Amazon’s dynamic pricing is causing chaos for school budgets

School districts are paying extra for basic supplies thanks to unpredictable dynamic pricing on Amazon, which is costing them on average 17 percent more, according to a report by the Institute for Local Self-Reliance (ILSR). Unlike the contracts schools and local governments would traditionally make with local suppliers, who would bid to offer the best rates, Amazon Business doesn’t guarantee locked-in prices, resulting in huge pricing swings. 

For instance, the report mentions an employee of the City of Boulder, Colorado who purchased a 12-pack of Sharpie markers for $8.99, while an employee of the nearby Denver Public Schools was charged $28.63 for the same product on the same day. ILSR cites similar price fluctuations for Crayola markers, Kleenex tissues, Expo dry erase markers, Elmer’s school glue, and more. 

ILSR takes issue with Amazon’s lack of transparency around how these price changes are calculated by its algorithm, and what triggers different prices for different buyers. However, it seems like the more often an item is ordered, the more significant the price fluctuations can be. ILSR found that “among the 100 most frequently ordered products, the highest prices Amazon charged were, on average, 136 percent higher than the lowest.” 

As the report points out, Amazon Business has also reduced competition for these necessary school and office supplies, cutting down the number of independent suppliers from 1,300 to 900 over the past decade. A price comparison of commonly-purchased school supplies found that an independent supplier was able to beat Amazon’s prices on 68 percent of products. 

A separate study published last month found that Amazon offers on average 14 percent lower prices than 23 other leading U.S. retailers. In the case of state and local governments, though, that doesn’t necessarily reflect lower prices that could have been negotiated with local independent suppliers, such as bulk discounts, especially compared with the peak prices from Amazon’s dynamic pricing.