US Schools Overpay for Basic Supplies Due to Amazon's Dynamic Pricing System, Report Claims
A recent report by the non-profit Institute for Local Self-Reliance has found that US schools and local governments are overpaying for basic supplies due to Amazon's dynamic pricing system. According to the report, which analyzed government data and public records, school districts and local governments across the country have been bound by contracts with Amazon, leading to erratic price swings and inflated costs.
One example cited in the report is a Denver, Colorado school district that spent $5.7 million on Amazon in 2023. Had it negotiated for locked-in prices, the district could have saved around $1 million, or about 17 percent of its total spending.
The dynamic pricing system used by Amazon continuously adjusts prices based on real-time data, allowing companies to adjust to changes in supply and demand. While proponents argue that this helps companies adapt to market conditions, regulators have warned of the potential for high prices and unfair business practices.
Researchers analyzed purchases made by 23 public entities, including Denver's school district, and found that these localities could have saved an average of 17 percent if they had consistently received Amazon's lowest prices. The report also highlighted cases where schools paid significantly different prices for identical products sold by the same vendor on Amazon, with prices ranging from $26 to over $100.
In response to the criticism, Amazon has stated that its platform offers everyday low prices that meet or beat those of other online providers and provides tools to help customers lower their spend. However, the company's model discards traditional safeguards used in public procurement processes, such as publicly available bid documents and multi-year price commitments.
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 concerns that Amazon's rapid, digital procurement approach lacks transparency and allows the company to manipulate prices without public scrutiny.
This development raises questions about the role of Amazon in US public procurement and the impact of its pricing system on schools and local governments. As the case continues to unfold, policymakers and stakeholders will need to carefully consider the potential benefits and drawbacks of using dynamic pricing in public procurement.
A recent report by the non-profit Institute for Local Self-Reliance has found that US schools and local governments are overpaying for basic supplies due to Amazon's dynamic pricing system. According to the report, which analyzed government data and public records, school districts and local governments across the country have been bound by contracts with Amazon, leading to erratic price swings and inflated costs.
One example cited in the report is a Denver, Colorado school district that spent $5.7 million on Amazon in 2023. Had it negotiated for locked-in prices, the district could have saved around $1 million, or about 17 percent of its total spending.
The dynamic pricing system used by Amazon continuously adjusts prices based on real-time data, allowing companies to adjust to changes in supply and demand. While proponents argue that this helps companies adapt to market conditions, regulators have warned of the potential for high prices and unfair business practices.
Researchers analyzed purchases made by 23 public entities, including Denver's school district, and found that these localities could have saved an average of 17 percent if they had consistently received Amazon's lowest prices. The report also highlighted cases where schools paid significantly different prices for identical products sold by the same vendor on Amazon, with prices ranging from $26 to over $100.
In response to the criticism, Amazon has stated that its platform offers everyday low prices that meet or beat those of other online providers and provides tools to help customers lower their spend. However, the company's model discards traditional safeguards used in public procurement processes, such as publicly available bid documents and multi-year price commitments.
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 concerns that Amazon's rapid, digital procurement approach lacks transparency and allows the company to manipulate prices without public scrutiny.
This development raises questions about the role of Amazon in US public procurement and the impact of its pricing system on schools and local governments. As the case continues to unfold, policymakers and stakeholders will need to carefully consider the potential benefits and drawbacks of using dynamic pricing in public procurement.
... think about it, $5.7 million on Amazon alone for a school district... that's like buying a whole new playground 
... 17% savings would be a huge deal, just imagine the extra resources they could get for their students 
... and it's not just one district, this is happening all over the country 
... it's like we're being taken advantage of by Amazon's pricing system 
... I feel bad for these schools, they should be able to negotiate better prices for essential supplies 
... maybe it's time for a change in the way public procurement works 
so like what's up with this? Schools are literally throwing cash at Amazon just because it can change prices on a whim... 17% of $5.7 million is still $1 million, that's not even a new textbook fund 
and honestly who needs everyday low prices when you're just trying to get basic stuff like pencils and paper? 
. So, basically Amazon's prices for stuff that schools and gov'ts need can change super fast, sometimes going up like crazy 
. It doesn't make sense that they can get hit with such big price swings like that.
. It's not right that Amazon gets to play this game with them. They should have some kind of guarantee or something so they can plan ahead without getting hit with huge price jumps 
. If everyone has to go through Amazon for their stuff, it could be tough for the little guys to compete 
. We need to make sure that everyone's got access to good deals and not just Amazon's prices 
. The fact that they're making money off this is just icing on the cake. Local governments need to wake up and stop relying on these big corporations for everything. Can't we support local businesses instead? 
. can't we just go back to good ol' fashioned procurement processes? 
. And it gets even worse - schools are paying different prices for the same stuff from the same vendor 
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. And what's up with the huge price swings? $26 to over $100 for the same product? That's just insane! 
. It's time for local gov'ts and schools to take a closer look at their contracts with Amazon and consider alternative options 
. We need more fairness in public procurement, not less 
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