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Price Transparency On Steroids: The End Game

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As we careen into the 2014 Holiday Season, one thing is becoming apparent: the phenomenon called “Price Transparency ” has moved on from simple things like a “RedLaser ” app to full-fledged shopping bots that report the seemingly hourly changes of prices on the web. In the game of “find the lowest price, ” consumers are still winning.

I Googled up the term “price checkers ” and found a couple I’d never heard of before, including Consumer World’s Price Checker. Then I tried “price comparison ” and got pricegrabber.com, and Shopify’s “ten best price comparison shopping engines ” among others. Change the search slightly, and more appear on the screen.

What’s more, more than one mass media article has revealed that retailers actually increase their prices right before Cyber Monday, and show the shopper what those before and after prices were. Even dynamic pricing seems to be at risk, as the general public is becoming aware of large retailers changing price up to nine times a day.

This is important for several reasons. It suggests a certain amount of caution when changing prices. Too much intra-day pricing runs the risk of irritating consumers and sending them elsewhere. There’s an old mantra we’ve used at RSR frequently: Just because you can do it, doesn’t mean you should do it. It also means the key differentiators will not be price. Key differentiators will continue to be rapid fulfillment, solid in-stock positions, and excellent customer service. Ask yourself, will you be able to fill your customer delivery promises this year? If not, the price just isn’t going to matter.

In fact, customer service and inventory reliability might even be more important that the actual products sold. Why do I say that?

It’s clear that brands continue to investigate their relations with consumers beyond just “low price alternative. ” In a study we ran earlier this year in conjunction with SPS Commerce, we found 50% of manufacturers surveyed are already selling direct to consumers, most typically via digital channels. When push comes to shove, no one is going to be able to afford to underprice manufacturers themselves. In a war of price attrition, the brand manager going direct will always win.

To pile more fuel on the fire, IBM just published the results of its first annual consumer brands study. If you have a chance, try to get hold of it and read it. It’s got some fascinating insights from around the world, and Brian’s commentary this takes an interesting look at it, as well.

When talking about retailers, they use the term “consumer advocates ” for the most loyal shoppers. But when talking about brands, IBM uses the term “brand enthusiasts. ” While the brand enthusiast is loyal, that loyalty is increasingly fickle. We live in a world of “short attention span theater, ” where the next new thing can easily capture a seemingly loyal shopper’s fancy. Further, just because the shopper seems loyal, it doesn’t mean they want to engage with brands. And that same enthusiast will enthusiastically write a really bad product review via social media.

This is the long way round reiterating that a pure pricing play is a dangerous game. Those door busters will lose their luster if consumers know the price was cheaper just five days before. We seem to have reached the end game. Price is a zero sum game. Well-trained and helpful employees may well be the “long ball ” retailers use to create and sustain advocates.

 

 



Newsletter Articles November 18, 2014
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