Price fixing

January 2015

Imagine that you strolled up to a supermarket shelf to buy some toothpaste, but as you reached out for it, you saw the price rise slightly?  And then you learned that it only rose because the supermarket had been watching you and assessed that you could afford a bit more?

You’d feel more than irritated, but that is exactly what is happening on some of the big retail websites, but you’ll never find out. 

I suppose we are aware that you can’t visit at a website without telling it something about yourself, it’s a fact of internet life.  That’s why the adverts you see often spookily reflect what you’ve recently been looking at. 

What you may not know is that some websites are taking this a step further, and changing the price they offer you, as well as the range of goods you see, based on what they know about you.  If you think that we all see the same thing on a website, think again. 

It’s called “price steering”; it’s a controversial and highly complex process, hard to pin down and usually secret, but central to the way some very large websites operate.

Without knowing it, we are being categorised and pigeon-holed as soon as we walk through the virtual doors of the online shop, and then quietly propelled into the department where they think we are most likely to get out our credit card. 

You might ask what they can take into account when they decide how to treat you; the truth is, there is a lot to choose from.

They can review your internet habits (Internet Explorer can tell them that), what you’ve looked at on their site before and when it was (they can see your computer’s serial number) as well as where you are (your ISP tells them).   If you log in (and probably if you don’t) they can recall what you’ve bought from them before and use all the information you have given them yourself.  

Some research suggests that it is common to offer more expensive products to those using a mobile phone to browse a website.  A couple of years ago a big travel agent was found to be charging Apple users up to 30% more than everybody else (your computer announces which Operating System you use).  I suppose they thought that if people are prepared to pay through the nose for a computer, they might be a soft touch for other products.

The travel agent stopped doing it when it was made public, and there’s the nub of the matter; once it’s in the open, people don’t like it.  This is a huge transparency problem; not only do we not know what’s going on, but the rules change all the time, as the retailer refines how they assess us.

Of course, this is not new; selling the same products through different channels at different prices is an old trick.  I remember a kitchen installation company which had only one range of cupboards but three catalogues – cheap, medium and expensive.  Your address determined which one they sent you. 

However, whilst we might expect kitchen companies to be sneaky, online it’s some of the most trusted brands which are using these techniques.  I accept that any business should find out what its customers like, but doing it in this secretive way just makes me feel uncomfortable, and I doubt I am alone.

I’d like to see some of the big, household names declaring openly that their website presents the same way to everyone and that we all get the same treatment.  I’d like to see it, but I strongly suspect that they are all up to the same highly profitable game, so I think I shall wait in vain.