Phil's Personal Finance Tip of the Day:
Beware of These Online Retail Pricing Strategies
By Susan Johnston | U.S.News & World Report LP
From free shipping to rapidly fluctuating prices, here's what consumers should know about new strategies in online pricing and marketing.
In e-commerce's infancy, a few key players competed for business online, so comparing prices and shopping online was relatively simple. Now, as big retailers gain market share and startups roll out innovative new strategies for pricing and marketing, identifying the best value is anything but clear-cut for the average consumer.
In fact, fluctuating prices and abandoned shopping carts mean the price you pay for a new camera or leather couch may be a lot different than what your friend pays, even if you buy from the same online retailer. Here's a look at several trends to watch.
1. Fluctuating prices. Thanks to dynamic pricing, which is used by retailers like Amazon, online prices tend to fluctuate more than prices in physical stores. Online stores can easily update prices minute by minute, but "in a physical store, they're not going to go around and retag everything," points out Niraj Shah, CEO of Wayfair.com, an online retailer for home products and furnishings.
Prices might vary depending on an item's popularity, your proximity to a brick-and-mortar store carrying the same item or other intelligence gathered through Internet cookies. "With popular items, the volatility of the market will be higher," says Arie Shpanya, CEO of WisePricer.com, which helps companies monitor and adjust pricing. "Electronics is the category that's having the most price change." Keep in mind that if you see a price you're happy with, you may want to buy right away because the price might be higher or lower when you refresh the page.
[Read: How to Avoid Online Ticket Scammers.]
Some retailers have been accused of discriminatory pricing based on information gathered about the customer - for instance, past buying history, whether the customer browsed a price-comparison website first and their location. "If I'm shopping from my office or my home, I might get two different prices," Shah says. For more expensive purchases, try checking the price on multiple devices, such as a laptop, tablet and smartphone, to ensure you're getting the best one.
To read the entire article from Susan Johnston | U.S.News & World Report LP:http://finance.yahoo.com/news/beware-online-retail-pricing-strategies-135504470.html
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