Mysteries of The Market

It’s aliiiive!!!

A Wall Street Journal investigation found that the Staples Inc. website displays different prices to people after estimating their locations. More than that, Staples appeared to consider the person’s distance from a rival brick-and-mortar store, either OfficeMax Inc. or Office Depot Inc. If rival stores were within 20 miles or so, Staples.com usually showed a discounted price. …Staples.com showed higher prices most often—86% of the time—when the ZIP Code actually had a brick-and-mortar Staples store in it, but was also far from a competitor’s store.

…In what appears to be an unintended side effect of Staples’ pricing methods—likely a function of retail competition with its rivals—the Journal’s testing also showed that areas that tended to see the discounted prices had a higher average income than areas that tended to see higher prices.

While Staples [run by that eeeevil rich guy: Bad WSJ! Bad!!] is their first example, this is becoming customary among online sellers, who, naturally, want to get the best price they can for their stuff.

Websites are adopting techniques to glean information about visitors to their sites, in real time, and then deliver different versions of the Web to different people. Prices change, products get swapped out, wording is modified, and there is little way for the typical website user to spot it when it happens.

…Office Depot, for example, told the Journal that it uses “customers’ browsing history and geolocation” to vary the offers and products it displays to a visitor to its site.

…Home Depot’s website offered price variations that appeared to be based on the nearest brick-and-mortar store as well. …The company said it uses “IP address,” a number assigned to devices that connect to the Internet, to try to match users to the closest store and align online prices accordingly.

In a similar case, my pal just visited relatives in Denver CO where gas is $2.50/gal [it's $3.96 here in western CA -- near where the refineries are -- and $3.18 once it's been trucked over The Hill to Reno]. Denver also has the best of CA avocados [the ones on offer here -- less than 500 miles from where they're grown -- are kinda spotty and rangy, now]. Markets. Go figure.

It is possible that Staples’ online-pricing formula uses other factors that the Journal didn’t identify.

…Statistically speaking, by far the strongest correlation involved the distance to a rival’s store from the center of a ZIP Code. That single factor appeared to explain upward of 90% of the pricing pattern.

…In the Journal’s examination of Staples’ online pricing, the weighted average income among ZIP Codes that mostly received discount prices was roughly $59,900, based on Internal Revenue Service data. ZIP Codes that saw generally high prices had a lower weighted average income, $48,700.

So, in the up-scale ‘burb, Caucasian Acres, there are piles of shopping centers with multiple competitors selling similar items and there are price wars. In the rural area of Beyond East Jeazus, there is one local store with no competition. This is what the online sellers seem to be taking into account. You’re already stuck, so you’re used to it.

There is this to consider, too:

Some sites, for example, gave discounts based on whether or not a person was using a mobile device. A person searching for hotels from the Web browser of an iPhone or Android phone on travel sites Orbitz and CheapTickets would see discounts of as much as 50% off the list price, Orbitz said.

Both sites are run by Orbitz Worldwide Inc., which in fact markets the differences as “mobile steals.” Orbitz says the deals are also available on the iPad if a person installs the Orbitz app.

It’s the same old game; those willing to hunt a little will find better prices.

But there seems to be an entrepreneurial opportunity in there somewhere…

3 Comments!

  1. Colonel Jerry USMC
    Posted January 1, 2013 at 8:30 am |

    Another cosmic reason for not taking our firearms!!!!!!

  2. Paul Moore
    Posted January 1, 2013 at 3:03 pm |

    Rush explained why the lobsters on sale in other States are of higher quality than lobsters in Maine. The shipping costs are the same for either, so the premium product gets sent where the prices are higher, leaving B grade for local consumption.

  3. Posted January 3, 2013 at 9:42 am |

    ^ It’s the same in France. The same brand of the same champagne costs the same there as it does here, 5,000 miles away. I don’t like champagne anyway. Complete waste of money, unless it gets you laid. Then it’s a bigger waste of money.