported that the online travel agency Orbitz found Apple users spent as much as 30 per cent more on hotels than Windows visitors so it started showing them more expensive travel options.
Amazon's chief executive, Jeff Bezos, said it was ''a mistake'' to experiment with charging different customers different prices for the same products.
A common ploy is for websites to use data that users generate online to tune prices, such as whether the shopper has already searched for a particular item.
Nigel Peach, the sales director of the specialist data company Servian, said some flight-booking sites did this.
"If you try and book a plane, the next time you look, the price will have gone up," he said.
The chief executive of the Australian National Retailers' Association, Margy Osmond, said this behaviour was unlikely in Australia due to the already heated nature of discussions about online retailing.
But many international website operators, especially technology companies, already make discriminatory pricing decisions based on the IP address of a shopper's browser (which provides a guide to where they are). This stops Australians from purchasing cheaper items from international sites.
The practice has been the subject of a federal parliamentary inquiry and in June an analysis conducted by Choice found that, without accounting for tax, Australian consumers paid an average of 50 per cent more for PC games and 52 per cent more for iTunes music.
Consumer IP addresses are not overly accurate beyond the country of origin, but less-scrupulous site operators might also capture address details that a user has entered into a legitimate website and sell them on to other site operators.The collection of customer data can work in a consumer's favour too. Some websites issue discount coupons to encourage buyers to complete abandoned transactions, provided they have the would-be buyer's email address.
This article initially appeared on The Sydney Morning Herald.
Image via Shutterstock.