Sunday 29 January 2017

Should Your Online Prices Be The Same As At Your Stall?

We are told that omni-channel retailing includes a seamless buying experience for your customer whether they buy online or in-stall. So does that mean that prices need to be the same?

We know that major retailers have different prices in different locations to allow for “market differences”. We suspect that translates to “If I can get a higher price in that location, I will go for it.” or “If competition is higher in that location I will adjust my price accordingly”.

A QVM Trader who sells, say socks, gears up his market operation for a certain level of mass demand. Volume is the key and in a popular market like The Queen Vic Market he can achieve quick turnover and keep the costs associated with an average sale at a reasonable level. But if a customer buys one pair of socks online that cost/volume ratio is destroyed. By the time the pair of $7 socks has been packed, invoiced, and delivered to the post office he is losing on the deal. It is not clear just where the break even occurs for an online transaction but it is more likely to occur with a $50 or $60 sale than a $7 sale.

Traders who sell higher priced items may not have such a problem and may be able to set uniform prices across their online and in-stall transactions.

The answer to the question “Should your online prices be the same as at your stall?” probably needs to follow standard retail thinking. In the same way that a pure online retailer can claim to offer cheaper prices because of low overheads, then a brick’s and mortar market trader should be able to sell cheaper at his stall which is his “volume” location and charge more for “inefficient” online transactions. If the reverse applies then that is fine.

There is a lot of hype in retail commentary about keeping prices the same across all your business activities. But the price you charge needs to reflect retail reality and a realistic margin. Rather than set hard and fast rules, traders should be encouraged to do what works for them - no apologies needed.