At this time, online retailers often change their prices
Oh, no! The targeted new smartphone had cost 399 euros at the last price check on the Internet. Now, a few hours later, the same trader suddenly demands 50 euros more. This is called a dynamic price if the amount changes at short intervals, explains Christoph-Martin Mai, Head of the Consumer Prices unit at the Federal Statistical Office.
“The classic is gasoline prices, which move several times a day,” says Mai. Most often, a tank of fuel costs in the morning, just before the start of work, and in the late evening.
“Price changes are easier to implement on the Internet than in brick-and-mortar retail. There is often still re-labeled by hand, so there is such a pricing there less often.“
in 2019, the Federal Statistical Office had observed consumer prices on the Internet for over a year. A total of 42 million data from over 200 online retailers has been collected. The observed products corresponded to the average shopping behavior on the net. A lot of clothes are included, but also travel and hotels.
The result: most traders (96 percent) rarely change their offers, so they do not yet have really dynamic prices.
Dynamic pricing with the big players
“Many providers do not yet implement this so consistently and uniformly or at least do not have a clear strategy that can be observed,” Mai concludes. “In contrast, a lot of dynamics can be seen in individual traders.”The companies that bet on it tended to be among the big, international players.
In a similar direction, the results of a 2018 study by the market guardians of consumer centers go. You have looked at the largest dealers in different divisions. In almost all of them, they detected movements during the investigation period.
Most of the changes were comparatively rare and small. But some suppliers changed some prices almost daily: A hardware store would have demanded something different for a window sill almost every day.
Electronics markets and online pharmacies were particularly dynamic during the investigation period. It is not always just about small adjustments, as the example of a large fashion retailer shows.
The market watchdogs followed the price development of a pair of trousers. Within a few days, the offer fluctuated in several steps between just under 80 euros and just under 200 euros. And at a large electronics retailer, customers who struck on the wrong day paid 220 euros more for a smartphone than on other days.
Where and when the price moves
In its study, the Federal Statistical Office observed above all upward adjustments. The most movement is therefore in the early morning hours and during the day, during normal working hours, reports Mai.
“So in the morning and in the evening, an offer for the same product can be quite different. In the late evening and especially on weekends, prices are usually stable.“
Thus,they tend to be constant when people have time to shop. But only because there is hardly any movement on the weekend, the prices are not the cheapest, so May. In any case, dynamic prices are the same for all customers who buy at the same time.
But research from the USA shows that online shops there not only adapt their offers to the time, but also to the buyers. “Retailers create such personal prices with individual data they have from their customers. They supplement this with group-related information, i.e. characteristics that they attribute to a group,“ explains Hans-Wolfgang Micklitz. He is Professor Emeritus of Business Law at the European University Institute in Florence and a member of the Consumer Affairs Expert Council.
An algorithm calculates an individual price from the bundled information. How exactly, this is trade secret of the providers. For example, a wine merchant might appreciate that Micklitz is willing to pay significantly more for a bottle of wine than students. And, accordingly, at the price mark up.
No personal prices in this country yet
It is also often suspected that users of Apple devices receive more expensive offers, because these are among the premium products and thus suggest wealthy customers. While there are already studies on this in the USA, it has so far only been assumed in Germany whether dealers individualize their offers in this way.
The Federal Consumer Protection Ministry has now had a study carried out for the first time. It comes to the conclusion that there is no personal pricing in this country yet. Different locations, surfing history, user accounts or profiles from social networks would therefore have no effect on the requested offer, as well as cookies in the browser.
Only in one case did the researchers working for the ministry find a price difference due to the use of the equipment. One platform granted a discount if the hotel room was booked via mobile phone.
How to proceed with personalized pricing
For companies, the individualization of their offers would be an advantage. Because you could theoretically sound out the maximum willingness of each of your customers to pay in order to increase your profit.
Consumers, on the other hand, do not particularly like such personalized offers, various surveys show. However, they do not have the right to equal prices for all.
“A price tag on a product is always just an invitation from the seller to the customer. He still does not have to sell to him for this reported amount,“ explains Micklitz. There is freedom of contract.
This applies not only on the Internet. Even with shoes in the store, the company is free to demand a different amount from each customer. Even if the personalization of the price is legal, Micklitz does not consider it particularly transparent. For competition to work, consumers should be able to compare prices.
The European Union is also worried. In a directive (2019/216), it therefore stipulated that from 2022, online retailers must notify their customers if their offer is personalized. How exactly Germany implements the directive has not yet been determined.