Are you paying more because of Artificial Intelligence?
The answer is probably yes you are and you don't even notice it.
For a while now consumers have been subject to dynamic pricing when purchasing online for items like airfares, hotel rooms and Uber based on the demand. The higher the demand the higher the price. While paying extra is annoying we also benefit when demand is low and often get bargains when demand is low like early-bird discounts.
Well hold onto your wallets because brick and mortar retail is starting to implement dynamic pricing too.
Your behaviors give insight into how much you would pay.
They way in how you respond to special offers is giving away how much you are willing to pay for certain items and helps algorithms create pricing based on your behavior.
As these machine learning algorithms get smarter about your buying patterns they can also drive your behavior buy determining what price to offer you at what time to most likely result in you making a purchase either in-store or online.
What worries me is where this can lead. Gamification of pricing could actually drive behavior in the future and look at the damage such ideas have done to society in the gambling industry.
Could your grocery store become the equivalent of a video slot machine? Enticing you with rewards and discounts the more often you visit?
AI pricing bots can also work for you
Innovate products like the Amazon Echo and Google Home are already assisting consumers to find the best deals. I have recently noticed that Amazon Echo often gives the user a greater discount than you can get on the actual Amazon website for the same product from the same supplier. This is designed to encourage you to use the voice search service more often.
Retailers have already been using supply and demand to drive prices but as rewards programs become more personalized they also are starting to use your behavioral purchasing patterns to dynamically determine prices. Bonus reward points on your favorite regular purchases and discounts for using your loyalty cards at checkout are an example of algorithms starting to be introduced in-store.
Loyalty programs are really just a way for retailers to collect more data. Consumer unwittingly are giving up their buying behaviors to retailers so they can sell that data back to the brands you buy and other advertisers.
My hope is someone soon finds a way to trick the algorithms into giving bigger discounts more often. Now that would be a hack worthy of us constantly giving brands more and more data.