Amazon’s price discrimination

[UPDATE: An email from Director of Strategic Communication at Amazon, Craig Berman states the following (quoted with permission), which I thought was important to note here: “Amazon is a marketplace of many sellers, and while sellers are free to set their own prices for items they list, every customer pays the same for every individual offer.” I’m happy to hear that there is no price discrimination per se. I stand by my concerns though and consider Prime Shipping a shady product. I don’t recommend enrolling in it.]

Amazon's price: $17.13Amazon is quoting me a higher price than it’s quoting my friend, on the same product. I knew this was theoretically possible, of course, but I didn’t realize online stores engaged in these practices much these days. After all, is it really worth annoying customers when they find out? After a bit of experimentation, it seems to me that what’s going on here is that those with a Prime membership are being quoted a higher price. Ouch. So the thanks I get for paying for the Prime membership and shopping at Amazon a lot is higher prices. No thank you.

I was about to buy a Canon Digital Rebel XSi and some lenses (in sum, a $1K+ purchase) when I saw the link to an 8GB storage unit (the Transcend 8 GB SDHC Class 6 Flash Memory Card TS8GSDHC6) and decided to check it out given the size of photos I may be taking with a 12 MP camera. I clicked on the link and saw that the card cost $10 plus change (I have no screenshot of this as I didn’t realize I’d want one later). I then clicked on Add to Shopping Cart at which point I realized that I was logged on under a friend’s account who’d been using my computer earlier in the day. I logged out and logged back in using my own account. I went back to the same product’s page and noticed that the unit was now $17.13. (See screenshot here.) That’s annoying, after all, who likes to be charged 70% more than others? I logged out and did a search for the product without being signed on at all. Now the product came out costing $14.14 (screenshot). I logged back on using my own account to see what I would get now, and back I was at $17.13.

I have another Amazon account for other purposes so I decided to see how that would be treated. That account was quoted $14.14. The account I had tried first is the one I use the most. It is a Prime account. Prime means that for a payment of $79 a year, I get unlimited 2-day shipping on items that are eligible for it (which includes quite a few items). It also means that I have an incentive to shop at Amazon, because 2-day shipping is included on many things so I don’t have to worry about additional shipping costs.

As I was looking around the site for an explanation of the different prices – I found none, shocking, I know – I learned that it was possible to share my Prime membership with other members of my household. I decided to share the membership with my other account to test whether it was the Prime membership that was giving me the higher price quote. Indeed. Once I signed up for Prime with my second account, that account was now also being quoted $17.13 for the item.

When I initially sat down to use Amazon, I was going to spend well over $1,000. I walked away spending nothing. Additionally, I have no intention of continuing my Prime membership (I disabled the auto-renewal for it immediately), unless I get some explanation and the chance to buy items at prices others are being offered them. I sent Customer Service three notes already, but nothing helpful has come back so far. (The first response was outright offensive as the person either didn’t read or completely misunderstood the point of my email and sent back a canned response having nothing to do with my situation. I resent the query with what I hoped was a clearer explanation of the situation and still didn’t get anything addressing the question. I am waiting for the third response, but not holding my breath. Really, what I’m waiting for is for someone to tweak my account so I’m being charged what others are.) Of course, by not renewing my Prime membership, I’ll have much less incentive to shop at Amazon period (after this experience, it certainly won’t be the first place I go to look for things anyway). I guess most Prime members probably don’t realize this is going on or they don’t care about the differential so perhaps this practice doesn’t matter in the grand scheme of things. But it matters to me, more on principle than based on the $3 differential (although 21% could amount to a lot depending on the price) .

I’m curious to know what price quote others get on that product when they log on. If you’re a Prime member, do you see $17.13? If not, do you get $14.14 or less? Do you have other examples of such differentiated pricing at Amazon based on user account?

By the way, to read about the practices going on here, I recommend Joe Turow’s book on Breaking Up America. (No, of course that’s not a link to an Amazon page, I don’t plan on supplying those here anymore, not unless this gets cleared up.)

10 Responses to “Amazon’s price discrimination”

  1. Jill Says:

    I see $12.63, and I’m not a Prime member. Scary!

  2. Rajiv Shah Says:

    It looks like the $17.13 comes with free shipping – eligible for Prime.
    But the 14.14 is not eligible for Prime and requires a 2.99 shipping charge.
    In both of these cases, its not Amazon that selling the products, its a third party. These reasons could account for the difference.
    Make sense?
    Rajiv

  3. Josh Says:

    Actually, they’re just sold by different companies at different prices. Amazon is just showing you which one is cheapest to your house, which is different depending on whether you’re a Prime member or not.

    The $17.17 is sold by Blue Proton, and the ‘cheaper’ one is sold by Eek. Amazon just lists the cheapest seller as the default when you go to the page. If two agree, it takes the ones that fulfill through Amazon. If you’re a prime member, this is Blue Proton (because of the free shipping – with shipping, the Eek is the same price and no Amazon fulfillment). If you’re not a prime member the Eek one is $2.99 cheaper, and so displayed first.

    I was ready to fire off my own email, but I think this one is okay.

  4. eszter Says:

    Thanks for the comments. There has been a pretty lively discussion about this over at Crooked Timber where I’ve posted some responses. I understand now what is going on about how the price of the product and shipping add up to $17.13 in all of these cases. This, however, still means that the Prime user ends up paying more, because she already paid for shipping once and is now required to pay for it again. Not cool.

  5. geognerd Says:

    Amazon’s fickle pricing is well-known. I (and other folks) have seen pricing on GPS receivers change during the course of a day. The prices were for a purchase made from amazon.com itself, not a partner, so the pricing variation was not due to a change in the vendor chosen for display on the page.

    Amazon cheesed me off when they got rid of their 30-day price guarantee back in September. One of the reasons I preferred to purchase from Amazon was the possibility I could get a further savings if there was a price drop on an item I bought. I think the guarantee saved me $30 on my Canon S5 when its price dropped shortly after my purchase. I was planning to buy my Samsung NC10 netbook from Amazon but chose to give my business to J&R instead. A bit of a punitive action because of the elimination of a policy I liked. I’ll still buy from Amazon, but only if they have the best price among the reputable retailers.

    BTW, the 8GB SDHC card you linked to would cost me $17.99 from Amazon and I am not a Prime member.

  6. Peter Says:

    Also note that the more expensive Prime selection is available for delivery before Christmas. The other, cheaper one is not.

  7. eszter Says:

    Thanks for the additional comments. Please note the update I posted up front regarding an email I received from Director of Strategic Communication at Amazon. For more comments on this than you could possibly want to see, there was quite a discussion about the topic over on Crooked Timber.

  8. Alex H. Says:

    Same as Jill, 12.63, via ChiTech. But I’ll second what some have said: in many cases (like this one) it is not Amazon who is setting the price. And not everyone is very good at pricing their inventory effectively.

    I buy dog treats that help with my dogs hips as he gets older. They come in different sized packages, but all by the same maker. There are about 4 or 5 different companies selling them through Amazon, with prices that differ by about 50%. In at least a couple of instances, I have seen the same distributor selling the same item for two different prices on Amazon. I’ve picked the cheaper one :) .

    So, unless you’ve checked at exactly the same time, on exactly the same URL (and you may have), I wouldn’t assume that it is differential pricing for Amazon Prime customers. And if it is, it may be that Amazon simply does not require suppliers to price things equitably for items listed as Prime options and non-Prime.

  9. Jeremy Says:

    $12.61, via ChiTech.

  10. Biliana Says:

    Eszter, it seems that Amazon Prime only covers shipping of items distributed directly by Amazon or partners. There are a lot of vendors who use the website and do their own shipping. I don’t have a Prime account (I don’t really find this type of services valuable) but if I were to buy this memory card from Amazon or Blueproton (that are shipped through Amazon) I will have to either use the Free SuperSaver shipping that most of the times takes 10 days to deliver or pay shipping on top of the $17.99 or $17.13… So you are not really being double charged for shipping, it is just that the shipping you paid for through Prime is only for Amazon and partners, not for all vendors using Amazon’s website. I always look at the list of vendors to see what the best offer is and what vendors have good ratings because Amazon doesn’t always have the best offer.