News

Giant e-tailer Amazon.com (NASDAQ:AMZN) said it
 made a mistake in implementing a random price test for
 some products, and is refunding some money to nearly
 7,000 customers who got less than the best deal on certain
 DVDs.

 The company, which took heat from a few privacy
 advocates several weeks ago after disclosing in a new
 privacy statement the amount of customer tracking it does,
 said that recent news reports "incorrectly characterized a
 recent Amazon.com random price test as a test based on
 customer demographic information. These reports were
 incorrect and were not based on the facts."

 In its statement, the company said that it had varied the
 discount levels on some products on a totally random
 basis, without respect to customer demographic
 information. The purpose of the test was to determine how
 much sales are affected by lower prices, Amazon said.

 "In retrospect, this random testing was a mistake, and we
 regret it because it created uncertainty and complexity for
 our customers, and our job is to simplify shopping for
 customers," Amazon said.

 The company added that it has changed its policy "to
 protect customers should we ever do random price testing
 again (and currently we have no plans to do so). Now, if
 we ever do such a test again, we'll automatically give
 customers who purchased a test item the lowest test price
 for that item at the conclusion of the test period -- thereby
 ensuring that all customers pay the lowest available price."

 Amazon said it has now refunded an average of $3.10 to
 each of 6,896 customers as a result of the random price test
 on DVD sales. Amazon said the five-day test on 68 titles
 had offered random discounts of between 20 percent and
 40 percent in an effort to chart the impact of pricing on
 sales.

 "We've never tested and we never will test prices based on
 customer demographics," said Amazon.com founder and
 CEO Jeff Bezos. "What we did was a random price test,
 and even that was a mistake because it created uncertainty
 for customers rather than simplifying their lives. The
 policy we put in place two weeks ago removes that
 uncertainty."

See http://www.internetnews.com/ec-news/article/0,,4_471541,00.html