"When it comes to convenience, it's hard to beat Amazon. And that rationale isn't limited to consumers: Many local districts shopping for supplies with public funds apply the same logic. But the Institute for Local Self-Reliance (ILSR) published a study earlier this month (via The American Prospect) that illustrates the cost of that bargain. It suggests that Amazon's "dynamic pricing" has led many schools and other localities to overpay for supplies."
"According to the report, Amazon's contracts with public entities don't include fixed price lists. Instead, they include language built around swings. "This contract has a dynamic pricing structure in which the price for items listed on the online digital marketplace is driven by the market," Amazon's contract with Utah reads. "This contract will not need to be amended when prices fluctuate.""
Public schools and local governments historically procure supplies through competitive bids from local vendors that provide fixed price lists, delivery timelines, and public transparency, which encourages low prices. Amazon Business offers apparent competition by listing many third-party sellers, but relies on algorithmic dynamic pricing without fixed price lists in contracts with public entities. Contracts allow market-driven price swings and do not require amendments for fluctuations. That opacity has produced wide price discrepancies for identical items bought by different districts, causing some public entities to overpay and redirecting taxpayer spending away from local suppliers toward overseas vendors.
Read at Engadget
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