September 12, 2000 5:55 PM PDT

Amazon backs away from test prices

Under fire from confused customers, Amazon.com has decided to back away from a price test in its DVD store and give refunds to customers who paid higher prices.

The price test, which ran early last week, affected dozens of Amazon's top-selling titles. Because of the test, which assigned prices at random to customers as they shopped, some customers found DVDs at prices up to $15 greater than other customers.

Amazon spokesman Bill Curry said that Amazon would reimburse customers who ordered DVDs affected by the test for the difference between the price they paid and the lowest test price. Although Amazon has no plans to do any more pricing tests, the company guarantees that should it run another one, customers will pay the lowest test price even if they order goods at a higher price during the test.

"We think that customers shouldn't have to worry about getting the lowest prices," Curry said. "We want them to be able to shop with confidence here."

Previously, Amazon expected customers to pay whatever price they were offered during the test.

The test on DVD prices last week was the second such test at Amazon in recent months. In May, the Seattle-based e-tailer ran a similar price test on a Diamond Rio MP3 player.

The policy change comes in the wake of a pricing glitch in Amazon's DVD store. On Thursday, Amazon offered several DVDs at up to 75 percent off their list prices. The company later informed customers who ordered the discounted DVDs that the prices were a mistake and asked them to pay a higher price or cancel their orders.

Although many customers speculated that the pricing glitch was related to the price test, Curry said they were unrelated. But the connection drawn in shoppers' minds between the incidents and the vocal criticism by customers on message boards may have encouraged Amazon's policy change.

"We always listen to our customers," Curry said. "When customers are concerned, we take that into account and do what's necessary."

Curry said Amazon used the test to explore how customer demand for the DVDs was affected by different prices. He said Amazon also used the price test to determine whether a product's price or display on the site is a bigger factor in customer demand.

Customers might be more understanding of such tests were Amazon to give preferential treatment--and prices--to its better customers, said Jonathan Gaw, an e-commerce analyst with International Data Corp. Consumers seem to accept that many airlines board their frequent fliers before their other customers, he points out.

But randomized pricing doesn't make much sense, Gaw said.

"If they're trying to find a price point, this seems a crude way of doing it," he added.

 

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