Price Manipulation On The Web

And in today’s ecommerce news:

Orbitz Worldwide Inc. has found that people who use Apple Inc.’s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.

The idea being that Mac users, which tend to be of higher income are more willing to spend than their PC counterparts.

It’s important to note that this sort of manipulation is nothing new. Websites regularly optimize content based on the user. If you live in an affluent city like New York, San Francisco, or Los Angeles, as determined by your IP address you may be offered a different (often more expensive) price. Repeat customers (cookies help here) may not see all the price cutting someone coming in from a search engine might. Search referrers might be offered a lower price since they are already looking at competitors.

Then of course is the obvious problem with travel sites. They are based on systems like SABRE which have a long history of bias (and rules against them have since expired in the US as far as I’m aware). Expecting a travel site to reliably offer you the lowest price is like expecting a tiger to leave the helpless gazelle alone. They are for convenience, not the best deal.

This would have been slightly ironic had it been Expedia, who was originally a division of Microsoft.

Engineering Efficiency

Internet companies have the unique ability to scale quicker than any other industry on earth. Never before has a company been able to position itself from being nothing more than an idea to being in the living rooms of millions around the globe in a matter of hours. While this introduces seemingly unlimited opportunities to grow it also allows for exponential waste if a company isn’t careful. It’s interesting to see how they scale. Scaling businesses in many ways isn’t very different than scaling servers and software stacks.

The Classic Example: UPS

Started in 1907 and adopting the name United Parcel Service in 1919 UPS has no real “high tech” background unless you include the Ford Model T. That doesn’t mean it couldn’t become more efficient. UPS has made a science of the delivery business. For example it’s famous for it’s “no left” policy. Simply put they found that avoiding left turns means less time waiting at lights which means less fuel is wasted. The more efficient routing formerly done by humans now computerized saves them 3 million gallons of fuel in 2007 alone. Lets do the math:

Assuming they run 100% diesel at an average cost of $2.87/gallon in 2007 [doe] multiplied by 3 million that’s $8.61 million dollars by trying to avoid left turns.

Not bad for a souped up mapping application.

By having their drivers do things like turning of the ignition while unbuckling their seat belt at the same time, and scanning for the doorbell while walking towards the door (it’s easier to see from a distance than up close) they can shave time off of their routes.

Then of course there’s package tracking. While customers might like to know in what city their weight loss taps are sitting tracking systems help reduce loss and monitor package routing for optimal efficiency.

Cutting Utility Bills: Google

Being the largest search engine, a large ad network, email provider, analytics firm, mapping service, video site, and whatever else they do means Google needs a ton of servers. Cramming servers into data centers and keeping them cool to prevent hardware failures is a complicated and expensive task. Keeping the whole thing powered is also really expensive. Google has scrutinized server designs to eliminate all waste possible. This has resulted in Google having more horsepower at a lower cost than their competitors. Having more capacity at a lower cost means Google can do more at a lower cost than their competitors. I won’t discuss Google in too much detail since they did a great job themselves recently and I mentioned it the other day in another blog post: Google’s Data Center Secrets.

Shipping Efficiency: Amazon

Amazon’s long been improving efficiency by using data collection and analysis to encouraging their customers to spend more. Their algorithms to recommend related products you might be interested in is one of the best out there. Their ordering system is streamlined to prevent customers from bailing before completion. Their products are SEO’d to appear on the top of Google searches. That doesn’t mean Amazon can’t improve other parts of their business.

Amazon several months ago started a Frustration-Free Packaging program. Here’s how they describe it:

The Frustration-Free Package (on the left) is recyclable and comes without excess packaging materials such as hard plastic clamshell casings, plastic bindings, and wire ties. It’s designed to be opened without the use of a box cutter or knife and will protect your product just as well as traditional packaging (on the right). Products with Frustration-Free Packaging can frequently be shipped in their own boxes, without an additional shipping box.

The key here is “can frequently be shipped in their own boxes”. By shipping a box alone rather than packaging they can skip a step in their warehouses (and the packaging materials that go with packaging something for delivery). This also lowers the weight as those extra boxes don’t weigh 0 oz. The frustration free packaging is also the perfect shape for efficiently filling trucks and strong enough to not crush easily thus lowering returns due to damage.

Amazon now even has a feedback form [login required] for users to share what they think of their package. This has the added bonus of helping further reduce the inefficient shipping practices so common right now.

Amazon’s also done a significant amount of work on their infrastructure to make their servers scale well using tech such as EC2 and S3. By selling capacity to other companies they able to take advantage of economy of scale as well as diversify their business beyond just retail. Of course they are planning their data centers to have access to cheap power.

These aren’t haphazard attempts at increasing efficiency, these are well calculated engineered approaches to removing even the smallest inefficiencies with the knowledge of how they compound as operations scale. Aren’t they clever?

How To Build A Good Order/Shipment Notification Email

I buy a decent amount of stuff online, both physical goods and services from various vendors. It amazes me how few get the order confirmation and shipment notification emails right. Most companies do a downright awful job.

Order Confirmation

Order confirmations should be sent shortly after an order has been sent and the credit card has been accepted. It should contain the following information:

  • Order # – This should be in the subject as well as the body. Obvious.
  • Sanitized payment information – The last 4 digits of your credit card should be included, or other billing information.
  • Itemized order list – Each item, description, quantity, stock status (or est. date) should be listed in a table.
  • Shipping Address – Where is my stuff going?
  • Shipping Method – USPS? UPS? FedEx? Overnight? Ground?
  • Estimated ship date – If different things have a different shipping date, it should be per item, otherwise one date specified.
  • Contact Information – Email address, link to contact form, phone number to get in touch with store

Shipment Notification

A shipment notification should be sent for each day something ships. All shipments from all warehouses should appear in 1 email. For example if I order 3 things and it ships from 3 warehouses on 1 day, I expect 1 email. If I order 3 things and it ships over 2 days from any number of warehouses I expect 2 emails, one each day. If there is more than one package, I expect each to be listed in the email.

The email should contain the following:

  • Order # – Again, obvious
  • For each package it should tell me:
    • Delivery Address – Where is this package going?
    • Shipment Method – How the item is being mail (USPS, UPS, FedEx, overnight, ground etc.).
    • Estimated Arrival – When is this package expected to arrive?
    • Tracking Number – Tracking number to track package, there should be a direct link to shipper to track package NOT a page that requires you to login first. Most stores mess this up. I shouldn’t need to login. I just want the number. (Pro Tip: search Google with your tracking number for an quick direct link to the tracking status page).
    • Inventory – What is in this package? Should be an itemized list with quantity.
  • Contact Information – Email address, link to contact form, phone number to get in touch with store

It makes things so much easier the closer companies get to following this. Most companies get about 80% of the list, only a select few get this done correctly 100% of the time. The closest I’ve seen to date is ThinkGeek who has been pretty close to perfect every time I order.

When Shipping Costs More Than The Product

Shipping is more than the costSo I needed a longer USB cable. Newegg.com to the rescue. Found a nice generic brand cable with good reviews (they tend to be every bit as good as the 24K gold, diamond encrusted name brand cables you can buy at certain electronics stores). The irony of it all is that the shipping is just a few cents shy of being more than the cable. Still cheaper than going to the store, but silly it costs so much.

Is this a complaint? No not really, shipping isn’t free, I know that. And it’s not the sony screw incident, but it’s still odd.

Why Use Google Checkout?

I just recently made a purchase using Google Checkout. As a disclosure this was my first and only one so far. I base my observations on that purchase and that purchase alone. I did it with Buy.com, and got $20 off my purchase. After all, how can you pass that up? I also qualified for free shipping. The process was extremely simple and strait forward as Google services typically are. However I did notice a few minor quirks:

  • Confirmation emails from both Google and Buy.com, which is really unnecessary and should be avoidable.
  • Two different order numbers is confusing when you check your status. Go to Buy.com and you now have to select which order type: Buy.com, Google Checkout, or PayPal to view the status. That’s an extra step that really shouldn’t happen. You can also check the status from within Google Checkout, but no tracking number.

The real advantage to Google Checkout was the discount ($20 off my purchase with no questions, rebates, coupon codes). Other than that, it’s just a way to keep all your online purchases in 1 easy to read place. I wonder how many really need such functionality? I almost never have more than 2 or 3 things (and even that is very rare) on order. Even in those cases I get emails when they ship, and can check the status easily. I never feel that it’s disorganized or I could loose track of things. Even when everything is from different places.

So what’s the incentive to use Google Checkout? There are some for merchants, but really no clear advantage for consumers when purchasing with larger retailers. The only real place where it would be helpful is with smaller sites where you may not want to give the merchant your credit card and feel better with Google mediating. Ebay would be another place, though not allowed. Most mainstream merchants will likely still process payments themselves, I don’t see the Amazon.com’s, Buy.com’s, Overstock.com’s, etc. using Google Checkout exclusively. So why not just use the billing system they provide?

So what’s the incentive to use the service now that the savings are done (the promotion ended on December 26th)? Does anyone see a real advantage of the service when using popular merchants? I personally don’t. I wouldn’t have bothered to use it if it wasn’t giving me a discount. Google claims:

Stop creating multiple accounts and passwords.
With Google Checkout™ you can quickly and easily buy from stores across the web and track all your orders and shipping in one place.

How many people regularly shop from more than a handful of retailers? Is this really such an issue? I’d guess most people tend to use the same username/password on multiple sites anyway (or a variation, or a password manager), or use SafePasswd.com to help them generate passwords they can remember (hint, hint). Browsers also remember login credentials for users. Amazon goes as far as keeping users logged in and offers “1-Click” purchasing.

Shop with confidence.
Our fraud protection policy covers you against unauthorized purchases made through Google Checkout, and we don’t share your purchase history or full credit card number with sellers.

Most credit card companies offer the same fraud protection. Purchase history? So they will ship my package and not record what went where? How is that audited? My guess is merchants know who bought what. I do believe they keep your credit number away from sellers, but do you often buy from someone you don’t really trust (besides Ebay, which doesn’t allow Google Checkout)?

Control commercial spam.
You can keep your email address confidential, and easily turn off unwanted emails from stores where you use Google Checkout.

I’m not sure about anyone else, but the sellers I buy from don’t spam me. I just choose not to receive promotions from the ones I don’t want.

Perhaps I’m a stubborn person for not purchasing from just anyone with a website (since I know they aren’t that difficult to make). I tend to buy only from reputable merchants with a proven track record. I know offers too good to be true, typically are. I wouldn’t walk into a shady store with 0 customers in a bad neighborhood either. Maybe that’s just me.

So what’s the killer feature of Google Checkout? What does it offer?