US Schools are Paying Exorbitant Prices for Basic Supplies Due to Amazon's Dynamic Pricing Model, Report Reveals
School districts and local governments across the United States have been found to be overpaying for basic supplies due to a contract with Amazon that uses dynamic pricing. The Institute for Local Self-Reliance has analyzed government data and public records to show how the platform, which offers everyday low prices, can lead to erratic price swings and inflated costs.
A report by the non-profit group reveals that Denver's school district paid $5.7 million to Amazon in 2023, with some purchases costing nearly four times more than others due to dynamic pricing. The district could have saved around $1 million if it had negotiated for the lowest prices offered by Amazon.
Under the platform, companies like Amazon use algorithms to continuously adjust prices based on real-time data. While supporters argue that these tools help companies respond to changes in supply and demand, regulators warn of their potential to set high prices.
Researchers obtained detailed data on 55,000 purchases of repeatedly-ordered Amazon items from 23 public entities, including Denver's school district. On average, the localities could have saved 17% had they consistently received the lowest prices offered by Amazon for those items.
Amazon has persuaded cities and schools to abandon competitive bidding and surrender to its dynamic pricing model, which subjects buyers to erratic price swings and allows the company to covertly inflate prices and overcharge schools and cities. The Institute for Local Self-Reliance is calling on local and state governments to ban dynamic pricing in public procurement and prioritize independent, local businesses for supply needs.
The report highlights a shift towards Amazon Business, a purchasing portal that allows government officials to browse through a familiar interface with a large selection of product offerings. This approach means that government officials are not actively soliciting bids and bargaining with vendors to guarantee lower prices.
One example cited in the report is Denver's school district, which paid $15.39 for a red Swingline stapler sold by Amazon, only to pay four times that amount just days later for the same stapler sold by a third-party seller on Amazon.
Amazon has countered that its platform offers customers price ceilings that ensure they don't pay above an agreed price while capturing savings when prices drop. However, the Institute for Local Self-Reliance argues that this rapid, digital procurement approach is less transparent than older methods and does not provide safeguards to protect consumers.
The report also highlights previous allegations about Amazon's algorithmic pricing model, including a lawsuit filed by the Federal Trade Commission (FTC) in 2023 against the company over its use of "Project Nessie" to manipulate consumer prices. The case is ongoing.
School districts and local governments across the United States have been found to be overpaying for basic supplies due to a contract with Amazon that uses dynamic pricing. The Institute for Local Self-Reliance has analyzed government data and public records to show how the platform, which offers everyday low prices, can lead to erratic price swings and inflated costs.
A report by the non-profit group reveals that Denver's school district paid $5.7 million to Amazon in 2023, with some purchases costing nearly four times more than others due to dynamic pricing. The district could have saved around $1 million if it had negotiated for the lowest prices offered by Amazon.
Under the platform, companies like Amazon use algorithms to continuously adjust prices based on real-time data. While supporters argue that these tools help companies respond to changes in supply and demand, regulators warn of their potential to set high prices.
Researchers obtained detailed data on 55,000 purchases of repeatedly-ordered Amazon items from 23 public entities, including Denver's school district. On average, the localities could have saved 17% had they consistently received the lowest prices offered by Amazon for those items.
Amazon has persuaded cities and schools to abandon competitive bidding and surrender to its dynamic pricing model, which subjects buyers to erratic price swings and allows the company to covertly inflate prices and overcharge schools and cities. The Institute for Local Self-Reliance is calling on local and state governments to ban dynamic pricing in public procurement and prioritize independent, local businesses for supply needs.
The report highlights a shift towards Amazon Business, a purchasing portal that allows government officials to browse through a familiar interface with a large selection of product offerings. This approach means that government officials are not actively soliciting bids and bargaining with vendors to guarantee lower prices.
One example cited in the report is Denver's school district, which paid $15.39 for a red Swingline stapler sold by Amazon, only to pay four times that amount just days later for the same stapler sold by a third-party seller on Amazon.
Amazon has countered that its platform offers customers price ceilings that ensure they don't pay above an agreed price while capturing savings when prices drop. However, the Institute for Local Self-Reliance argues that this rapid, digital procurement approach is less transparent than older methods and does not provide safeguards to protect consumers.
The report also highlights previous allegations about Amazon's algorithmic pricing model, including a lawsuit filed by the Federal Trade Commission (FTC) in 2023 against the company over its use of "Project Nessie" to manipulate consumer prices. The case is ongoing.
. newsflash: dynamic pricing is not always the best deal. like, seriously $5.7 million for swinglin staplers? that's crazy! what if they just bought from local office supply stores instead? would've saved them a bunch of cash 
. also, who thought it was a good idea to give amazon a free pass on price inflation? 
which isnt cool.
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. anyway thats my 2 cents lolol
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. We can't keep trusting these tech giants to do what's best for us. It's time for a change 
!
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! theyre makin them pay way more than they need to for basic supplies like staplers & pens 
cuz of their fancy dynamic pricing model 
. schools coulda saved millions if they had just stuck w/ traditional bidding processes 
.
and i mean whats wrong with regular bidding or something? its not like our schools need some fancy algorithm to tell us how much to pay for stuff we already know what were looking for just give us a straight deal 
. It makes no sense. They got all these public entities like schools and cities signing up to their Amazon Business thingamajig without even thinking about whether they're getting the best deal 
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. We should be supporting local businesses and making sure we get a fair deal 
. This Amazon Business thing is just a way for them to squeeze more cash out of unsuspecting public entities 
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And what's up with Amazon just being able to inflate prices whenever they want? 
. Like, can we get some real transparency here? 
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. and what's up with amazon's algorithmic pricing model? it sounds like they're just messing around with prices left and right, taking advantage of people who don't know any better 
It's time to take a closer look at these contracts and make sure we're not being taken advantage of. 
I feel for those schools struggling to make ends meet... it's just not fair that they're getting ripped off on basic supplies like staplers 
, we need more transparency in government procurement and an end to these predatory practices. 
