WSJ: Staples, others, adjust prices based on location

This summer, the Wall Street Journal broke a story about Orbitz featuring different deals for Mac and PC users. The Journal is now reporting on something similar but arguably more aggravating. Apparently, some e-tailers and other e-commerce sites are charging different prices depending on where customers live—and no, none of it has to do with taxes or shipping. The paper explains:

A Wall Street Journal investigation found that the Staples Inc. website displays different prices to people after estimating their locations. More than that, Staples appeared to consider the person’s distance from a rival brick-and-mortar store, either OfficeMax Inc. or Office Depot Inc. If rival stores were within 20 miles or so, Staples.com usually showed a discounted price.

The Journal says Staples charges more in higher-income areas, too. And it turns out that other companies do the same thing. During its investigation, the Journal found that Discover, Rosetta Stone, and Home Depot were all "consistently adjusting prices and displaying different product offers based on a range of characteristics that could be discovered about the user."

Surprisingly enough, the practice is legal—and has a fairly long history. Amazon reportedly implemented a similar scheme back in 2000, although it eventually backtracked and refunded users who were overcharged. According to a poll quoted by the Journal, 76% of American adults say they would be bothered if someone else paid less than they did for a given item. I’m surprised that number isn’t higher.

Comments closed
    • staceymon888i
    • 7 years ago
    • BIF
    • 7 years ago

    I once worked in the IT department for a regional pharmacy/retailer. They were proud that their prices were the same in the entire region, and that no matter where you lived, in a rich neighborhood or not, you could count on the prices being the same low prices as what everybody else paid.

    Of course, the prices weren’t “low” like Walmart, but Walmart hadn’t yet made inroads in our region. And K-Mart was a pushover competitor at the time. Our average location floorplan was bigger than a 7-Eleven (which didn’t have pharmacies). We were similar in size and inventory types to today’s Walgreens and CVS stores, or the Eckerd stores that no longer exist.

    Among other things, people liked this pricing and marketing strategy. They thought it was fair, and we handily kicked the arses of some other local businesses.

    But that was decades ago and the world has changed.

    • cygnus1
    • 7 years ago

    This seems pretty similar to arbitrage. I don’t see the problem.

      • danny e.
      • 7 years ago

      me either. you charge what you can get. dont like the price, buy somewhere else.

    • holophrastic
    • 7 years ago

    I can’t see why this would bother anyone. High-end stores in high-end areas. Discount stores in low-income areas. Property taxes, rental rates, landlord rules, they all change from area to area. Makes sense that the some stores/branches would have higher costs.

    Similarly, the people in said areas have different expectations. I’m sure that return rates are different. I’m sure shopping experiences are different. Customer service, technical support, after-hours, trusting shipping complains. All sorts of things can make one group of customers more annoying than another.

    So what if this article added the following:

    Higher income areas tend to want the customer service phone answered faster, open later, and insist on faster shipping.

    And let’s say that these store subsidize the faster shipping to keep it reasonable.
    And let’s say that they keep the phones open later for those customers.
    And let’s say that they trust damaged shipments reported by those customers more readily.

    I just ordered an ornate crystal cake dome. When it arrived very much damaged, they believed me and immediately sent another. That happened twice. And I never had any problems; not even a long conversation.

    If you’re saying that I may have paid an additional 10%, well that would never have been an issue to me.

    The reason I’m not a part of that 76% is because I’m a business owner myself. I know that it’s better for companies to get paid, rather than discount away more profits. I’d much rather prices go up all around, than down all around.

      • kumori
      • 7 years ago

      According to the article it’s high income areas that get the lowest prices because there are generally competing stores close by, while the lower income areas have higher prices because of less competition.

      This of course makes sense, but the articles real point is that the price leveling effect that the internet once had may be changing.

    • chelsie09xmarie
    • 7 years ago
      • willmore
      • 7 years ago

      SPAM!!!!!

      Edited to ask “Thumbed down for warning of spam? Really?”

    • indeego
    • 7 years ago

    This has the potential to backfire pretty badly. I live in an affluent area, and a higher price in my area would give me less pause to consider brick and mortar than I already have.

    Having said that, Starbucks and other goods/service industries have done this for a long time, I’m curious how/why this is news.

      • standingmammoth
      • 7 years ago

      Obviously because it’s online. When you buy online you expect to be paying the same price as everyone else.

    • Deanjo
    • 7 years ago

    Nothing new to Canada. Pretty much every retailer has location based pricing. Canadian Tire, Staples, Future Shop, Best Buy, The Source, Sears, etc.

      • UberGerbil
      • 7 years ago

      Retailers do so because their costs are different — rents are higher in one place than another, logistics are more expensive, local taxes (B&O etc) vary, the labo(u)r market is tighter. That’s been true for about as long as there have been store chains with more than one location.

      This is different, though, because it is etailers, and all of those costs are the same for every customer (shipping of course will vary). Yet they are charging different prices based on where you live, not based on the costs they incur. Imagine if the cashier at Canadian Tire asked to look at your driver’s license and then adjusted your total based on the address written there. “Oh, you live in the fancy part of town — there’s a surcharge for that.” Or “Oh, you live way out this side of town, you’re not driving all the way to Sears/London Drug/Whatever, so that’s a surcharge.”

        • Deanjo
        • 7 years ago

        It isn’t any different as those retailers that I mention still do location based prices with their online services.

    • just brew it!
    • 7 years ago

    Played around with this a bit (direct connection from my ISP in IL versus going through a proxy in NJ), and saw no price differences at staples.com. I only spot checked a half dozen or so items though, so all this proves is that they don’t do it for *everything*.

    Something else odd that I noticed, however: The layout of the home page is radically different depending on where it thinks I am accessing it from. When connecting from IL the left side of the window is a large navigation menu with a comprehensive list of all of their product categories, and some special offers listed underneath that (need to scroll down to see them).

    When connecting via NJ the large menu disappears, the special offers are moved up into the space where the menu was, and there are 4 large buttons across the top of the window that aren’t there in the IL version of the site (the 4 big buttons take you to paper/ink/office supplies/furniture, computers/printers/service/software, cleaning/breakroom/safety supplies, and copy/print services).

    So they are *definitely* tailoring the site layout based on geolocation data (and apparently feel that NJ residents are more interested in special offers, and need a dumbed-down version of the site).

      • MadManOriginal
      • 7 years ago

      pics or it didn’t happen.

        • just brew it!
        • 7 years ago

        Here you go:
        [url=http://uchima.net/trstuff/staples-noproxy.png<]Without proxy[/url<] [url=http://uchima.net/trstuff/staples-proxy.png<]With proxy[/url<] Edit: Moved screenshots to a server with more bandwidth, as they are fairly large png images. Edit 2: The behavior also appears to be browser-specific. Chrome doesn't do it, but Firefox does.

          • MadManOriginal
          • 7 years ago

          lol, thanks 🙂 I did believe you, I was just more curious to see the differences (a picture is worth a thousand words) and I’m not enough of a tech fancy pants like you to play around with proxies.

          • paulWTAMU
          • 7 years ago

          I get what I’m going to refer to as the “Jersey version” here in Amarillo.

      • davidbowser
      • 7 years ago

      NJ is funky from a demographics perspective, so it would not be a great example for targeting. It is akin to the way some big cities are laid out where VERY HIGH income neighborhoods are geographically close to poverty stricken ones. In the Bridgewater, NJ area, there are Habitat for Humanity homes 3-4 blocks from homes selling for $800k+.

      NJ is traditionally in the top 5 in per capita income and median household income, has the highest percentage of millionaires in the country, but also has some of the poorest cities (e.g. Camden) in the US.

      [url<]http://en.wikipedia.org/wiki/New_Jersey_locations_by_per_capita_income[/url<]

    • derFunkenstein
    • 7 years ago

    [quote<]Staples[/quote<] Oh, see, there's your problem right there.

      • just brew it!
      • 7 years ago

      They occasionally have good sales on Logitech mice… when they’re on sale their prices are actually a lot better than Newegg’s.

        • thanatos355
        • 7 years ago

        I used to buy all my optical media and hard drives there for the same reason.

    • PrincipalSkinner
    • 7 years ago

    Steam charges more if you’re in Europe. Right now, it’s 32% more.

      • Meadows
      • 7 years ago

      Cost of overseas shipping. …Oh, wait.

      • HisDivineOrder
      • 7 years ago

      That’s not exactly the same thing.

        • Byte Storm
        • 7 years ago

        Wonder why this comment was downrated. It really isn’t the same, as international goods, digital or physical, are taxed differently. So higher prices are to be expected.

          • MadManOriginal
          • 7 years ago

          It could be due to taxes or some other similar cost (do they itemize VAT at checkout or such or is it included in the up-front pricing?), there could also be to different infrastructure costs. I imagine Valve has download servers in Europe that have a different cost structure than those in America.

    • Meadows
    • 7 years ago

    It’s called capitalism. Stop crying.

      • HisDivineOrder
      • 7 years ago

      It’s my party and I’ll cry if I want to…

      • thermistor
      • 7 years ago

      Yes, because allows big co’s to take advantage of someone is not just legal, ethical, or moral, it’s mandatory as stated by the Capitalist overlords. Take everything you can – give nothin’ back, arrrrrgh.

      Ad hominem: Meadows 1,124, 234th dumb comment since this site was created.

        • Deanjo
        • 7 years ago

        [quote<]Take everything you can - give nothin' back, arrrrrgh.[/quote<] I'd say being to supply you with your product is "giving back".

        • Meadows
        • 7 years ago

        Regular trading practices are not “taking advantage” of anyone. You should charge what any target demographic is willing to pay for your goods. Not more, not less. Business is not charity.

    • yogibbear
    • 7 years ago

    They do this in supermarkets and petrol stations too… nobody complains… ever…. or at least nobody that can change anything.

      • poohbah10
      • 7 years ago

      The perceived problem with this practice is that…

      IF shipping is charged separately and reflects actual shipping costs
      and IF taxes are the same for two customers (either $0 for interstate shipment, or locally equivalent)
      THEN there’s no cost difference to the retailer. Some would argue that this is unfair.

      For traditional brick & mortar, there are differences in the cost of operating in various locations; for an e-tailer two different locations of delivery have exactly the same cost when shipping from the same warehouse (given the assumptions above).

        • Majiir Paktu
        • 7 years ago

        Cost to the retailer is irrelevant. A similar argument (I realize you’re not making it directly) would say that margins are unfair.

          • poohbah10
          • 7 years ago

          Indeed, cost is irrelevant; sellers will charge what the market will bear. Smart consumers will search for a better price; if enough buyers abandon the retailers with location specific pricing they will alter their pricing. If consumers don’t figure it out, then pricing will continue as is.

      • lilbuddhaman
      • 7 years ago

      B+M stores will have price differences due to variable property costs from one location to another, whereas an online retailer is using a centralized warehouse/distribution center. I can understand higher costs for remote / rural areas, but not within X radius of a city or even suburban area.

        • clone
        • 7 years ago

        B+M stores charge what they can…. they suffer under variable costs…. if it’s possible to survive and or prosper they do….. huge…. HUGE DIFFERENCE.

        their is no charity in private enterprise, Warehouse/distribution don’t want to sell for less they want to sell for more while paying less….. again….. huge…. HUGE DIFFERENCE.

        “take what you can, give nothing back”

      • ludi
      • 7 years ago

      Around these parts, we call them “gas stations” and complaining about price variability is a national pasttime.

      • clone
      • 7 years ago

      of course ppl complain….. what are you talking about nobody complains?…. especially price fixing amongst gas stations.

      it’s why I waited to fill up yesterday until I was out of the city and saved 5% on fuel, it’s why some ppl will cross the border to get a better deal in the Northern and Southern America’s.

    • dpaus
    • 7 years ago

    [quote<]the practice... has a fairly long history[/quote<] First! I've heard of it! No, not really... Take a minute to look up the census demographics for your city/town, and find the census tract with the lowest median income. Then find an address within that tract that is closest to a big-box retailer (usually Walmart; how do you [i<]think[/i<] they pick their locations??) and look up the zip/postal code. When prompted for one at a retailer's website, enter that. You'll get the best deal available 🙂

      • poohbah10
      • 7 years ago

      Better still, proxy your surfing through that zip code (since the retailers are clearly using IP address geolocation databases to set the prices).

        • Farting Bob
        • 7 years ago

        Most proxies ive used dont give an exact zip code up front, they will either say the country / major city they are from and nothing else.

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