(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.