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Think You’re Getting a Good Deal? Think Again — Some Online Stores Charging Different Prices Based on Where They Think You Live

Dec. 26, 2012 7:05am Liz Klimas

WSJ Investigation Finds Staples and Other Websites Vary Website Prices Based on Location

(Photo: AP/Paul Sakuma, file)

It has long been known that stores will use location data and other things that it’s able to find out about you via your online activity in order to tailor its advertising. But a Wall Street Journal investigation has found several stores are actually changing prices based on where they think you live.

According to the report, the cost for a Swingline stapler at Staples.com for Kim Wamble was $15,79. The cost for Trude Frizzell who lives a few miles away from Wamble was $14.29.

How can this be? WSJ found Staples’ website not only changed prices based on where it thinks the women were located, but also relative to the person’s distance from a rival store. It reported that lower prices were found at Staples.com if an OfficeMax or Office Depot was within 20 miles.

Here’s more from WSJ’s report:

In what appears to be an unintended side effect of Staples’ pricing methods—likely a function of retail competition with its rivals—the Journal’s testing also showed that areas that tended to see the discounted prices had a higher average income than areas that tended to see higher prices.

Presented with the Journal’s findings, Staples acknowledged that it varies its online and in-store prices by geography because of “a variety of factors” including “costs of doing business.”

(Photo: AP/ Lynne Sladky)

WSJ tested Staples’ website from more than 42,000 U.S. ZIP Codes and evaluated the price of the stapler 20 times in each area, among other items. The publication called Staples’ pricing “complex.” It found as many as three different prices for items, varying based on location. WSJ believes the office supply company is estimating ZIP codes based on a computer’s IP address, which it stated is “accurate, but isn’t foolproof.”

Watch journalist Jennifer Valentino-DeVries discuss the investigation:

Other stores WSJ found using similar location data to adjust prices, which it noted is completely legal, were Discover Financial Services, Rosetta Stone and Home Depot.

Some of the stores said they use location data to offer different specials. Rosetta Stone, for example, told WSJ they test different packages based on location:

Rosetta Stone said it sometimes tests and offers different product “bundles” in different places. It also personalizes its suggestions based on how the visitor gets to the site, Rosetta Stone said—whether from a search engine, a social-media link, a mobile device or a PC. “We are increasingly focused on segmentation and targeting,” a spokesman said. “Every customer is different.”Even if legal, WSJ cited a poll that found 76 percent of Americans would be bothered by such a practice.

Frizzle said, “How can they get away with that?” Wamble called it “discriminatory.”

WSJ’s Jennifer Valentino-DeVries has even more details about how stores use location data and pricing in its report. See the full article here. Be sure to try out WSJ’s interactive tool to illustrate the pricing scheme here.

(H/T: GeekOSystem)

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Comments (37)

nomark
Posted on December 27, 2012 at 5:15pm
If they use the IP address that is blatantly skewed. The location of the IP is not accurate. Also many businesses run your IP thru a security/fraud database and if your IP is too far from the zip provided it could flag the order as fraud. So there is that to consider.

If they are going to do this, they need to be accurate, and the only way to do that is have the customer provide the real zip code. And to be ethical, you need to tell the customer why you need the zip code. Certainly it’s used to estimate shipping charges, but if you use it to determine price that should be disclosed.

Then there is the issue of potential for unintended consequences. Let’s look at insurance. If you are insured, the dr and hospital quote you one price. But if you are a cash paying customer they charge you more. A LOT more. In my personal experience it’s 40-80% more. Now to see how that might work in this situation:

Let’s say you live an affluent neighborhood or perhaps you are in a fast growing community, and the business does a lot of business in those areas. The vol of pkgs going to that location is high and so they put a distribution center near that area. Now lets’ say there is a poor neighborhood and they order very few parts, so they are far and few orders. Thus the affluent could pay less. Business wise it’s justified. But is it fair or ethical?

Lastly, do you want to be a guinea pig or test subject just to buy something? Cause that is what you are in this scenario.

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watashbuddyfriend
Posted on December 27, 2012 at 1:02pm
Why so little attention to this blog?

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Salamander
Posted on December 27, 2012 at 11:34am
I have on my egg-catching vest–Sounds to me like the industry is finally getting sophisticated enough to bear the burden of State Sales Taxes, rue the day!

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- G-WHIZ
  Posted on December 27, 2012 at 12:44pm
  Yeah…and why does gasoline cost different in each and every state?! (self-answering question)
  
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Salamander
Posted on December 27, 2012 at 11:29am
Apologies to Alexandra! I blurted out my thoughts before reading yours! You had the idea first! It’s not such a far-out business concept and might even involve transshipment. But, seriously, I can see a REAL BUSINESS OPPORTUNITY for, say an entrepreneur in Port Chester, NY to offer shipping addresses for a savvy purchaser in Greenwich, CT! The Port Chester operation could even offer valet service, delivering the goods to their customers across the economic divide!

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- stumpy68
  Posted on December 27, 2012 at 1:49pm
  It sounds like they base price on ip address the prices show up before you add a shipping address there could shortly
  be an increase in those that know how to configure a proxy and a market for proxies lists
  from lower priced states
  
  Report this comment
Salamander
Posted on December 27, 2012 at 11:25am
Hey, no problem! I can see enterprising people in the ‘less desireable’ Zip*Codes setting up mail services, like UPS Stores and advertising for the rich people on the other side of town to ‘rent an address’! This might be the World’s BEST Cottage Industry–Address-Spoofing!

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termyt
Posted on December 26, 2012 at 5:33pm
There’s nothing wrong here. It’s not cheating or gouging to charge for an item based on where you live. Cost of living varies by location as well as gas prices and shipping rates. Staples is far from alone in doing this. It actually makes sense to me to tailor your pricing to location.

Brick and mortar stores have always done this. Why should online stores be different?.

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- Alexandra Stormwing
  Posted on December 26, 2012 at 5:46pm
  Precisely. There is no reason why online retailers should not be allowed to do this.
  
  Here’s the real kicker: There is a fantastic business opportunity here for someone to create a service that will allow you to place orders as if you were in a different geographic location. This is actually VERY easy to do: All the company needs to do is set up a bunch of proxy servers and monitor the pricing of items. Then the customer goes to the third party site and places the order through there.
  
  Not very complicated from a technology perspective.
  
  Report this comment
adumb12
Posted on December 26, 2012 at 5:13pm
I guess if you really wanted to stick it to them, there is a way to fool them, here’s how. There are many websites offering “public proxy servers” for use by anyone. These servers allow you to surf the web, from your computer, through their IP address. So, when accessing a website, you appear as if you are wherever the proxy server is located. Sounds complicated, but it’s really just like using a remote connection to a friends computer in another state, from your house. Find a proxy server location that gets the best deals and voila. Probably too much effort to save $0.35, but hey, screw them if they want to screw you! It’s the free market so I can shop and choose any way I want.

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Enchanted
Posted on December 26, 2012 at 2:50pm
Good to know. Guess I will think twice about buying at staples since they are basically going to cheat me. The difference in the staple guns is not that big a deal – but add it up over a time period and it adds up to decent money. Shame on you staples.

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- brigott
  Posted on December 26, 2012 at 9:05pm
  How are they cheating you?
  
  Did you think people get cheated when they pay more for a house in a higher-priced neighborhood? Do you think people get cheated when they pay more for a hotdog at a major-league ball park? Do you think people get cheated when they pay more for gas in one state than in another? Do some people get cheated because they pay more for a gallon of milk in some parts of the country than others pay elsewhere? Are those that live in areas that pay more for utilities such as water, electricity, etc., being cheated?
  
  It is definitely NOT cheating. Feel free to buy or not buy from whomever you wish. In fact, you may pay more to buy the same item from Office Deport than from Staples, but that is your choice.
  
  Just understand that this practice is not cheating.
  
  Or maybe the government could make sure that everyone pays exactly the same for everything no matter where they live? and maybe they could make sure that everyone has exactly the same income regardless of where they work, what job they do, or even if they don’t have a job at all? I guess that would make everything fair, eh?
  
  Report this comment
- Balpit
  Posted on December 27, 2012 at 5:13pm
  Unfairly charging people more IS cheating them. It’s different when prices change to reflect factors. For example, fruits which only grow in the North costing more in the South: in this case, Southerners pay extra for the added costs of transportation, gas, and trucker’s wages, among other fees.
  
  Of course, if Staples charges more for a product, tell them to take a hike and that you’ll be buying from their competitors instead. If you feel they’re cheating you, choose NOT to be cheated.
  
  Report this comment
hades3
Posted on December 26, 2012 at 2:19pm
Buy a condo in Omaha, then shop for a comparable one in Manhattan ! Surprise, surprise, surprise !! There is a difference in price ! It’s amazing as too the economic ignorance of some people,
especially those who do not expect too see differences in prices, depending on location.
Has anyone ever heard of “water front property “, or property with a view ?

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- Marrabella
  Posted on December 27, 2012 at 11:18am
  We rented a house frm a friend in a high end area for a year. It was maddening….. Every time we needed a plumber or work done, we got gouged big time.
  If you agree with Staple’s pricing, then you fit right into Obama’s redistribution of wealth theme.
  
  Report this comment
OUTLAW_WEALTH
Posted on December 26, 2012 at 1:40pm
It’s the free market folks. If you don’t like the price, don’t buy it. It’s really that simple. Price fixing is a liberal shibboleth, destined to fail.

Don’t give your principles for a mess of pottage.

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Con_Sanity
Posted on December 26, 2012 at 1:14pm
Yeah, but there are so many technological ways to game the system in my favor, I usually end up ahead for luxury items. There are so many coupons, competitor websites, price comparisons, refurbished items, eBay auctions for used products, Amazon used books, and so many ways that I get things for a better deal than the retail price charged at my local store. But if we talk about FOOD items, the deal breaker is that I live in a depressed rural area. I know for a fact that food items are cheaper when I travel into larger areas that have more competition. I once returned some food items at a Wal-Mart across state lines and found that they had to bump up the price of every returned item because I had paid more locally where competition is scarce.

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watashbuddyfriend
Posted on December 26, 2012 at 12:49pm
I always tell people that the ‘truth-in-advertising’ is only in the telephone number, website, and address! Otherwise, BEWARE!

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brigott
Posted on December 26, 2012 at 12:19pm
Come to think of it, McDonald’s charges more in airports and at oases on toll roads; so does everybody else. How about a hotdog at a major-league ball park?

Anybode who didn’t already know that prices vary by location is an imbecile.

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Pat Alexander
Posted on December 26, 2012 at 10:40am
I never shop @ Staples unless using a discount card.

They send us those $25 off $75 cards in the mail all the time. I look for something I want that is on sale and use the card. You might get something that was regularly $125 or more for $50 and free shipping. And you can combine the card with another coupon code – like take 20% additional off. As long as the remaining total is over $75 you are good to go.

Once in a while they send you a $10 off $20 in store discount. I never buy anything that isn’t drastically reduced on these trips. Not even a $1 item. I went in and bought two leather briefcases that were originally $55 each with small blemishes. Nothing you wouldn’t put on yourself within a week of use. They had them on the sale table for $12 each final clearance. Got $110 worth of product, for $14 plus tax. The cashier did glare at me though. Sold one on eBay for $40 and still using the other one.

My wife always says: “Don”t you feel bad doing that?” I’ll let her read this article..

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crystalsky
Posted on December 26, 2012 at 10:11am
The gas alone should tell you that some are at 299 while others are at 314 and that is regular gas, Why is that??

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- JimMadsen
  Posted on December 26, 2012 at 10:37am
  $3.14? I wish, my area is around $3.50
  
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- Silvertruth
  Posted on December 26, 2012 at 10:46am
  It’s a common practice. It was normally done by brick and mortar places but it seems that some on-line merchants have figured out how to grab the ISP information and encode it into their pricing formula.
  
  It’s quite nifty but fatally flawed for anyone with tech saavy capabilities. This will drive the tech saavy to have a legitimate reason to go through non-tracking router accounts and then the site will get nothing when it queries. So, in the end, it will be a gouge against the less tech saavy and as a side bonus. law enforcement will have to do more work to get that information as well, now with the ‘suspect’ having a legitimate reason to have the blind access.
  
  Oh, wait, I guess with the tech saavy, they’ll do this just to thwart the big brother NSA installation in Utah. So, no biggie either way. Enjoy it while you can Staples!
  
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- brigott
  Posted on December 26, 2012 at 9:08pm
  Got mine for $2.91 today, then had a 40-cents-per-gallon discount, so paid $2.59.
  
  Did I cheat them, or did they cheat me?
  
  Report this comment
- MisterSarcastic
  Posted on December 27, 2012 at 1:45pm
  Mostly has to do with transportation costs crystal.
  
  Report this comment
independentvoteril
Posted on December 26, 2012 at 9:58am
OK people finally figured this out??? or did someone decide to let everyone in on the secret?? I found that out about 5 years ago.. my sister and I always talk about what is on sale at which chain store.. one week we found the a large chain store by her was charging LESS for a particular item than they were by the same store in my area.so I went on line and put in the store and asked for different zip codes and there was a price difference in different area’s of my own neighborhood.. I complained at the store I go to and they gave me the price for the lowest area .. so it’s MORE than just on line..I know all the zip codes within my area so even on line I compare pricing.. taxing is another issue they are using zip codes for.. CHICAGO has a 10.25% tax on non food items.. so if necessary one can get a disposable visa card and have an item shipped to a family member who lives in a different zip code saving money on the item as well as the taxes..on large ticket items you can save quite a bit..goes to show the old saying ” better to be a rich person in a poor neighborhood than a poor person in a rich neighborhood”.. lol ..best deals are in the REALLY depressed area’s.. if you dare to go into them to shop which is where diversity and tolerance does NOT exist..

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BasketFullOfPuppies
Posted on December 26, 2012 at 9:41am
It’s no different than a neighborhood convenience store adjusting its prices, based on what customers will pay, and what their competition is charging. But, when I first read the story, my gut reaction was that it was wrong (which, interestingly, was brought up in the story).

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- Salamander
  Posted on December 27, 2012 at 11:41am
  Yeah, but just wait until they outsmart themselves! The advantage of the internet is its ‘flat-space’ behavior–everybody on a level playing field. Soon the retail merchants (if government regulations don’t beat them to it) will red-line by locatiion–just like the liquor stores do! Well, they don’t call it red-lining unless it is a bank, but you can go into a liquor store in Virginia and each location is stocked with what will sell in that area–upscale stuff in the upscale area and pints in pint-neighborhoods! I wonder if they might even require that one register as a cross-dresser to purchase in the opposite-gender’s department? Or, screen for child-molester’s before shipping clothes for the little ones? What a wonderful World we live in! It doesn’ take long for a great idea, like the level-playing field of th internet and online shopping to take on all the discriminatory variations we see in the brick and mortar stores!
  
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DougHuffman
Posted on December 26, 2012 at 8:59am
Hmm, as I recall from my study and brief use of The Onion Router Network – TOR – onion-router.net – the exit node can be specified. With common agent switching browser add-ons, we may be able to get the lowest available prices.

The most ethical avoidance of this progressive-capitalist paradigm is to Shop Mom&Pop, eschew BigBox Stores and damn The Great Wall of China Mart.

Good people ought to be armed as they will, with wits and Guns and the Truth. God Bless Bitter Clingers, damn know-nothings, progressives.

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hamrs_62
Posted on December 26, 2012 at 8:56am
a retailer will mark up their items anywhere for 100% to 1000%, what ever the customer will pay, where an Ipad may cost 5.00 to make in china at .87 cents to pay the worker, by the time it gets to the retail store it cost you 499.00 plus uncle sugars cut,

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- MisterSarcastic
  Posted on December 26, 2012 at 9:01am
  …ummm…you seem to have missed a few steps.
  
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willbedone
Posted on December 26, 2012 at 8:51am
Sometime back I was making travel arrangements on line and discovered the cookie experience. If you check prices on airlines, rental cars, and hotels then after checking a few more comparisons and return you will discover a higher price or a different package arrangement. By clearing your cookies before returning to the site will reset to the lower price. By the way, I discovered that it is cheaper to book the car rental and hotel separate, although it may be through the same agency. Sometimes Amazon does the same thing.

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MisterSarcastic
Posted on December 26, 2012 at 8:28am
It’s called free enterprise. I know Liz doesn’t understand that concept but you’d think WSJ would.

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Mapache
Posted on December 26, 2012 at 7:54am
Well duh, stores in high crime/low income area almost always charge higher prices due to the increased amount of theft, shoplifting and pilferage, the increased costs of security and insurance. Makes sense, unless the ‘other’ stores should subsidize the higher costs of a store in a poor neighborhood. What are the chances of a robbery or looting in a suburban store in Norther Virginia vs Compton California. Any questions? Anyone? Anyone?

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- jungle J
  Posted on December 26, 2012 at 8:21am
  Man, that is almost hate speech…I love hearing a sane person tell the troof.
  
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jp2feminist
Posted on December 26, 2012 at 7:35am
Why is this a big deal? Retailers always adjust prices according to where you live. ..housing, rent, gas, groceries. Also employers pay at different rates based on where you live. Has anyone complained to the NIL or MLB about what they charge for a cup of beer?

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- jungle J
  Posted on December 26, 2012 at 8:22am
  the cup of beer thing is deep…i suspect even the above average thinker won’t get it.
  
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