Amazon's roach motel

"With the holidays around the corner, I've been on an online shopping spree, and recently while on Amazon I stumbled upon a very disturbing trend. Right beside the item's price, in bright red discount colours there's a "-25%" discount text. Nothing particularly weird about that... except the "discounted" price was exactly the same as the price I'd seen a few days earlier."

"Back in the 1800s, shopping was more akin to a cat-and-mouse game, where prices were subjective and based on the individual shopkeeper's whims. If demand picked up for a particular item, they could increase or discount. This all changed when a family known as the Quakers (of Quaker Oats fame) implemented what they called the "one price" option. They started posting prices for things publicly, which allowed consumers to compare across stores, and that created a new kind of equilibrium."

"But in the age of the internet, the virtual shopkeepers have a lot more information to leverage against you. A thing called dynamic pricing, the algorithmic reincarnation of old-school haggling, was invented. Explicitly designed to discover the highest price at which a sale can actually be made. As companies increasingly shared data and responded automatically to competitor listings, it has become easier than ever to keep prices in lockstep in favour of businesses and not consumers."

Holiday Amazon listings showed 25% discount badges while the discounted price equaled a prior price; price trackers revealed brief restocks at higher list prices solely to enable the badge. The practice leverages user interface cues to create perceived bargains without material price changes. In the 1800s, the Quaker family standardized posted prices with a "one price" policy, enabling cross-store comparison and price tags. Modern e-commerce reintroduces fluid, opportunistic pricing through dynamic pricing algorithms designed to discover the highest saleable price. As sellers share data and respond algorithmically to competitors, prices can update in real time and remain in lockstep to maximize profit.

Read at Medium