Wednesday, October 24, 2018

What happened when Amazon ran price experiments to estimate MR?

In 2000, Amazon ran some price experiments to figure out what price to charge.

Consumers were furious:
 A group of consumers caught the online superstore tampering with price tags on DVDs, selling them to different people for different prices. 
Amazon officials immediately went on the defensive, describing the changes as a marketing test and issuing refunds to people who paid more than others. Many customers reacted angrily, wondering whether to believe the company's claim that prices weren't adjusted based on the personal preferences they revealed while shopping the site.

And Amazon learned its lesson:
"We've never tested and we never will test prices based on customer demographics," company founder Jeff Bezos told The Associated Press. Instead, he said, the company was merely trying to find out how much it could charge all customers for certain DVDs while maintaining a respectable volume.

6 comments:

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  3. The internet has led to more awareness about price discrimination. I know I've been on websites shopping and seen price discrimination first hand. I traveled from the Michigan to California. In the same day, the price on Amazon in CA (delivering to MI) was 10 dollars cheaper than the price quoted to me in MI to be delivered to my home in MI. It wasn't due to market price changes. I checked on camelcamelcamel. It was price discrimination.

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