Retailers Hiding Prices Online
By Tom Ryan
Much like some fine jewelry shops, some e-commerce sites are making
prices for items difficult to spot. Only by adding the merchandise to their
shopping carts are consumers able to see the cost. According to an article
New York Times, keeping the price tag somewhat hidden is part of a strategy
by major brands to counter the internet’s tendency to drive prices down.
are seeing firms of all types test the waters" with strategies to control online
pricing, Christopher Sprigman, associate professor of intellectual property
at the University of Virginia School of Law and a former antitrust lawyer at
the Justice Department, told the newspaper. "They feel they have more freedom
to do it now."
Manufacturers’ ability to control prices got a shot in the arm
with a 2007 Supreme Court ruling (Leegin Creative Leather Products v. PSKS)
that gave them considerably more leeway to dictate retail prices. Brick & mortar
retailers can no longer drop prices in circulars below minimum levels. But
manufacturers also consider any price online as an advertisement and complain
whenever e-commerce sites set prices below the minimum.
That’s why statements
such as "To see our price, add this item to your cart" frequently appear on
e-commerce sites. The Times noted that last week,
prices were missing on Amazon.com for a number of products, such as the Milwaukee
Sub-Compact Driver drill kit, a Movado men’s Esperanza watch and an Onkyo 7.2-channel
home theater receiver. One noticeable result is that the items don’t show up
on search sites like Google Product Search and PriceGrabber.com. The article
noted that this trend "has arguably weakened one of the implicit promises of
e-commerce: that quick searches and visits to comparison shopping sites will
yield the best deals."
Most online retailers complain that the missing prices
confuse consumers and give an advantage to big chains, which have circular
restrictions but can mark down prices at the store level. They also say the
practice of enforcing minimum advertised prices has spread from consumer electronics
to other industries like sporting goods and jewelry.
"We think consumers are
best served when the retail marketplace is open and transparent and retailers
have an opportunity to offer the best prices and services, and are not controlled
from above by manufacturers," said Brian Bieron, eBay’s senior director for
domestic government relations.
But manufacturers contend the frenzy around
ever-lower prices online, fed by search engines and comparison shopping sites,
has some websites selling product at a loss to capture market share. Another
concern is that their largest retail partners will not match online price cuts
and may stop carrying their products altogether.
"At the end of the day, it
will become a race to zero if you don’t do anything to manage the issue," said
Jon C. Jordan, chief executive of Southern Audio Services.
Do you think being evasive with pricing is a good policy for e-retailers?
Do you agree that brands should be allowed to establish a minimum advertised
price for their products? Should a product in an online store be considered
advertising in this context?