May 18, 2011

Frugality in the Digital Age

In theory, ordering online is faster than going to the store. For me at least, this is far from true true. I tend to be deliberate and slow, waiting for deals. One trick I employ while shopping online is to log in to the store, add an item in my cart and then close the browser. In the past, I’ve found if I wait just a little while, I’ll get a coupon from the store in hopes that I will complete the purchase. It reminds me of car dealer negations. You’re hiding the fact that you really want the product in hopes the seller will discount the price more. I’ll track products on multiple sites to see if catch any price drops and sales. This kind of price hunting may start to become more delicate.

Many companies are shifting towards more consumer profiling. Capital one made the news back in August when it was discovered they used a third party to estimate a potential customer’s worth. The third party collected data based on where you lived (from your IP address), what type of browser you used, what time of day it is**, etc, to make guesses on how much income you have, and how good a credit risk you are. Capital one would then choose which credit card offers to display on their website based on that estimation. Capital one claimed not to use the data in making lending decisions, however they made the news again six months ago when they offered different users different loan rates presumably based on the browser used. This action is legal because they aren’t discriminating based on any of the protected classes. This kind of profiling, however, is one trend that may make online discount hunting harder.

A product otherwise on sale may be offered to me at full price if the profiler estimates (rightly or wrongly) that I want the product and can afford it. This isn’t exactly new, but it may be becoming more common. Amazon tried something similar, but reversed their policy admit a backlash from the internet community. Although, there are mixed reports that they may be at it again, mostly by redirecting prime customers to different products and not price fixing per se.

This dynamic pricing (Also called flexible pricing, customized pricing, and personalized pricing) has become an increasing concern of mine with the abundance of personalized ads. A few weeks ago I was jewelry shopping on I ended up leaving a tab open because a ring I liked was out of stock in my size and I wanted to see when it would be back in. I’ve now noticed as I’ve surfed the web that the same ring has been featured on ads for QVC. I tried it out by leaving a tab open with a different product. This means several things: 1) QVC (or a third party acting on QVC’s behalf) knows what my shopping behavior is and have tied it to me, likely by the cookie they left on my computer; 2) They are sharing that data with a third party advertiser responsible for display ads on many different websites; 3) The ad broker is likely keeping tabs on where I am going and may be sharing that information back to QVC. What if I purchase something expensive elsewhere, will the advertiser tell QVC that I can afford to pay more? If I look for a QVC discount code, would it signal that I really want the ring so QVC should raise the price? To be fair, I don’t think this is unique to QVC. Nor do I think QVC is doing anything deceptive in terms of price altering. The price never changed for me, and I had my husband check from a different state using a different browser and operating system. My concern is that dynamic pricing will be the next step.

The concern I have is I am no longer in charge of the single I send. I do not know how online companies are evaluating me, and what that could mean to my bottom line. While dynamic pricing has been around for ages in the form of senior citizen discounts, or student discounts, in those cases the change is price is transparent. I know what the discount is, whether or not I qualify and what I have to do to get it. When dynamic pricing happens because of my internet habits, I have no awareness. I don’t know that if I had opened Chrome instead of Firefox that morning, I could have saved. Would a company assume I have more disposable income if I view their website from a smart phone?

There’s no clear cut way to thwart this kind of tracking. Removing cookies would be one step, since it reduces the amount of ongoing tracking most companies can do. Even that’s not full proof, as my IP address is unlikely to change in any one sitting. If the combination of ip geolocation, exact operating system (vista home vs Windows 7 professional, etc), and browser version is not enough to identify my computer, it certainty narrows down the field of possibilities.

For now, I will have to be careful about how I shop online if I want to ensure I am paying the best prices.

** Whether you’re on during the day or night could indicate what type of job you have: day shift vs night shift, white color vs blue color. The type of browser and operating system can also be used for profiling, as computer geeks often use linux, while trendy hipster types might prefer apple.

Posted in Internet & Technology | Tags: , ,



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