Online Shopping Makes Suckers of Us All

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The right price—the one that will extract the most profit from consumers’ wallets—has become the fixation of a large and growing number of quantitative types, many of them economists who have left academia for Silicon Valley. It’s also the preoccupation of Boomerang Commerce, a five-year-old start-up founded by Hariharan, an Amazon alum. He says these sorts of price experiments have become a routine part of finding that right price—and refinding it, because the right price can change by the day or even by the hour. (Amazon says its price changes are not attempts to gather data on customers’ spending habits, but rather to give shoppers the lowest price out there.) More at The Atlantic.

This is a big problem which is only getting worse as time passes. The real problem is that no matter what online stores do, many people still have a perception that retail stores are more expensive.

I noticed this before Christmas when a local jewellers was only too happy to match the price of WatchShop or other online watch sellers. We ended up buying 2 watches as Christmas presents and saved over £250 in the process. However, if I had walked in and bought the watches for the sticker prices, which I never do with watches, I would have been £250 out.

And we shouldn’t forget that retail stores use all kinds of tricks to get us to spend more. Argos, PC World and the rest often post prices that change all of the time and the bundles they sometimes offer are simply ridiculous.

The more I think about it, the more I realise that buying anything makes me a sucker. The markups are huge compared to the production costs, I am either paying for the stores lease and staff or an online organisations profits and that is the way it goes. That is business.

When you buy anything, you pay more than you should and that applies whether online or in a bricks and mortar store. Without that there would be nothing to buy so maybe we should just do our own research, wait for the very best price and not get hooked on instant gratification.

One thought on “Online Shopping Makes Suckers of Us All

  1. > The markups are huge compared to the production costs, I am either paying for the stores lease and staff or an online organisations profit

    If you are only taking production costs into accounts, you are only considering the very barest marginal cost. As you say, leasing premises, staffing it, heating it, lighting and so on are costs most retail businesses will bear, whether a shop or a warehouse. Stuff needs to get from the factory to the shop/warehouse, so transport costs too. And what about the hours spent doing research and development? Or licensing a third party design? Testing the latest design to ensure it works properly? Providing after sales service? All of these are costs, even if some are less apparent than others. And all before you get to any profit…

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