Amazon has built its reputation by claiming cheaper prices and greater convenience for consumers. But a new report questions whether schools are getting the best deals by using the company. Among the concerns raised in the report, published by the nonprofit Institute for Local Self-Reliance, are that the company uses its dynamic pricing model in a large public-sector contract—and that, ultimately, school districts risk not getting the best prices and local competitors lose out on business. First, a recap. In 2017, Amazon won an five-year public sector contract with U.S. Communities, a cooperative purchasing program for local governments and school districts, with the option to renew for three additional two year periods. The contract covers office and classroom supplies as well as library books, technology and more. The report authors write that U.S. Communities estimated that the contract’s value could be worth $5.5 billion over a potential 11-year period. Typically, these contracts set fixed prices for hundreds of commonly-purchased items. Yet according to the report authors, the contract with Amazon does not guarantee prices for any items. Instead, it uses dynamic pricing, which is subject to change, and thus could end up costing school districts more in the long run. To test that assumption, the authors did a little research. They asked a firm that tracks the prices of office supplies across multiple retailers to see if a California school system would have gotten a better deal had it purchased the same supplies it got through a local supplier from… [Read full story]
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