Kamishima, Toshihiro, and Shotaro Akaho. "Personalized pricing recommender system: Multi-stage epsilon-greedy approach." Proceedings of the 2nd International Workshop on Information Heterogeneity and Fusion in Recommender Systems. ACM, 2011.
Amazon says the pricing variations, which it stopped as soon as the complaints began coming in from DVDTalk members, were completely random.
"It was done to determine consumer responses to different discount levels," said spokesman Bill Curry. "This was a pure and simple price test. This was not dynamic pricing. We don't do that and have no plans ever to do that."
But an Amazon customer service representative called it exactly that in e-mail to a DVDTalk member.
"I would first like to send along my most sincere apology for any confusion or frustration caused by our dynamic price test," wrote the company's Galen Sather. "Dynamic testing of a customer base is a common practice among both brick & mortar and internet companies."
Indeed, physical stores have always had varied pricing. Prices might be higher in an affluent neighborhood or lower, depending on the goods being sold. A stereo system or camera purchased in certain neighborhoods of Manhattan would almost always be cheaper than in a small town with only one electronics store. Industries as basic as airlines and automobiles routinely adjust their prices because of the consumer's negotiating skills and general savvy
Amazon swears it won't happen there again. "Dynamic pricing is stupid, because people will find out," said spokesman Curry. "Fortunately, it only took us two instances to see this."
The retailer has worked very hard, and largely successfully, to build an image of itself as the most consumer-centric business ever. Technology writers have penned love songs to the site, while analysts routinely commend it for excellent customer relations.