Sorry We Did It, Glad We Were Caught
It's explanation time for Amazon.com and its founder and CEO, Jeff Bezos.
In an interview with CBS News Early Show Anchor Bryant Gumbel, Bezos says it's true the company did offer different prices to different customers for the very same items, but only for a few days, to determine differences in buying patterns in reactions to different size discounts.
Bezos stresses that the different prices, on a test group of 68 DVDs, were offered to customers selected at random and not chosen through the use of demographic information or any other customer ID information.
Amazon.com does maintain a large database of customer information, but Bezos says "We don't use it at all to determine prices. This is one of the myths that has come out of this price test that we're trying to correct."
He acknowledges that the retailer originally had no intention of telling its customers about the price tests, one done last April and another early this month.
That one backfired, as DVD fans comparing notes began posting messages on the web wondering why prices on some items were varying by nearly four dollars.
"We weren't going to tell the customers about the tests," says Bezos. "Two weeks ago, there were a bunch of chat rooms online that started talking about this and they were upset about it and sent us a lot of e-mail, a lot of customer feedback."
He says Amazon.com at that time changed its policy, posted it and then sent out refunds to the 6,896 customers who paid the higher test prices.
"If we do future random price tests, we're going to – at the conclusion of the tests – which last three or four days – we're going to give everybody the lowest test price," promises Bezos.
Bezos was asked why consumers should believe that pledge.
"I think we have shown in the past when we make mistakes, we try to fix them. I think we will make more mistakes in the future and we'll try to fix them, too," says Bezos. "Our business depends on trust. I hate it when we do something like this, because it undermines that trust. We worked hard to build that reputation and to earn it over the years. We're going to keep trying to do it. It's the best reason to trust us."
The retailing CEO notes that while price tests of this type are "common practice" at many companies, it was "a mistake" because "it creates uncertainty for customers" and "we regret it."
"We're sorry we did it. We're glad we got caught. We're certainly the most scrutinized online retailer and maybe one of the most scrutinized companies in the world. We think that's a good thing because it really does help us do the right thing for our customers," explains Bezos.
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