E-commerce and Price Customization

30 Jun ’05

Many shoppers are now comfortable with e-commerce, drawn to it by its convenience and often, its low prices. But a less well known power of e-commerce is price discrimination (though the industry calls it “price customization”) – the efficient variation of price by consumer. Why, after all, should everyone pay the same? It’s a custom in many societies, where mass retailing has largely driven the need for uniformity, but on the Web, many of the conventional constraints on the retailing model need not apply.

CNN reports on the practice, with some observations that many will find unsettling – online retailers are using cookies to distinguish between customers for pricing purposes. For example, to identify a regular customer, or one who has recently been to a price comparison website.

The EFF has a short piece on the practice claiming that it is unfair and offering consumers some tips on how to beat the system.

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