Report claims US schools experiencing significant price fluctuations for essential items due to Amazon's 'dynamic pricing'

Across the United States, school districts and local governments may be paying more than necessary for everyday supplies due to contracts with Amazon that tie them to dynamic pricing, according to a report by the non-profit Institute for Local Self-Reliance based on public records and government spending data.

One analysis highlighted that Denver Public Schools could have saved roughly $1 million in 2023 if they had been able to lock in the platforms lowest prices. In that year, the district spent $5.7 million through Amazon, and the report estimates a potential 17% savings if consistently charged the minimum rates.

For instance, on August 15, 2023, Denver ordered two bulk cases of dry-erase markers at different prices: $114.52 and $149.07. This fluctuation reflects Amazons dynamic pricing model, which automatically adjusts costs using real-time data. While proponents argue it helps adapt to supply and demand changes, critics warn it can drive up prices unpredictably.

The study examined around 55,000 purchases from 23 public entities, including office and classroom essentials such as glue, copy paper, cleaning wipes, and crayons. On average, municipalities could have saved 17% if charged the lowest Amazon prices for those items.

The report claims Amazon has encouraged public agencies to forgo traditional competitive bidding in favor of its platform. The Institute said this creates an opaque system where prices swing unpredictably and allows the company to overcharge schools and local governments.

The nonprofit recommends banning dynamic pricing for public procurement and prioritizing local suppliers. Amazon responded that the report is flawed and misleading, emphasizing that its platform provides cost savings, local sourcing options, and tools for budget management.

Spending through Amazon has grown rapidly. Public agencies serving over 50 million Americans spent $2.2 billion with the company in 2023, nearly four times the 2016 figure. Some school districts saw Amazon purchases increase from $462,000 in 2016 to $1.1 million in 2023, adjusted for inflation. Instances included identical orders of snacks or play sets purchased at widely differing prices due to dynamic pricing.

Amazon maintains that its platform allows bulk purchasing, price ceilings, and access to certified local vendors. However, the report argues the process is less transparent than traditional procurement methods, which involve public bidding and long-term price agreements.

Examples cited include Denver Public Schools paying $15.39 for a stapler from Amazon and, days later, $61.87 for the same model from a third-party seller. Other districts, like Green Bay, have used Amazons bulk-buying tools to reduce costs and speed delivery, according to school officials.

The report draws on interviews with local leaders, contracts, and data from 122 state agencies and 128 local governments, noting a trend of moving supply purchasing to Amazon Business. Critics argue this reduces transparency and eliminates safeguards present in traditional procurement.

Amazons Utah contract explicitly allows prices to fluctuate dynamically without amendment, though the company states it offers price ceilings to prevent overspending. Promotional material from officials claims the platform also increases oversight by tracking employee purchases.

The report comes amid wider scrutiny of Amazons pricing practices. In 2023, the FTC and 17 state attorneys general filed a lawsuit alleging the company manipulated prices through an algorithm dubbed Project Nessie, designed to raise consumer costs by predicting competitor reactions. Amazon denied wrongdoing and contested the allegations.

Author: Connor Blake