The Web is full of personalized content, whether it’s a Netflix recommendation or the results of a Google search.
But consumers have protested when e-commerce companies have extended their behind-the-scenes personalization to prices, charging different sums for the same goods, or pushing some people toward higher-priced offers.
A new study of top e-commerce websites found these practices—called discriminatory pricing or price steering—are much more widespread than was previously understood.
The study, by a team of computer scientists at Northeastern University, tracked searches on 16 popular e-commerce sites. Six of those sites used the pricing techniques; none of the sites alerted consumers to that fact.
Among the study’s findings: Travel-booking sites Cheaptickets and Orbitz charged some users searching hotel rates an average $12 more per night if they weren’t logged into the sites, and Travelocity charged users of Apple Inc. ’s iOS mobile operating system $15 less for hotels than other users.
Home Depot Inc. shows mobile-device users products that are roughly $100 more expensive than those offered to desktop-computer users. And Expedia and Hotels.com steer users at random to pricier products, the study said.
“In the real world, there are coupons and loyalty cards, and people are fine with that,” said Christo Wilson, an assistant professor at Northeastern who led the research team. “Here, there’s a transparency problem. The algorithms change regularly, so you don’t know if other people are getting the same results.”
Travelocity, a unit of Sabre Corp. , didn’t respond to a request for comment.
Home Depot didn’t dispute the accuracy of the findings, but the home-improvement retailer wasn’t “intentionally steering search results,” said company spokesman Stephen Holmes.
Many factors could influence what a customer sees on the company’s sites, Mr. Holmes said, including prior browsing and purchase history, the location of the store, and whether the customer is on mobile or not.
Home Depot didn’t charge users different prices for identical products but showed more-expensive products to people who shopped using a smartphone, the researchers found.
Chris Chiames, vice president of corporate affairs at Orbitz Worldwide Inc., said in an email that the company clearly advertises its loyalty programs and other deals. He said the discounts some members see on the site apply to just a small proportion of hotels—fewer than 5%. So, it wouldn’t make sense, and might even be misleading, to advertise lower prices to all members, he said.
“The Northeastern study states that ‘overall, most of the experiments do not reveal evidence of steering or discrimination,’ and so we are curious as to why a handful of exceptions to searches on thousands of hotels is the basis of this paper’s conclusions, or even worthy of a story,” Mr. Chiames added. “Would you be as interested in a Kmart ‘blue light special’ deal that was made available to shoppers who happen to be in a certain store at a certain time?”
Moreover, some deals are priced by Orbitz’s hotel partners, he added. “The hotel might have limited inventory of that price, and so they choose to display the rate on a more-limited basis, akin to the flash sale,” he said.
On Orbitz and Cheaptickets, also owned by Orbitz Worldwide, consumers who registered through the websites’ free log-in were shown a tab labeled “members only” that offered lower hotel prices. The company didn’t advertise that users could receive discounts for logging in.
Orbitz has been accused of price discrimination in the past. A 2012 Wall Street Journal investigation found the company charged Mac users as much as 30% more than PC users for a night’s lodging. The company discontinued the practice, which it characterized as a month-long experiment. The Northeastern researchers confirmed the company no longer discriminates between Mac and PC users.
Expedia and Hotels.com, both units of Expedia Inc., don’t show different prices because of users’ differing characteristics but because the company constantly refines its pricing strategies using a method called A/B testing, the researchers said. Shoppers are randomly placed in a group that highlights either less or more costly hotels. “Either way, the user has no idea what bucket they’ve been placed in,” said Northeastern’s Mr. Wilson.
One group of users, for example, were shown an average hotel listing price of $187 a night. The other group saw prices that were $17, or roughly 10%, less.
“Presenting different booking paths and options to different customers allows us to determine which features customers appreciate most” said Expedia spokesman Dave McNamee, in an email. “Pricing is not manipulated by Expedia.com.”
Consumers have long protested price discrimination. In 2000, Amazon.com Inc. Chief Executive Jeff Bezos apologized for an internal research program in which consumers were shown different prices for identical products. He called the experiment a “mistake.” (Amazon and eBay Inc. weren’t included in the Northeastern study because those companies’ services have little power over the prices they charge, the researchers said.)
Staples Inc. varied its online prices based on users’ locations, according to a 2012 article in The Wall Street Journal. The researchers didn’t examine Staples but pointed out that retailers might vary prices by region because the cost of procuring a given product can differ in different parts of the country. They didn’t study geographic variations for that reason.
In their study, the Northeastern researchers devised a statistical method to weed out what they called “noise,” or legitimate factors that might cause prices to vary—a technique they hope will be used in future studies of online personalization.
The research team recruited 300 beta users, who allowed the researchers to track their experience on different sites.
The team also developed hundreds of fake accounts to see whether historical purchase patterns and clicks through the sites had an impact on price personalization. They didn’t examine the impact of consumers’ overall Web-browsing behavior on pricing because they would have no way to know how e-commerce sites tracked participants across the Web.
Write to Elizabeth Dwoskin at firstname.lastname@example.org
Bruce Dickinson has spent his life singing in the rock band Iron Maiden. Now, the frontman is working on an altogether different type of metal: airplanes. Mr. Dickinson just finished a three-year world tour with his legendary metal band, but he's also been a pilot for 25 years, and is now focusing on a new solo act: He set up last year a company that mixes airline leasing, plane maintenance and pilot training—all in the Welsh valleys.
The business, Cardiff Aviation, plans to build an airline fleet of up to 10 aircraft within a few years and fill a market niche from its 132,000-square-foot hangar in St. Athan, Wales, Mr. Dickinson says.
Having clocked more than 7,000 hours flying time working part time as an airline pilot for British World Airlines and Astraeus Airlines, Mr. Dickinson also occasionally flew his band around the world for gigs. In 2008, Iron Maiden decorated an Astraeus Boeing Co. BA +0.14% 757 in their own branded livery and flew it on a world tour.
At Cardiff Aviation's hangar, he sells maintenance and repair services to aircraft-leasing companies and airlines. The facility can work on all Boeing and Airbus Group EADSY +1.63% NV narrow-body jets.
Mr. Dickinson also aims to convince leasing companies to turn over their old, unused and unloved planes. He'll refurbish them, sublease them, and use his pilots to fly them, to help bolster airlines' fleets in busy periods, like the summer holidays.
Cardiff Aviation will provide the plane and pilots on ad hoc charters in Europe—"wet leasing" in industry jargon—and then fly the planes south for the winter to Asia to offer the same service to customers there. Mr. Dickinson hopes to begin wet leasing next year and plans to offer training for airlines pilots from his hub in Wales.
"It's knowing the niches that all these areas occupy and seeing how they fit together," Mr. Dickinson said on the sidelines of the Farnborough air show in England last month.
Authored by Rory Jones via wsj.com.