Why daring to compare online prices pays off offline

Why daring to compare online prices pays off offline
Professor Onur Bodur

The sudden closures of big-box stores like Future Shop and Target may make it seem like online shopping is killing real-world stores. But shoppers are actually engaging in "web-to-store" shopping—buying offline after comparing prices online.

New research from Concordia University's John Molson School of Business shows this consumer behaviour has important implications for retailers. When setting in-store or offering price-matching guarantees, offline retailers should focus more on online retailer ratings than on offering the lowest prices.

In a study published in the Journal of Retailing, one of the top journals in the retailing field, marketing professor Onur Bodur investigates how offline is influenced by online price comparison sites (PCSs). His results from three studies show that consumers pay careful attention to things like retailer ratings, how often a product is offered at the same price, and differing price levels.

"Price comparison sites like Shopzilla and PriceGrabber are solid online information sources that display numerous retailer prices for a product type or given brand," says Bodur, who co-authored the paper with colleagues Noreen Klein from Virginia Tech, and Neeraj Arora from the University of Wisconsin-Madison.

For the study, the research team focused on how information from PCSs often acted as reference pricing for in-store shoppers. "We asked: How PCS retailer ratings would impact in-store price evaluations? Do consumers really believe super-low online prices are obtainable?" Bodur says.

"The good news for brick-and-mortar retailers is that low online prices may not be used by consumers as comparison prices. We found that offline retailers should actually focus on prices that are associated with highly rated online retailers. That's because their prices are perceived as more valid and therefore have greater impact on subsequent price evaluations," he says.

"When there is little variation in PCS retailer ratings, offline retailers should also focus on prices that occur frequently in PCS searches and not just the low price."

Explore further

Retail pricing strategies: Do consumers prefer deep discounts or everyday low prices?

More information: Bodur, H. O., Klein, N. M., & Arora, N. (2015). Online Price Search: Impact of Price Comparison Sites on Offline Price Evaluations. Journal of Retailing, 91(1), 125–139. DOI: 10.1016/j.jretai.2014.09.003
Journal information: Journal of Retailing

Citation: Why daring to compare online prices pays off offline (2015, April 7) retrieved 18 July 2019 from https://phys.org/news/2015-04-online-prices-offline.html
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Apr 08, 2015
A great reason to do web-to-store shopping is that you are more or less guaranteed delivery and returns.

Many online stores carry no stock and instead sell directly from a wholesale vendor's or importer's online inventory. It means the shop doesn't actually have the product, the listings are often wrong or outdated - or the product is no longer being made, remaining only as a ghost in the system. That means the delivery time can be weeks to never.

Meanwhile, a brick-and-mortar store usually has the product physically there, and you can pick it up immediately instead of waiting 3-5 working days and paying for the inconvenience.You get a proper receipt and a real place to go to for warranty returns instead of mailing things around at your own cost and waiting months for replacements.

While window-shopping online is convenient, slapping a wad of cash on a counter and walking away with the product is far simpler and faster than buying online.

Apr 08, 2015
Emphasis is on the last point.

Imagine walking into a grocery store to buy a banana; the cashier hands you a printed customer account form. You fill it - he tells you to go to another desk to verify it, where another guy makes you wait 10 minutes before he agrees to stamp the form. He then directs you back to the first guy who scans your item, drops it in a paper bag, puts the bag in the mail. You offer to pay, but he writes you a bill instead. You walk out without a banana.

That's the online shopping experience in a nutshell.

Every web-store wants your name and address and banking details, email-address, your mother's maiden name, fill in this captcha, read this EULA, wait for this email... etc. etc. just to buy some simple thing. Then you'll forget your user name and password, or which email you used to verify, and have to do the same thing over and over again, in dozens of different places that pop up and dissapear over the years.

Apr 08, 2015

You make some very good points but increasingly products can only be bought online. I need to replace a neck support pillow, in the past I've bought them at Sears, now they can only be found online. Staples lists 29 external dvd drives but only offer one in their stores. My first choice is always a brick and mortar store but over time that isn't an option.

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