Will price-comparison apps eventually end up hurting consumers - Canadian TV, Computing and Home Theatre Forums

 
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post #1 of 2 (permalink) Old 2011-12-18, 07:11 PM Thread Starter
 
Join Date: Jul 2010
Location: Toronto, Canada
Posts: 662
Question Will price-comparison apps eventually end up hurting consumers

I don't have a smartphone, but I assume it would come in handy to allow me to quickly compare the various prices for a specific product that I saw on sale while shopping. Many "sale" prices are often quite high when compared to the already low prices of the competition.

The big box stores often sell similar products that have different model numbers (only one letter or number is different from the exact -- or virtually identical product sold elsewhere) or are part of "exclusive" package deals, so as to perhaps make it more difficult to compare prices at other retailers. Many (but not all) of the price-comparison apps will often come up empty if you search for these so-called "exclusive" products.

If all the big retailers decide to match or beat their competitors' prices, it could eventually lead to the thinning of the herd. Fewer retailers could lead to less competition and even more price fixing.

To counter the price-comparison apps, it might be necessary for retailers to offer more one-day deals, or similar limited-time offers that will make it less likely that prices will be matched or beaten by the competition.

Many stores require the flyers (or perhaps let the staff compare online prices for various products) before they match the prices of the competition, but if consumers decide to use one or more of the various price-comparison apps instead of making impulse buys, will that be enough to influence the big boys to loosen their price-matching policies?

For Canadians (and many Americans), being forced to to carry around flyers to get price matches is still necessary at many stores. But as smartphone purchases rise even more, perhaps that will force more Canadian retailers to honour the power of the price-comparison apps.

http://lifehacker.com/5866851/five-b...omparison-apps
[Five Best Mobile Price Comparison Apps]

http://en.wikipedia.org/wiki/Price_comparison_service
[wikipedia page - Price comparison service]

http://online.wsj.com/article/SB1000...ice+comparison
[Dec 15, 2010: Phone-Wielding Shoppers Strike Fear Into Retailers]

Quote:
DECEMBER 15, 2010

"Only a couple of retailers can play the lowest-price game," says Noam Paransky, senior manager at consultancy Kurt Salmon Associates. "This is going to accelerate the demise of retailers who do not have either competitive pricing" or a standout store experience.

Because consumers made more frugal by the economic downturn are flocking to the cheapest offers they can find, comparison shopping via smartphones is making it harder for many retailers to charge higher prices in stores than on their websites.

"Those days are over," says Laura Conrad, president of comparison site PriceGrabber.com. Despite the higher costs associated with a bricks-and-mortar store, "The line between offline and online has been blurred."

This week, Best Buy settled a lawsuit by the Connecticut attorney general alleging that it showed web prices at in-store kiosks that were higher than those customers saw on home computers.

The shift in consumer behavior also imperils some of the most lucrative aspects of selling in stores, such as the ability to use salespeople to lure customers into making impulse buys, or entice them to buy one thing after they came in for another. A 10-country study by management consultant Accenture this year found that 73% of mobile-powered shoppers preferred peering into their phones for basic assistance over talking to a retail clerk.

For diehard deal-hunters such as Mary Saunders, a Virginia mother of two, the phone is fast becoming the weapon of choice in the battle for the best bargain. Hunting for Christmas gifts on a recent afternoon, Ms. Saunders used her iPhone at several stores to scan bar codes on every item on her children's Christmas wish lists, saving $2 here and $3 there.

Ms. Saunders still gathers newspaper circulars and visits all the big stores near her home in Stephens City, Va., to scrutinize specials. But her phone gives her a new sense of empowerment.

Through a partnership with TheFind, Best Buy now targets personalized advertisements to shoppers when the program detects that they are in stores such as Wal-Mart.

If shoppers use TheFind's free app to compare prices on TVs at Wal-Mart, for example, the phone gleans the particulars from their recent search and shows them ads of similar electronics for sale at Best Buy. The items aren't always identical, and the prices aren't always better, but it is an attempt by Best Buy to enter the competition, similar to the way that marketers now target special offers to consumers based on what they are searching for on home computers.

The hard sell doesn't stop there. If a customer inside a Best Buy compares prices through TheFind and discovers a better deal elsewhere, the retailer also makes one last pitch for the sale with ads showing them deals on other products at the store, such as a similar Blu-ray player that comes with a free movie disc.

"Instead of letting that person walk out, you are telling the customer, 'Look, we know you're already here, let's make a deal,'" says TheFind's Chief Executive, Siva Kumar. "It is not a consumer-only game. Retailers can use it to their advantage."

While Best Buy is aggressively entering the stores of rivals, it still refuses to match competitors' prices shown on comparison programs. Best Buy's guarantee applies only to deals in print advertisements by neighboring competitors, a policy Mr. Judge admits Best Buy may have to change.

One way stores attempt to beat this price-comparison game is by stocking products that manufacturers have slightly modified exclusively for them, signaling the phone that no other store has the product.

Ms. Saunders used her iPhone to scan the bar code on a case for the Nintendo DSi handheld gaming system at Wal-Mart, but it didn't show up at other stores. A worker informed her that it is a special Wal-Mart bundle: the case plus earphones and a plug for $19.99.

But Ms. Saunders was undeterred. She typed the item's description on TheFind and discovered that Walmart.com, the retailer's website, offers a better bundle including a car adapter—for $5 less.

"It's like, 'gotcha,'" she said. "I feel so good when that happens."
--------------------------

http://www.retailtouchpoints.com/cro...ison-apps.html
[Dec 23, 2010 - Meet the Enemy: Price Comparison Apps]

Quote:
Dec 23, 2010

“Retailers will respond the way they always have and that is to adjust their pricing,” said David Livingston, Principal, DJL Research. “The days of ad matching will be over and all a customer will have to do to negotiate will be to show the store they can get the item at a lower price — so match it or beat it.”

The bottom line, one panelist noted, is that technology is definitely changing the way shoppers behave, as they are empowered with more powerful and convenient technology.

“I don't agree with some who believe that service and selection can offset these trends and that these considerations are greater than price,” said Charles Walsh, President, Omniquest.

“Price comparison apps negate the attributes of selection and quality since these are held equal in comparing same items using price as the qualifying factor. Once the best price has been established then the last factor mentioned, service, may come into play for the buyer.”
------------------------------------------

And now a year later ...

http://phx.corporate-ir.net/phoenix....6655&highlight
[Dec 6, 2011: Amazon press release - Is That Deal Really A Deal?]

http://www.mobilecommercedaily.com/2...rice-check-app
[Dec 8, 2011: Amazon offers mobile discount via Price Check app]

http://www.mobilecommercedaily.com/2...ctivated-world
[Dec 12, 2011: Should retailers feel threatened by Amazon’s new price comparison app?]

http://www.nytimes.com/2011/12/13/op...ogic.html?_r=1
[Dec 12, 2011: Amazon's Jungle Logic]

http://online.wsj.com/article/SB1000...Tabs%3Darticle
[Dec 18, 2011: Info-Age Shoplifting]

http://pragmaticpricing.com/2011/12/...ns-price-check
[Dec 18, 2011: Hooray(?) for Amazon’s Price Check]

Quote:
Dec 18, 2011

The complaint against Price Check is that Amazon will learn prices from the mom and pop stores. So what? Amazon is not going to change prices to compete with mom and pop.

Amazon may change prices to compete with Wal-Mart or any retailer that is dominant in their market space, but this is not the emotional put-mom-and-pop-out-of-business scenario. Small retailers can charge anything they want and Amazon will not respond.

You’re a small business owner, what should you do? Three things:

1. Don’t worry about someone using Price Check in your store. This person is tech-savvy and probably isn’t going to be a customer anyway. However, try not to waste resources serving them.

2. Use Amazon’s same technique. You have access to the prices that Amazon charges. Watch them. Use that information while setting your prices. This is especially true for all products where you think customers will shop for prices. Check out the web site www.camelcamelcamel.com for Amazon’s historical prices.

3. Most importantly – DO NOT COMPETE ON PRICE against Amazon. Know their prices, and charge a little more. Focus on the value that you add: immediate delivery, personable help, easier returns, etc. Your role is to add value over Amazon so you can charge a little more. People who do not appreciate your added value will buy from Amazon. You need to attract and capture the customers who do appreciate your value.

Although it is impossible to tell, my belief is that Amazon’s Price Check is more likely to hold prices higher. When Wal-Mart knows that it can’t stealthfully undercut Amazon, they will do it less often. Mom and Pop’s real fear should be a price war between Amazon and Wal-Mart. If these two behemoths get into a price war, mom and pop stores will suffer. But if Amazon and Wal-Mart find a way to implicitly collude by knowing each others’ prices, it holds prices up so the mom and pop stores have more room to make money. There is more money to share between them when they implicitly collude.

As small businesspeople, let’s hope they implicitly collude. Of course as consumers, we prefer the price war.
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post #2 of 2 (permalink) Old 2011-12-19, 09:12 AM
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Join Date: Apr 2003
Location: Gatineau and Ottawa
Posts: 11,101
I will say no.

1. Not everyone has a smart phone.
2. Not everyone is aware of price matching.
3. Not everyone is interested in price matching.
4. Price Matching conditions are unclear or confusing.
4. Not all price matches are honored.
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