How E-Commerce Algorithms Have Been Practicing ‘Surge’ Pricing On You

Uber, made ‘surge’ price enter popular parlance. It is the price that is charged to customers depending upon demand, environment factors & more.
For example, if it rains suddenly & demand for taxi goes up in an area, Uber will immediately raise the price under the guise of getting more drivers on the road! And when the demand falls the price too comes back to the ‘normal’. This strategy has caused an uproar with many labelling it as unethical & amoral because a user’s helplessness is being exploited for commercial gain.


Hold on.

Much before Uber brought Surge pricing into public domain, e-commerce companies, led by Amazon, have been practicing it on you.


Take yourself. If you search for a product on line, then the price quoted to you will depend upon the location & device from were you are searching. If you are in Mumbai & searching from Malabar Hill, the most affluent area, on an Apple iPad then the price quoted to you is likely to be between 20 -25 % higher as compared your friend who is also searching for the same merchandise at the same time but form a lesser affluent suburban location on a Window’s installed Dell laptop.

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Why the difference in price?

The smart algorithm installed by e-commerce companies surmises that a person doing a search from Malabar Hills on an Apple device is likely to more affluent than a person searching from a less affluent location on a Dell. And an affluent person is likely to be less finicky about price than others!


By the Way, if your keep a track of your e-commerce site you will be dismayed to find that using smart algorithm the prices of merchandise change multiple times a day depending upon demand!


And we laid the blame solely at Uber’s doorstep!


Do remember for majority of internet companies we are the product from whom they make money – either by selling to us or by selling us.

 

Read everything by Rajesh Srivastava here

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