AI Pricing - can we trust it?


  • Most retailers’ pricing decisions are still not up to date with the latest technology, but Artificial Intelligence (AI) pricing is catching on
  • With an asymmetry of information, there is a fine line between personalised pricing and ethics 

 No one forecast the 2020 rush for hand sanitiser, masks and toilet roll. Pandemic price gouging became one of the quickest ways to erode customer trust – a big mistake when loyalty is hard won and easily lost. 

The Financial Times highlighted that pandemic price increases on Amazon perpetuate: the new essential, a patio heater, could easily cost you over double what it did a year ago.

Retail Week recently published some great research on “How AI pricing will win the pricing war. The study highlighted that most retailers don’t use automation for pricing; for 40% of retailers pricing decisions are entirely manual. 

There is clearly a huge tech opportunity to move away from blanket discounting and proliferating voucher codes (which often don’t work) but there are numerous technical, data quality and integration issues. If retailers don’t embrace it, they may just lose out to the big guys, as Amazon, Target and Wal-Mart have high tech tools and data to make these decisions. 

But the truth is, AI pricing is rarely there to give consumers a better deal. Compared to John Lewis’s old “never knowingly undersold” brand promise, AI pricing would be equivalent to the strategy of “never knowingly oversold”… The Competition & Markets Authority is concerned consumers may be manipulated into buying more expensive items or may be led to believe a product is in short supply by unregulated algorithms and personalised pricing. 

We have seen a huge shift in stance of data usage and privacy over the past few years, in particular a divergence in strategy between Facebook and Apple. Tim Cook was recently quoted in a speech saying: “If a business is built on misleading users on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform”. 

What if there was a transparent AI pricing where the shopper can easily see what data is being used to personalise their experience and what are the rules applied by the algorithm? We are aiming for this at Nibble by developing a conversation between the customer and the retailer. We allow customers to use their negotiating skills to get a better price and require no log in or personal data. Not only this provides a fun rewarding experience, but also a transparent, honest and fair deal.