EU Commission Takes Online Pricing Policy To Task: Is E-Commerce Becoming Fair?

Photo: Media Markt

E-Commerce is a very dynamic matter in principle. By means of customer data and real-time information you can set up individual offers that are tailored specifically to your customers and their demands. Personalised product recommendations, banners, prices, and discounts add up to a unique shopping experience for any customer.

But personalisation tools aren’t used for the sake of pure humanity; of course retailers have their revenues in mind when they invest in search and recommendation engines. This is not necessarily met with enthusiasm on the customers’ part.

Pricing policy frustrates consumers

Once it became public that iOS users are systematically charged higher prices than PC users the scandal was inevitable. With mobile devices the problem cropped up again. If you visit an online shop via smartphone or app, you’ll probably face higher prices.

This is all no rocket science but simple targeting – if you search products on the go, your shopping needs are most likely higher than those of people browsing at home.

The digital fingerprint allows for the creation of offers that are so granular that it’s nearly impossible to find out which factor exactly caused the final price. Was it the click on a banner or the purchasing history?

Dynamic prices also a problem for retailers

Not only customers can suffer disadvantages from dynamic pricing. Even retailers may get in trouble, for instance if online prices are much lower than those in store. If customers notice the price difference, they’ll probably expect willingness to cooperate from their local retailer. Provided that the clever customer hasn’t already left the store to order online.

One approach to tackle this issue is the implementation of digital price tags. They adapt to constantly changing prices and moderate overly strong differences. Personalised prices, however, cannot be displayed on them.

EU to sort this out. Maybe.

So the e-commerce industry’s in pure chaos. Luckily the EU has taken up the cause of sorting the whole thing out. Proceedings against Austrian ski lift operators, Amazon, and the city of Venice have already been initiated.

It’s getting even more interesting if you apply this development to international e-commerce. Here offers don’t only differ by VAT rates and shipping costs – French people are charged different prices than Belgians.

This may not be fair but at least not surprising in view of the examples mentioned above.

Standardised prices in a digitally driven market that’s becoming increasingly granular? When will the EU Commission recognise the problem and which solution will they provide? We can’t wait to find out!

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