Get a discount on Amazon? You may have awi

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More than a quarter of vacuum cleaners sold on Amazon at some point claimed to offer a discount when they actually just raised the price, according to new research.

By associating a price increase with the introduction of a previously unannounced “list price” for a product, Amazon signals to shoppers that they are getting a discount when they are actually paying 23% more, on average. , for their new vacuum cleaner than they would have done just a day earlier. A few days after the price increase, the price drops and the list price and misleading discount claim disappear.

Sellers of digital cameras, mixers, drones and even books have used the same deceptive practice, although less frequently. The fake discounts led to increased sales despite being charged more money, which led to the products improving in Amazon’s sales ranking.

These findings come from new research on this pricing phenomenon led by Jinhong Xie of the University of Florida, Sungsik Park of the University of South Carolina and Man Xie of Arizona State University. The team published their analysis (DATE) in the journal Marketing science.

“When you see this list price comparison, you naturally assume you’re getting a discount. It’s not just that you didn’t get a discount. You actually paid a higher price than before. the seller does not display the discount request,” said Jinhong Xie, a professor at UF’s Warrington College of Business.

Currently, regulations prohibiting misleading prices require sellers to use truthful price comparisons. Consumers have won class action lawsuits against retailers like JC Penny and Ann Taylor for making discount claims using illegitimate values ​​in price comparisons.

In the pricing practice discovered by Xie and his colleagues, the list price can be truthful but still misleading. This is because retailers advertise a price discount by displaying the list price when they actually raise prices and give the impression of an offer. But most of the time, the product is sold at a cheaper price without any comparison with a list price. It is the moment of price comparison that misleads buyers.

“Current regulations only relate to the value of the list price, and they say nothing about misleading consumers by manipulating the timing of the introduction of the list price,” Xie said.

The researchers studied household product pricing on Amazon from 2016 to 2017. Xie and his colleagues tracked more than 1,700 vacuum cleaners and collected nearly half a million individual price observations. While most introductions of a new list price were associated with a price drop or no price change, 22% were instead accompanied by a price increase.

Because shoppers perceive they are getting a deal, these misleading discounts have actually boosted product sales rank on Amazon, an indicator of sales volume.

“We found that by increasing the price by 23% on average, the seller gets an 11% advantage in their sales ranking among all products in the home and kitchen category,” Xie said. “It allows companies to achieve the impossible: increase margins and increase sales simultaneously.”

Other products used this practice between 3% of the time for books and more than 13% of the time for mixers, digital cameras and drones.

Xie says consumers can protect themselves by questioning the ubiquitous “discounts” advertised in online stores. Buyers should not assume that a discount request means the price is lower than normal. Instead, shoppers should compare purchases across multiple websites. They can also use online tools that provide price histories to find out if the advertised price they see is really a bargain or not.

“We believe consumers need to be aware so they can protect themselves,” Xie said. “And we believe consumer organizations and regulators should assess this new marketing practice to determine if and how to manage it.”


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