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December 02, 2006

WSJ: Online Retailers article in context of Richard Mason

Richard Mason's article summarized the threat that the dispersion of information brings to our society. In reflection of privacy, accuracy, property, and accessibility, Mason brings to light the potential harm that the spread and increasing availability of information could bring. Using this as a relative check point, it is possible to see whether online retailers are over-stepping their bounds, or simply bringing a new way of shopping to light.

An analysis of this relative to online retailers follows:

Privacy: It is true that online retailers are acquiring certain demographic information about shoppers without their knowing, and using this to "better market to them". Should this be allowed? Well, often it can lead to price discounts to customers. While it's true customers can face HIGHER prices as a result, nobody is forcing consumers to purchase the product at that price.

Accuracy: Given the example of Overstock.com's method of determining the gender of a shopper by examing the pattern of the movement about the website, it's highly possible that mistakes could be made in this area. The accuracy of customer information is also threatened by the possibility that one household comprised of two males and two females may use one account to do all of their shopping. The question here is, is innaccurate customer information - possibly leading to a male's viewing of an advertisement or promotion from Bath & Body works - truly a major threat to society?

Property: Given that customers aren't really behind the permission of the release of their information (mostly), the concept of the release of this property could be a problem. Untrusting shoppers may not like a company acquiring this property - and then possibly price differentiating accordingly, leading a shopper paying more for an item - without the customer receiving some payment form for providing the information. Do companies pay for the release of this information in some way? Often they do pay in the form of discounts consumers recieve as repeat customers, or through emails the company sends to preferred customers.

Accessbility: The simple question here is, do the organizations have the right to acquire this information? This is up to debate. A simple cost/benefit analysis should lead most impartial users to realize the benfits outweigh the costs.

Companies like Overstock.com, ebay.com, and Amazon.com all have used the acquiring of customer information in some way to better price their products to customers, and logically help make the company more money. Customers ARE given the opportunty for more discounts, but also could be presented with higher prices on products. A company knowing it's customers shopping habits allows them to present more products the customer may not have initially considered, however, the use of this information allows companies to more easily exploit their customer's buying habits.

In conclusion, the use of this information by companies is currently not overstepping any boundaries and presenting serious threats to society. Customers can often benefit from the companies use of this information, and in all reality, this is "gathering of customer information" is just the corporate response to customers "gathering company pricing information". The internet allows customers to compare prices incredibly easily, and now companies are doing the same. Elimination of one rightly requires the elimination of the other. Currently, the use of this information by both sides of the market is just increasing social welfare, and the benefits far outweigh the cost. If customers face a higher price on their "usual" website, they can just as easily find a lower price by searching around a bit more.

Posted by rentsche at December 2, 2006 01:07 PM


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