Compear

Exploring price discrimination

Type:

Personal project

Medium:

UX / UI

In my everyday life I noticed when I research an item I want to purchase online and go into the same store to buy it the price is different. The same exact item at the same retailer is more expensive in store than it is online and sometimes vice versa. Additionally, in store prices are not found online and simply come with a disclaimer that they may be different in-store. With this project I sought to explore these questions and provide a hypothetical solution for a better informed consumer.

Research

Multichannel pricing

It’s quite likely you have ran into the same problem as I. But what if those were just one-off situations? Sadly, they are not! Some retailers employ a strategy called multichannel pricing where the same retailer charges different prices for the same exact item across different channels such as online vs. in store. Target and Walmart directly let you know about this. But just to confirm it for myself, I have gone out to my local retailer to show an example of this first hand.

Shopping user journey

Why is this happening?

A quick google search will result in the most common theory being that this is done because it costs more money to run a store. This didn’t really seem like the real reason to me because if that were truly the case then the option to buy online and pick up in store wouldn’t be an option if it resulted in significant profit loss. The fact that for these retailers it is an option signals to me that there is something else at play. So I kept on researching! What emerged next was learning about the two most common types of shoppers as well as the concept of self-matching.

Offsetting revenue from a savvy customer

“Understanding what customers value in each channel and how that affects what they are willing to pay is the key challenge for pricing teams today. Getting it right has a real payoff: In our experience, retailers that effectively price differently across all channels see bottom line growth of 2% to 5%.”
- MIT Sloan Management Review

Survey

Clearly I care about these price discrepancies, but does anybody else? I asked 10 people in my life to see if they were aware and if asking for a price match is something they are interested in doing.

Conclusion

Uninformed consumers carry the burden of more expensive shopping costs to offset the costs from informed consumers. Retailers bet on the fact you are already in store and would rather swallow the extra cost than go to another retailer which requires more time and effort.

The problem

The problem with this is that an un-informed consumer can also be an otherwise informed consumer who simply wants to pop into the store and get their item quickly. Multichannel pricing specifically referring to in-store prices present a clear lack of transparency. It’s frustrating that you can quickly check online for the price of an item and go in store to pick it up yourself and be charged a premium. Yes, you can attempt a self-match however that is a hoop most people don’t want to jump through and they shouldn’t. Everybody knows different retailers charge different prices. But now, one retailer can have multiple prices for the same item with no way of knowing unless you make a physical visit to store where you are less likely to leave without buying.

My idea

I think the best way to approach this problem is by finding a way to present consumers with accurate data so they can make an informed decision themselves. Mitigating the mystery of in store prices and lack of transparency. My idea is an app that gathers retail online prices and crowd sources in store prices.