Online retailers customize prices to make you pay more

Nov 17, 2014, 8:37 AM | Updated: 8:37 am
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Online shopping websites manipulate search results or modify prices without the consumer’s knowledge, leading to some shoppers paying more than others for the same product, a new study finds.

As the holiday shopping season gears up, online consumers may want to know the prices they pay depends on the user’s location, search history, device using or membership status — common practices called price discrimination and price steering.

And there is little the consumer can do about it.

Professors Christo Wilson, Alan Mislove and David Lazer of Northeastern University “examined 16 popular e-​​commerce sites (10 general retailers and six hotel and car rental sites) to measure two specific forms of personalization: price discrimination, in which a product’s price is customized to the user; and price steering, in which the order of search results are customized to the user,” reported a Northeastern press release.

“Overall, we find numerous instances of price steering and discrimination on a variety of top e-​​commerce sites,” the authors wrote, according to Northeastern.

Northeastern researchers found prices customized on four retail and five travel sites, “including cases where sites altered prices by hundreds of dollars. Overall, travel sites showed price inconsistencies in a higher percentage of cases, relative to the controls,” stated the Northeastern press release.

“For instance, the study found, users logged in to Cheaptickets and Orbitz saw lower hotel prices than shoppers who were not registered with the sites. Home Depot shoppers on mobile devices saw higher prices than users browsing on desktops. Some searchers on Expedia and Hotels.com consistently received higher-priced options, a result of randomized testing by the websites. Shoppers at Sears, Walmart, Priceline and others received results in a different order than control groups,” reported Time.

“Earlier reports had documented individual quirks: Staples might charge you $1.50 more for a stapler depending on your ZIP code. The CEO of Orbitz once acknowledged steering Mac users to fancier hotels,” said Dan Weissman of Marketplace.

The Wall Street Journal in 2012 did a study on price discrimination and discovered that “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.”

Researchers say that price discrimination is an economic reality. “Regular shops routinely adjust their prices to account for local demand, competition, store location and so on. Nobody is surprised if, say, a gallon of gas is cheaper at the same chain, one town over,” stated the journal.

In his Washington Post article, researcher Christo Wilson said that consumers could do some basic things to beat the retailer ploy. “If you are looking for the best deals and are willing to work for it, we recommend searching for products in your normal desktop browser, an incognito or private browser window and your mobile device,” he wrote.

“Surf on a PC, not an Apple. Start by visiting a price-comparison site, then — on arrival on a seller's site — feign interest in its cheapest stuff. Having made your choice, dawdle on your way to the checkout page. The Internet may make price discrimination easier for retailers; but in online stores, as in bricks-and-mortar shops, two can play at that game,” reported The Economist.

[email protected] | Twitter: @debylene

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Online retailers customize prices to make you pay more