OnDemand WTP Pricing Research

Target narrows pricing gap with Walmart | Food Dive

While the Clark Howard comparison is an informal look, research from data scientists backs up the consumer advocates’ work. Earlier this year, Profitero found that the most intense price competition is among Walmart, Target, Jet and Amazon. On average, the average online prices of those first three combined are just 4.5% more than Amazon, Profitero found. Walmart is offering identical prices to Amazon on more than half (53%) of all products — compared to 37% matched by Target and 35% by Jet, according to that research.

Several items were priced exactly or nearly exactly, Timmermann found. “Did you notice how some prices were just a penny or two off?” he wrote. “The retailers are clearly watching each other’s every move!”

They are indeed, according to other research from Profitero, which warned that brands are taking the brunt of the “destructive game of follow the leader.” In some cases, though Amazon’s pricing algorithms are instrumental in stoking the pricing competition, the e-commerce giant will drop products or brands that are too cheap to be profitable. “Long term, brands need to rethink item profitability,” Profitero Vice President of Marketing Mike Black wrote in a blog post, noting that sometimes it’s Target that triggers a price drop. “One strategy is redesigning products so that they’re smaller or require less packaging, thereby making them less costly for Amazon to stock and ship. Another strategy is developing products that cost less to make and therefore have more of a margin buffer when prices inevitably drop.”

Consumer product categories seem more prone to price wars with Amazon than non-CPG categories, with Amazon losing about 6.5% of its pricing advantage in that area. Target’s average CPG prices online are within 6.3% of Amazon — a 10.6 percentage point swing, Profitero found. Similarly, Jet’s CPG prices were only 4.3% higher than Amazon.

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Target narrows pricing gap with Walmart | Food Dive.

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