Fair Data Mining?
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I think Jeremy makes a good point: if it's still lower than what you can get elsewhere, you're still getting a deal. The main drawback is the lack of negotiation on the buyer's part. For instance, here in the US, I can drive a car off the lot for a wildly different price than the exact same model with the exact same options that drove off in front of me; this is because I can haggle with the dealer and come to a mutually agreeable price that is still below sticker. Or I can just pay the sticker price and go on about my merry way.
In this Amazon case, the option to negotiate is not as simple.
Is it taking data mining too far? Nope; it's an excellent use of data mining. It may alienate some customers, but until it rubs the mainstream the wrong way, it's a good boost to the bottom line.
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And not only that, but data mining well-used in a broader sense helps sharpen business decisions, and forces customers to subsidize fewer poor ones.
So while tiered pricing is one result, it's only one. We also have more targeted advertising, better product tie-ins, better feature packaging, fewer resources spent on polling and other subjective research, and so on. Even tiered pricing will feel competitive effects once good data mining is more widely used by other companies in the industry.
I'd also reiterate that, in the sense that we can manipulate Amazon's analysis of our individual purchasing habits, we in effect ARE haggling. On the street, a vendor can offer a price, gauge your reaction, etc. While it's true that Amazon won't let you haggle downward, you can use the techniques I mentioned before to obfuscate their findings about whether you'd be willing to pay MORE.
Just like putting on a show for a street vendor, it's a haggling tool that anyone wise to the tiered pricing would be wise to use (if the price difference even matters to you that much).
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I work in the book industry at a company with some catalog overlap with Amazon.com. What I can tell you is that the book industry is a very different beast for purchasing then any other industry I can think of. even a small subset of ISBNs will build a catalog of over 2 million items, and hundreds of different publishers to deal with. And those publishers LOVE to fiddle with prices. It's fine if you're charging list, they rarely fiddle enough to make you take a loss there, but when you're dealing with the competition of ecomerce, and trying to keep the price as low as possible while turning a profit, their minor swings in price can quickly make a book not profitable. Add to that the number of vendors you're dealing with, and the size of catalogs, and it's a feat to even try to keep the data straight. (many of the big publishers fiddle with their prices daily). What Amazon is doing is one of two things depending on the size of the publisher. Either they're updating the cost due to a new price feed coming in, or, someone else ordered the book, and they discovered it didn't fit within margin, and then adjusting the cost of the book on their site.
Another big cause of fluctuation, Just like other industries, sometimes a vendor stops producing an item, or a distributor stops carrying the item. This doesn't necessarily make the item not available, but when your discounts with differenty distributors or vendors can vary widely, they can make a large impact on the bottom line when you do a lot of business with distributor x and get a 40% discount as compared to needing to go directly to the manufacturer, where you do very little business, and only get a 10% discount...
Basically, don't blame Amazon, blame the intersection of the publishing industry, and ecommerce... believe me... it's an interesting mix.
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How about some reverse tier pricing? I like buying tennis shoes. I wear a size 13. But my price is the same as the size 8. So my reasoning is the person who wears a size 10 is paying the highest price because he is the median. The smaller size wearer overpay and the larger sizes underpay.
Maybe its just to complicated to charge by the foot
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Imagine yourself walking up and down the aisles of a supermarket, filling your shopping cart with various items. Suddenly a clerk walks up to your cart, reaches in and takes out several items and sticks a higher price on them. Would that be "fair"?
I think we would all be really, really ticked off if this was done to us. What Steve is feeling with the Amazon "shopping cart" experience is the same thing, perhaps on a bit lesser scale because it is online.
I think this is really a User Interface (UI) issue. Here is where the Amazon analogy of a "shopping cart" and our personal experiences with real "shopping carts" actually breaks down and works against them.
The big difference is the expectation by the supermarket that the items in the shopping cart will be bought right away, not days later. And the expectation by the customer that a clerk won't waltz up to our carts and start changing prices. I haven't tried it, but I don't think the supermarket would let me leave my cart parked in the corner by the milk section for a few days. And if they did, I would expect they would change some of the prices too in the interim.
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The other huge difference between many ecommerce sites, and brick and mortar is that, they don't always have the item in stock... a brick and mortar has already paid for the item, so their cost is set. if the ecommerce site does not have the item you're ordering in stock, then their cost is completely at the whim of their distributor/vendor. Just like a store would change the price on the shelf while restocking, amazon will change the price when they know their cost will change...
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