Home > data science, modeling, rant > Staples.com rips off poor people; let’s take control of our online personas

Staples.com rips off poor people; let’s take control of our online personas

August 22, 2013

You’ve probably heard rumors about this here and there, but the Wall Street Journal convincingly reported yesterday that websites charge certain people more for the exact thing.

Specifically, poor people were more likely to pay more for, say, a stapler from Staples.com than richer people. Home Depot and Lowes does the same for their online customers, and Discover and Capitol One make different credit card offers to people depending on where they live (“hey, do you live in a PayDay lender neighborhood? We got the card for you!”).

They got pretty quantitative for Staples.com, and did tests to determine the cost. From the article:

It is possible that Staples’ online-pricing formula uses other factors that the Journal didn’t identify. The Journal tested to see whether price was tied to different characteristics including population, local income, proximity to a Staples store, race and other demographic factors. Statistically speaking, by far the strongest correlation involved the distance to a rival’s store from the center of a ZIP Code. That single factor appeared to explain upward of 90% of the pricing pattern.

If anyone’s ever seen a census map, race is highly segregated by ZIP code, and my guess is we’d see pretty high correlations along racial lines as well, although they didn’t mention it in the article except to say that explicit race-related pricing is illegal. The article does mentions that things get more expensive in rural areas, which are also poorer, so there’s that acknowledged correlation.

But wait, how much of a price difference are we talking about? From the article:

Prices varied for about a third of the more than 1,000 randomly selected Staples.com products tested. The discounted and higher prices differed by about 8% on average.

In other words, a really non-trivial amount.

The messed up thing about this, or at least one of them, is that we could actually have way more control over our online personas than we think. It’s invisible to us, typically, so we don’t think about our cookies and our displayed IP addresses. But we could totally manipulate these signatures to our advantage if we set our minds to it.

Hackers, get thyselves to work making this technology easily available.

For that matter, given the 8% difference, there’s money on the line so some straight-up capitalist somewhere should be meeting that need. I for one would be willing to give someone a sliver of the amount saved every time they manipulated my online persona to save me money. You save me $1.00, I’ll give you a dime.

Here’s my favorite part of this plan: it would be easy for Staples to keep track of how much people are manipulating their ZIP codes. So if Staples.com infers a certain ZIP code for me to display a certain price, but then in check-out I ask them to send the package to a different ZIP code, Staples will know after-the-fact that I fooled them. But whatever, last time I looked it didn’t cost more or less to send mail to California or wherever than to Manhattan [Update: they do charge differently for packages, though. That's the only differential in cost I think is reasonable to pay].

I’d love to see them make a case for how this isn’t fair to them.

Categories: data science, modeling, rant
  1. johndburger
    August 22, 2013 at 7:52 am

    There’s zero evidence for your thesis in the WSJ story. Distance to a rival explained NINETY PERCENT of the price difference. Do you believe that if they had thrown median income into their regression, it would have had even more explanatory power?

    • August 23, 2013 at 2:44 pm

      Did I say that? No I did not. I said that it’s correlated. I believe that the Staples model is based entirely on zip code, for that matter, and the fact that the WSJ only see 90% is because they didn’t totally figure it out. But the fact remains that, given that, poor people _in general_ will be asked to pay more for stuff.

      Please calm down and next time, read more carefully before you spill toxic energy onto my comment section. This is your final warning.

  2. Abe Kohen
    August 22, 2013 at 7:56 am

    The price of first-class mail is uniform throughout the US. The price of sending a package is not. No one is forced to buy online. Walk to the store or to their rival. That will also improve the buyer’s health as long as they do NOT stop at McDonald’s for an unhealthy meal. If you’re going to buy online and are the victim of price discrimination go to hidemyass.com or a similar service.

    • August 22, 2013 at 8:05 am

      “No one is forced to buy online.” – True but shouldn’t we have a level playing field (i.e. shouldn’t everyone be charged the same thing?) Staple.com FAIL!

      • Abe Kohen
        August 22, 2013 at 8:43 am

        In a free market, prices are (usually) not regulated by the government. Also everyone is free to boycott staples &/or staples.com.

        I often open 3 browsers, with different cookie settings, to the same web page, and buy at the lowest price. I’ve done this with e-bags and found differences of up to 20% on luggage costing between $100-$200. They target each consumer differently based on your cookies.

        • August 22, 2013 at 9:00 am

          Abe you’re proving my point. So what you’re saying is that technophiles like you are entitled to better pricing schemes? Other people who don’t know about cookies deserve to pay more?

        • Abe Kohen
          August 22, 2013 at 9:31 am

          Caveat emptor! Most mom & pop retailers have been doing this for years, not with cookies, but with sizing up the customer and determining the highest price the buyer is willing to pay. Car buying is a perfect example. We can differ on the morality of the practice, but it is not illegal.

        • bob
          August 22, 2013 at 9:56 am
        • August 22, 2013 at 10:51 am

          Abe, what do you mean by cookie settings?

        • Abe Kohen
          August 22, 2013 at 3:51 pm

          Balasr2013, cookies are files which track your activity. A better name would be spy files. Each browser has a way for the user to specify which cookies s/he will allow to be stored. In Chrome, click on the 3 horizontal bars (settings), click on show advanced settings, under Privacy click on Content Settings and you will see Cookies. Click on All Cookies and Site Data. I was reading “zeit.de” in German and it set 11 cookies. You can remove cookies. You can restrict who is allowed to set cookies. If you turn off all cookies, you will find some sites inoperable, as they claim they NEED to store your info in 1 or more cookie files. You won’t be able to bank online and you won’t be able to read certain newspapers. But you will be in control.

      • August 22, 2013 at 10:08 am

        Everyone is not charged the same amount for flying from DC to Chicago, even on the same flight.

    • August 22, 2013 at 8:07 am

      Good point about cost of sending packages. That’s the only differential in price I am willing to accept though.

      • johndburger
        August 22, 2013 at 5:39 pm

        If Staples stores with nearby rivals have sales more often than more isolated stores, do you think that’s unfair?

        • August 22, 2013 at 6:16 pm

          I think you misunderstand me. I think it’s high time we consumers find our own tools to fight back against a system that’s taking advantage of people because of where they live. We think of ourselves as getting a fair price but it’s based on things that are invisible to us. I think we should make those invisible things work for us, not against us.

        • johndburger
          August 24, 2013 at 10:55 am

          I am all for leveling the playing field and I think the Internet might be a strong force for that. But my question wasn’t rhetorical, I’m genuinely trying to understand your position.

          There are lots of forces that make it difficult for the poor to get things as cheaply as better-off people can. For example, poor people sometimes cannot afford to buy the jumbo size, or to pay warehouse club fees. I’m wondering if you would also characterize those situations as ripping off the poor?

        • August 27, 2013 at 4:28 pm

          Of course, but not in a way we could fight back about. The cool thing about the staples.com rip-off is that we have the tools to fight back.

  3. kris
    August 22, 2013 at 9:57 am

    Clearly, you have not tried walking very much in most of the US.
    I have (I don’t drive), and it is remarkably difficult to find stores
    which are walking distance from most places people live in, outside
    a few big cities. Even if the stores are close distance wise, roads are
    not designed with pedestrian traffic in mind, and one has no sidewalks and
    often there are highways with poor or non-existent traffic lights
    for crossing. The transportation policy in most of the US is designed
    for vehicle owners and not for pedestrians.

  4. August 22, 2013 at 9:59 am

    “Specifically, poor people were more likely to pay more for, say, a stapler from Staples.com than richer people.”

    Am I the dumbest guy in the room? If you want to generate more sales, why would you target poor people to pay MORE?

    I’m a bit of a comparison shopper online, which I do extensively, but I’ve never felt as though I’ve been SO duped on a price. For example, Target vs. Walmart vs. (my favorite) Amazon which usually wins my business. I seldom get into my car to travel to a retail store and I live in a suburb of SF!

    How much does a glass of water cost in the middle of the desert?

    • August 22, 2013 at 10:05 am

      Happens all the time! Poor people are more desperate.

      Plus, the point is you don’t see this price discrimination.

      • August 22, 2013 at 10:15 am

        But, Cath…I DO see the point about the lack of transparency. Unfortunately, Capital One was a client of my company years ago and it was horrifying the things I learned about ‘behind the curtain.’

        I’m just confused about the premise that poor people may be ‘more desperate’ buyers, for say, staplers! And that desperation causes them to do what? Panic and buy more stuff at a higher price?

        Sounds a little wobbly to me…

        • Thomas
          August 22, 2013 at 6:01 pm

          In the article, they also mention an instance where higher income pay more. In NYC, Manhattanites and Staten Islanders see higher price than Brooklynites and Queensians. The article suggests that the poorer people were seeing higher prices because they live farther from a Staples. Although there’s a lot of missing information here, it seems reasonable to conclude that if two zip codes are equidistant from a Staples store, Staples would want to show lower prices to residents of the poorer zip code.

  5. August 22, 2013 at 10:07 am

    While I, too, would pay a dime to save a dollar, I think the correlation with zip mirrors a bit what happens in the brick and mortar world. That is, there is a hardware store in Bethesda. It’s prices are known to all as being higher than Lowes and Home Depot. Sometime 15% higher. But it is convenient and they are not. So they charge more because they can. Because there is a cost in time and money to travel to Home Depot. And the zip code in which they are ripping people off is 20816 one of the wealthiest in the country. In fact, the prices are lower at Home Depot and Home Depot is located in a less affluent area. In the online world it seems that they are replicating the convenience/cost decision and asking online customers, in effect, whether they want to pay a higher price online or head to the less convenient brick and mortar store than has what they need. Having said that, just as they are playing a capitalist game of pricing, I think consumers ought to play their own as you suggest.

  6. Delbert
    August 24, 2013 at 11:05 am

    Use Firefox as your browser on MACs or Windows systems. Learn about the preferences. Go to the privacy setting, use “custom settings for history”, check “accept cookies from sites” “accept third party cookies” then, “delete cookies when I close Firefox”. Thus you can flush cookies from your hard drive. Also, Show “Show cookies”,
    You can delete them selectively or all at once. Don’t be a sucker, use Firefox and thwart spyware.

  7. Larry Smith
    September 3, 2013 at 5:04 pm

    Knowing a lot about online advertising and a fair amount of retailing, Occam’s Razor would probably cut toward general pricing/mis-pricing stupidity (algorithm gone wild); standard pricing overwritten by supply chain (inventory control and sell-through) systems; or multivariate testing.

    No offense to Staples but I seriously doubt they employ anyone smart enough to break the law without obvious traces, and BTW they employ many of those same less affluent customers who might have noticed. But then again Best Buy did it, so I could be wrong.

    The real story of price discrimination is in bulk pricing where, for example, the single roll of toilet tissue is $1 and the 12 pack is $8. Correlation and causality are 100% on this one where rich people have flexible budgets with larger spaces to store and an understanding of unit pricing being different that the out-of-pocket cost; the poor just need it, spred too few dollar over too many needs, and generally can’t stockpile. Check it out the next time you go to Walmart or Sam’s and be shocked at the massive pricing differentials.

  8. Maxine L. Rockoff
    October 29, 2013 at 7:47 pm

    Hi, Cathy,

    I’ve been leery of buying from Staples ever since I saw this headline. Well, I shopped today and used a $25 coupon that I got in e-mail and I’m very happy with the result.

    Maybe it just proves your point – that I’m paying less than I would if I lived in East Harlem. Perverse!

    Looking forward to seeing you Friday,

    Maxine

    [image: Inline image 1]

    • Abe Kohen
      October 29, 2013 at 7:53 pm

      Hi Maxine,

      I shop frequently at the East Harlem Costco paying the same price as East Harlemites and Upper East Siders, and an occasional Upper West Sider. It’s usually cheaper than Staples for their overlapping products.

  1. August 24, 2013 at 6:58 am
  2. August 25, 2013 at 7:37 pm
  3. August 26, 2013 at 10:20 am
Comments are closed.
Follow

Get every new post delivered to your Inbox.

Join 1,746 other followers

%d bloggers like this: