When it comes to convenience, it’s hard to beat Amazon. And that rationale isn’t limited to consumers: Many local districts shopping for supplies with public funds apply the same logic. But the Institute for Local Self-Reliance (ILSR) published a study earlier this month (via The American Prospect) that illustrates the cost of that bargain. It suggests that Amazon’s “dynamic pricing” has led many schools and other localities to overpay for supplies.
Public schools and local governments have historically bought supplies by soliciting competitive bids from local suppliers. Those vendors then respond with fixed price lists, delivery timelines and other terms. This competition — all out in the open, part of the public record — encourages low prices and transparency.
On the surface, ordering from Amazon appears to offer competition, too. After all, the platform includes third-party vendors fighting for your dollars. But turning taxpayer funds over to Amazon’s algorithms isn’t quite that simple. That’s because the platform’s “dynamic pricing” (algorithmically driven real-time changes) is inherently opaque.
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According to the report, Amazon’s contracts with public entities don’t include fixed price lists. Instead, they include language built around swings. “This contract has a dynamic pricing structure in which the price for items listed on the online digital marketplace is driven by the market,” Amazon’s contract with Utah reads. “This contract will not need to be amended when prices fluctuate.”
Below are some examples of wild price discrepancies for these districts. All of ILSR’s examples are from localities buying supplies from Amazon Business with public funds in 2023.
A City of Boulder, CO employee ordered a 12-pack of Sharpie markers from Amazon Business for $8.99. On the same day, a Denver Public Schools worker ordered the same markers for $28.63.
Amazon charged Clark County, WA, $146,000 for 610 computer monitors. On another day, that same order would have cost $24,000 less.
Pittsburgh Schools bought two cases of Kleenex for $57.99 each. On the same day, Denver Schools paid $36.91 for a single case.
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