Amazon Pricing Scheme: A Jungle of Debate

A few days ago in class we discussed a supposedly unintentional pricing scheme Amazon utilized to lure new customers by offering discounts on premium dvds, discounts that were not offered to the most loyal Amazon members. This caused a great uproar among the Amazon faithful who were enraged to find that by simply adjusting one's computer settings, namely refreshing the internet browser cookies, they could get significant discounts on products because Amazon viewed them as new customers. Amazon contested that this was actually a random pricing experiment that is quite common in the retail industry. However, the reality of the situation was that the most active Amazon purchasers were essentially being punished for their repeat business. It is quite understandable that Amazon would offer discounts to tempt new customers to purchase products from their website, but these discounts should not be at the expense of their established customer base. The situation is a real paradox because while it does make business sense to discount products for potential customers, it does not make business sense to alienate loyal customers by not offering them the same discount. Fundamentally, this situation represents an obvious marketing failure and the difficultly of navigating the online retail business environment. Again, while the internet provides great opportunities for business, it also brings completely unique challenges and obstacles.

After such actions, I will not advocate visiting the Amazon website, but if by some chance you can't resist, you can find it here: Amazon