U.S. school districts are paying on average 17% more for basic supplies due to unpredictable dynamic pricing on Amazon, according to a report by the Institute for Local Self-Reliance. Unlike the contracts that schools and local governments traditionally make with local suppliers, who bid to offer the best rates, Amazon Business doesn't guarantee locked-in prices, which results in big price swings throughout the year, or at times, throughout the day.
The report gives an example of an employee from one school who purchased a 12-pack of Sharpie markers for $8.99, while an employee of another school nearby was charged $28.63 for the same product on the same day.
Another example showed a Denver school placing two separate orders for bulk cases of dry-erase markers on the same day — paying $114.52 for one and $149.07 for the other.
In terms of price fluctuation, the report found that “among the 100 most frequently ordered products, the highest prices Amazon charged were, on average, 136 percent higher than the lowest.”
The Institute for Local Self-Reliance said:
“Amazon has persuaded cities and school districts to abandon competitive bidding and surrender to its dynamic, algorithm-driven pricing. This opaque system subjects buyers to erratic price swings and allows Amazon to covertly inflate prices and overcharge schools and cities.”
The organization is calling on local and state governments to ban dynamic pricing in public procurement and to prioritize independent, local businesses for supply needs.
Michael Scott called this out decades ago in a Chili's:
“Here's the thing about those discount suppliers. They don't care. They come in, they undercut everything, and they run us out of business, and then, once we're all gone, they jack up the prices. It's bad.”
An Amazon spokesperson questioned the study's validity:
“Pricing research is notoriously difficult to conduct accurately and typically lacks reliable methodology, including cherry-picked product selections, mismatched product comparisons, and comparing in-stock items with products out-of-stock at competitors.”