Price Comparison Function Offers Competitive Advantage

Discussion
Sep 11, 2009
George Anderson

By George Anderson

It works for insurance companies and perhaps it will
also work for e-tailers. The “it” is a comparison shopping function that
allows consumers to see how the site they are shopping on stacks up price-wise
with competitors.

According to a new study by the e-tailing group, Comparison
Shopping Is A Way of Life
, 36 percent of consumers spend more than half
an hour comparison shopping before making a decision on purchasing a commodity
product while online. Nearly two-thirds spend at least 16 minutes.

“Savvy
consumers are using the Internet to find value, particularly when shopping
for commodity products. Efficiency of price comparison and the ability to
merely Google it, check Amazon’s prices or visit a few competitors is core
to today’s consumer shopping behavior,” said Lauren Freedman,
president of the e-tailing group, in a press release. “This survey certainly
shows that consumers would like the convenience of accessing such information
on any given retailer’s website.”

Sixty-three percent of consumers say they
would like to see competitors’ prices while shopping on a retailer’s website.
Seventy-eight percent of consumers said they would likely return to a site
that shows competitors’ prices. Thirty-six percent said they would be “much
more loyal” to the retailer
displaying the information as a result.

Discussion
Questions: Will we see comparison-shopping tools begin to appear in large
numbers on retailers’ websites? Do you see more upside or downside
in providing a comparison-shopping app on e-tail sites?

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13 Comments on "Price Comparison Function Offers Competitive Advantage"


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David Livingston
Guest
11 years 7 months ago

We might see this but you know a retailer is not going to show competitors with lower prices, only higher prices. So don’t expect to see a retailer try to show Wal-Mart’s prices on their website.

Bob Phibbs
Guest
11 years 7 months ago

Those who want to ride the fast elevator down to commodity-ville are sure to add comparison shopping to their site; thus advertising competitors.

Look, anyone can be a discount whore and once you decide to do it, you are trapped in a way of life that isn’t profitable or pretty. That goes whether you’re on the web or in-store.

The next wave of the Internet will get out of the dirt-scratcher mentality and appeal to something other than cheap and easy.

Kevin Sterneckert
Guest
11 years 7 months ago
In addition to knowing the price at the time of purchase, there are web services that are emerging that will protect the consumer should a price decline occur within a given period of time. One such sight is priceprotectr.com. This site understands the price rules of many retailers including Best Buy, Costco, The Home Depot and many others. If you purchase an item from one of the participating retailers and the price declines within a determined window of time, you are alerted to the price decline and provided with instructions on how to work within the retailers’ guidelines to receive a rebate for the difference of the lower price and the price that you paid. IRI recently showed in a study they conducted that over 70% of consumers are making purchase decisions before they arrive at the store (vs. 60% at the store, just a year ago). The internet is proving to be a great resource for shoppers before, during and after the purchase. Savvy retailers will make sure they provide guided experiences while in… Read more »
Nikki Baird
Guest
Nikki Baird
11 years 7 months ago

Hmmm. Call me a skeptic, but unless the retailer is clearly a low price leader, I doubt they will be offering price comparisons. Most other retailers spend so much time trying to convince customers that either their selection, or their service, or their ability to know what their customers like best is worth paying more. They will hardly be interested in pointing out exactly how much they think that is worth in terms of price premiums.

Also, I think price comparisons can be somewhat misleading–first, what about shipping and handling? And second, I find I spend more time searching for coupon or promo codes than I do price comparing. I could see retailers doing something more along those lines: “see if you’re eligible for a coupon” as a way to get more info out of a customer. We already see sites offering affiliate-type programs that follow that kind of philosophy–Fandango’s “buy something from a partner and get your movie ticket free” offer.

Len Lewis
Guest
Len Lewis
11 years 7 months ago

Funny that George mentioned insurance. I just switched my auto insurance after doing online price and coverage comparisons.

But I think this is better suited to big ticket items. That’s where consumers are going to spend the time doing side by side comparisons–not for bananas.

Warren Thayer
Guest
11 years 7 months ago

Unless you’re the low-price leader, why be an idiot and do this? On another note, the “independent” sites that compare prices across “all” retailers for you, often omit non-advertising retailers. Lots of the travel websites, for example, don’t include discount air carriers.

Roger Saunders
Guest
11 years 7 months ago

The Consumer is working harder than ever to capture information in order to make a Price/Value decision. If the e-tail sites operate with full transparency and integrity (and the consumer will not when they are and are not), they will be embraced by segments of the population that appreciate the convenience to value shop.

Gene Detroyer
Guest
11 years 7 months ago

Most significant purchase I make starts with a visit to price comparison web sites. I get there though Google. They tell me all I need to know including reviews of the retailers. I don’t always go with the cheapest because I often have more confidence in the slightly more expensive retailers.

There is no need for retailers to provide their own price comparison info. It already exists and will continue to be expanded by clever independent websites. As the online retail activity continues to grow, pricing will become more transparent and consumers will make better and better decisions with regards to the price/value trade-offs they make on what they buy.

Shilpa Rao
Guest
11 years 7 months ago

As a customer, I would love to have this feature. But for a retailer, it has more disadvantages than advantages. Price comparison is more of a function of other service providers which crawl to these sites to find you a best price and let you compare. I agree with Nikki, coupons/discounts is an area where retailers can work on.

Another area, I think retailers need to work on is information. It’s just not prices that customers are comparing online; they are also finding the right mix of price and functionality. If retailers can aid that, online shoppers wouldn’t go elsewhere. Though most sites provide features of comparing products, and user comments and others, it becomes an information overload for the customer. If they could summarize these and also let the user know some statistics and what his/her friends/trusted advisors have said about the product, especially from that store, it could immensely help shopper decision.

Sandy Miller
Guest
Sandy Miller
11 years 7 months ago

My reasonably obvious guess is a retailer broadly posting competitive prices will cause a lot of trouble. Again obviously, many retailers doing this will play “gotcha,” finding an isolated example of a high price. The only place where it worked at all was supermarkets, putting out competitive baskets where shoppers could see and evaluate competitive prices and less of that is done today. Anybody want to name and take on Walmart?

Marge Laney
Guest
11 years 7 months ago

Online customers are going to search for the best deals anyway, so why not post some comparisons of your product pricing; maybe you can control the comparisons a bit. If it’s a commodity product they will buy the lowest price unless there is some compelling reason not to, like service.

But lots of items that are researched online are bought in stores. Consumers in many cases still like to feel the fabric and “kick the tires” so to speak before they buy. And there’s the opportunity for the brick and mortar retailer; no matter how much information and logic consumers are armed with from their online experience, a good salesperson can cause even the savviest shopper to throw all that out the window.

Linda Bustos
Guest
Linda Bustos
11 years 7 months ago

Showing price comparison on your site can have very negative effects.

1. If you post an incorrect price and your competitor spots it, you could be in for legal action.

2. If you post an incorrect price and your customer spots it, it hurts your credibility.

3. Giving customers too much choice is a conversion killer, guaranteed.

I spotted a retailer two years ago showing competitor pricing on its product page….

The retailer did not keep the feature on its site for long.

Dave Hamel
Guest
Dave Hamel
11 years 7 months ago

Given all the different SKUs, private label products, and short-term price changes at retail, this price comparison is a giant database issue. It’s a lot easier in insurance where it is a “commodity” product with a relatively small number of brand offerings. But how do I price compare a Gap T-Shirt? Mattresses? Is it really worth price comparing broccoli?

Maybe on larger ticket items from major brands (online shopping web sites already do this among the sub-retailers with whom they are allied). But across the board, I wouldn’t want to be IT guys in charge of this one.

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