If you wait long enough you see things coming back into fashion that you thought had gone away forever. The Washington Post of 9/27/00 has a frontpage report about how Amazon and other merchandising pioneers have discovered the glories of “differential pricing.” When you log on, chances are they know a lot about you even before you begin to stroll through their cyberstore and consider their wares. Using the instant recall in their supercomputers, they can make a considered judgment as to what they think you are willing to pay, and charge you accordingly.
I don’t want to misrepresent this. Amazon, according to the Post report, has only been caught out doing this a few times, and has explained that they were isolated instances when they were doing research. (What’s that old Tom Lehrer line, “…let noone else’s work evade your eyes, but plagiarize, plagiarize, plagiarize–but always, to call it research…”). So I am not accusing anyone of doing this regularly, not yet anyway. Still, like a cloud on the horizon, the portents are there, and if this new technique can improve the bottom line, we know what we can expect.
This new and promising merchandising frontier is largely but not entirely limited to cyberspace. Coca Cola was reportedly at least considering a vending machine with a thermostat, that ups its price when the weather gets hot. But the really keen thing about Amazon’s reported breakthrough is the sophistication with which it immediately evaluates its customers before deciding how much to stick them. I can’t tell from the report whether Amazon bases its evaluations only on its own prior experience with that particular customer, or whether it taps instantaneoulsy into that vast subterranean data bank that knows everything about every one of us who has ever applied for Social Security or paid taxes or had a bank account. Never mind, the handwriting is on the wall.
The Achilles Heel of the new system is that John gets sore when he discovers that Suzy next door bought the same item for less, and takes his spleen out on the purveyor. Amazon is probably working on this problem right now. The airline industry has a similar problem, and has worked out ways to get around it, so there is precedent. I sadly predict that throughout our great country, the retailing industry will become even more explicitly dependent on confusing the customer than it has ever been before.
Ah, the fond memories this brings back! Forty-eight years ago I was just settling in to my new post at our Legation (sic) in Damascus, Syria, and discovering the joys of bargaining. Down in the Suq Hamadieh there was a whole line of fancy stores selling rugs and antiques and other mostly useless objects to tourists and rich Lebanese. The premier store was Asfar and Sarkis, and the premier salesman in that emporium was a suave and well-spoken gentleman named Souki George. I struck up a friendship with George, who accepted me as a friend rather than just another American to be stuck, since I was in residence and presumably would advise a lot of visitors where to go to get gouged. He let me know some of the secrets of his trade. “Carl,” he told me once when his store was empty and he had a quiet moment, “the most important thing you have to acquire is the ability to judge accurately when a customer first walks in the door just how much money that person has to spend…oops, excuse me for a minute, please.” He dashed to the door as a lady dripping expensive jewelry entered. He was away a lot more than a minute, and when he came back, he looked like a cat who had just swallowed a mouse. “Venezuelan,” he said. “the only thing better than American, these days.” (Remember, it was 1952, before Japan and Europe had fully recovered from the war).
Well, Souki George taught me a lot about how he went beyond the initial recognition phase to assessing the customer’s preferences and eventually sticking it to him or her. I can say this, knowledge is power, and becoming privy to the seller’s dirty little secrets has empowered me as a consumer, at least in the Middle East. And some of those principles may even help me now, as I contemplate the electronic bazaar of the future.
But I certainly am not telling you what those secrets are, not for free. Maybe I’ll put them in a book, maybe I’ll just advertise on the internet. But don’t worry, for you there will be a special price. Just call or email me and ask.
Carl Coon 9/27/00