14 Nov 2018
Variance in product pricing is becoming a much more serious affair, in light of research by leading consumer magazine Which?.
The Which? research suggests that being behind with setting product pricing competitively not only damages sales but also the reputation of particular brands. That’s right. It can actually harm your brand, if your competitors are selling the same products you sell, for cheaper prices.
In this post we address the Which? research in detail and discuss what it means for online retailers, as the 2018 Christmas season approaches.
Trusted consumer magazine, Which? has just published a comprehensive study on which online retailers are the best and which are the worst in Britain.
The research studied the shopping experiences of 10,000 online shoppers over a six-month period. Shoppers were asked to rate their shopping experiences in detail, with factors like whether online retailers were up to date with price and stock deals being one of the most important factors shoppers took account of in rating their overall shopping experiences.
Other factors like how easy it was to navigate a website, and whether the retailer offered value for money also featured heavily in the study which ranked 100 online retailers, from best to worst.
Britain’s worst online shop
Homebase won the unhappy accolade of being Britain’s worst online shop.
Homebase customers complained that the website was often out of date with product deals, with savvy shoppers often being able to find similar products for cheaper elsewhere. The study spanned a period of six months, so this means that for a period of at least six months, Homebase was regularly “not up to date on stock deals”.
Conversely, smaller, specialist retailers like LizEarle.com, RicherSounds.com and Rohan.co.uk were all ranked among the best online retailers in Britain. Shoppers reported being able to find “exactly what they wanted”, conveniently.
Part of this involved not having to shop around too much in order to know that the best deals were available on the better performing websites. Of the bigger online retailers, John Lewis and Dyson did well, but surprisingly for many, not as well as their smaller, seemingly feistier counterparts like LizEarle.com.
This shows us very, very important trends surrounding the concept of shopping around – and that is that shoppers expect products to be priced competitively. Where they were found not to have been, shoppers placed less faith in the overall brand and were more likely to be diverted from the website and make their purchases elsewhere.
One of the most important things that the Which? research reveals is how the concept of “shopping around” has changed.
“Shopping around” used to be a very different animal. In times gone by, merely asking friends where they got their purchases and what price they paid was regarded as sufficient in terms of shopping around. A whole price comparison industry has since grown up around the process of “shopping around”.
Price comparison sites make it much easier for customers to compare prices, and the best deals on products on a minute by minute basis. Services like the Money Advice Service even recommend to customers that price comparison sites should be central to their shopping experiences, as they can be used to plan where to get the best deals from.
Consequently, customers are approaching their buying decisions with much more zeal about getting the best prices and as such the best value for their money. With more information in the public domain and more tools available to customers themselves to help them determine where to go to get the best value for money, retailers are subject to pressures like never before.
More transparency for shoppers, means that online retailers risk being left behind themselves, if they don’t stay ahead of the game in terms of setting their prices compared to their competitors.
Retailers are therefore investing in software and other tools that help them quickly find out which competitors are selling the same products they are selling, and products that are similar to the ones they are selling, for cheaper.
The importance of online retailers staying ahead of the game like this is one of the biggest revelations from the Which? research.
Implications of pricing decisions for online retailers
Since it is now easier than ever for customers to find out for themselves where they can get products for the best price, the issue of price has taken on a whole new level of importance.
If your customer finds that a competitor is selling a product for less, it isn’t just a price issue, but it also quickly becomes a trust issue that has knock on effects for factors like repeat business.
Online retailers thrive on repeat business and customers who feel like they have been deceived are much less likely return to a brand that has previously sold an overpriced product.
Definition of a successful online retailer?
The definition of what a successful retailer is appears to be changing with price volatility becoming a much more important factor in what makes an online retailer appealing to customers.
Additionally, what it takes to create a trusted brand in a climate of increased consumer pricing transparency has changed. If Homebase’s poor fortunes serve to illustrate anything, it is that customers can’t be fooled as easily as was possible in the past, and even big brands can be brought to their knees when they underestimate the importance of maintaining consumer confidence and trust in their brands. Pricing decisions are an essential cog in this overall system.
The Which? research has made both shocking and erudite revelations. Whereas on one level it serves as a useful guide for shoppers, on another level it shows the factors that customers are taking account of when deciding which brands to purchase from.
As UK shoppers get ready for the 2018 Christmas season, online retailers need to be aware of the implications of increased price transparency consumers benefit from, and the implications of being caught selling overpriced products.
With more power than ever in the hands of consumers, the Which? research shows us that for online retailers to thrive they need to pay more attention to ensuring that they are regarded as a trusted brand, with pricing knowledge being an integral part of this.
Are you interested in price monitoring? Request a demo today to see how Competitor Monitor could benefit your business.