Archive for the ‘Discounts’ Category

Service of a Crack in the Surface of E-Commerce

Monday, September 10th, 2018

Photo: physics.aps.org

A Wall Street Journal article about traditional retailing and E-commerce made clear that those who see the latter annihilating traditional retail shouldn’t order the funeral flowers just yet. Some retailers of both luxury and discount goods are spending big bucks on their brick and mortar stores. In a second article the same day the Journal reported that WalMart has started to refuse to ship heavy items–because of the cost– by claiming they are out of stock. This approach may be temporary and therefore, potentially less significant in the long run.

What’s In Store?

Photo: pinterest.com

Target was also a focus of John D. Stoll’s Wall Street Journal article, “Tiffany’s $250 Million Bet on a 78-Year-Old Store.” He wrote “It turns out that all over the ravaged retailing sector, companies are rethinking the mantra that the future is digital, and pouring money into actual brick-and-mortar stores.” Target plans to spend $7 billion. It doesn’t break down the superstore’s expenditures though “a spokeswoman said stores are an ‘incredibly important linchpin.’”

Why this confidence in physical stores? Stoll wrote: “Because the bulk of America’s retail is still done the old-fashioned way. Target has consistently increased online sales, but ecommerce represents less than 6% of its revenues. Online sales are closer to 7% at Home Depot but under 4% at Walmart.” Tiffany’s stores produce 90 percent of its revenue.

Photo: logos.wikia.com

PricewaterhouseCoopers’ annual Consumer Insights survey showed weekly purchases from stores has risen from 36 percent four years ago to 40 percent in 2015 and 44 percent this year. Stoll wrote: “Retailers are smart to better integrate the physical shopping experience with people’s online habits, but now is not the time to give up on making stores better.” On a recent Wednesday, he reported, Tiffany’s new café in its NYC flagship had 1,000 on a waiting list for 40 seats.

Cupboard is Bare

So what about Walmart’s shipping policy? People need the products involved such as household cleaners, nonperishable groceries, pet food and cosmetics so they will buy them somewhere.

I marvel at how CVS often covers the cost of shipping heavy items with no minimum purchase required, in conjunction with a sale many times, and wonder how long the windfall will last.

Photo: walmartcareers.com

Sarah Nassauer in her Wall Street Journal article wrote that the Walmart “has begun telling online shoppers that some products in its warehouses are ‘out of stock’ after the retailer changed its e-commerce systems to avoid orders deemed too expensive to ship.” Some suppliers were surprised. To address the policy they’ll “stock their products at more Walmart warehouses around the country to keep sales steady, according to an executive at a large food company.

“The shift is part of a test, Walmart said, to see if it can deliver more products via ground shipping, a cheaper option than air shipping, in two days or less.” Spokesman Ravi Jariwala “said shoppers shouldn’t notice a big increase in out-of-stock items because walmart.com will suggest similar products from nearby warehouses.”

Do you think retailers like Tiffany’s and Target are throwing away their money in this retail climate by upgrading their traditional stores? Is there an aura about some stores—like Tiffany’s—that compels shoppers to visit? Will retailers figure out cheaper ways of shipping heavy goods or will customers increasingly pick up in stores their online orders deemed too heavy/expensive to ship? Walmart says it’s a test but if profitable, don’t you think the “shortages will be permanent, potentially impacting online sales? When you buy online, do you stick to your shopping list more than you do when you’re in a store?

Photo: flickr.com

Service of Online Sales—Such A Deal Or Not

Thursday, March 17th, 2016

Great deal

I had to buy Oreck vacuum cleaner bags online and was surprised to see the price range, from $15 plus postage on the brand’s website to $9.69 plus postage on Amazon.com to $9.12, no postage, at Wal*Mart. [I really wanted to find a store near my office that carried them but was unsuccessful.]

My experience with this product was the opposite of most according to David Streitfeld’s front page Sunday New York Times article, “An Online Deal Just For You (Oh, and Everyone Else, Too).” He wrote about the public’s perception that they get bargains online because the asking price is much less than the “list price, suggested price, reference price or manufacturer’s suggested retail price.” He observed that “hardly anyone is charging” these.

Le Creuset skilletOne of his examples was a Le Creuset 11 ¾-inch iron handle skillet in cherry [photo, right] which Amazon claimed was $200 due to a $60 discount off list. At the same time everyone else was charging $200—Williams-Sonoma.com, CutleryandMore.com and AllModern.com, with posted list prices ranging from $285 to $250. Meanwhile the brand’s website was charging $200.

Another was a Cuisinart Mini-Prep Plus Processor [photo below, left] that on its site costs $40 but that Amazon claims costs $75 and you can get it from them for $40. “Mary Rodgers, a spokeswoman for Cuisinart, said the $75 list price was ‘the highest price you could actually see the product being sold for.’ She said as far as she knew, no one was selling the processor for that price,” he wrote.

Cuisinart Mini-Prep Plus ProcessorStreitfeld quoted pricing strategy expert professor Larry Compeau of ClarksonUniversity, “Everyone expects a deal on the web. Nobody wants to pay retail. Some sellers are now willing to deceive consumers to make the sale.” He said list prices are meaningless.

Overstock.com may be paying the price for deceit. According to Streitfeld, the company is appealing a $6.8 million fine in California for false advertising. Just one example in the case: A customer paid $450 for a patio set at a supposed 55 percent discount from $999 list but the same set cost $247 at Wal*Mart.

Wrote Streitfeld, “Overstock said it followed ‘standard industry practices’ to come up with its reference prices. Internet retailers including Wayfair, Walmart, Rakuten (formerly Buy.com), Crate & Barrel and Williams-Sonoma employ list prices to varying degrees. Amazon, the biggest e-commerce player, uses them extensively and prominently.

“If some Internet retailers have an expansive definition of list price, the Federal Trade Federal Trade ComissionCommission does not.” According to the Code of Federal Regulations, he wrote, “To the extent that list or suggested retail prices do not in fact correspond to prices at which a substantial number of sales of the article in question are made, the advertisement of a reduction may mislead the consumer.” Translation: You can’t say that a pen that everyone charges $7.50 for originally cost $15, when it never did.

Streitfeld reported that originally, the list price was to protect consumers who might see one price on a box and a much higher price at the cash register. We’ve come a long way from those days for sure—and not in a good sense.

Do you always compare online prices before punching in your credit card number? Are you enticed by what appears to be a deep dish online discount?

typing in credit card

 

Service of Smart Frugality

Thursday, February 25th, 2016

pinching pennies

I was drawn to Sendhil Mullainathan’s Wall Street Journal article “Pinching Pennies in the Right Places,” because according to this Harvard professor of economics, my thinking, while intuitive, is wrong. Not surprised: I almost failed economics in college. I ended up passing the course by figuring out the answer and writing the opposite. On the other hand, what he wrote makes sense. Maybe I’d have aced his class.

He shared two instances where you’re at a store and the salesperson tells you that another branch 30 minutes away has what you want for less. One item costs $50 and would be $40 for the same model. The other item costs $400 and you could get it for $385.

20 percent off“Research by Daniel Kahneman and Amos Tversky the psychologists whose work helped spawn behavioral economics, suggests that people are more likely to make the trip for the $40 headphones than for the $385 speakers,” wrote Mullainathan. That would be a mistake. “In each case it will take 30 minutes to save some money. But with the headphones, you save $10; with the speakers, you save $15.” He continued: “It’s as if you had two identical job offers, but one paid $20 an hour and the other $30. Yet you consistently chose the lower-paying job.”

He observed that people spend chunks of time finding the best deal on a pair of jeans and none on the fees charged by mutual funds for example. “Do Consumers Make Too Much Effort to Save on Cheap Items and Too Little to Save on Expensive Items?” is the title of the paper of Ben-Gurion University economist Ofer H. Azar. Mullainathan’s answer is “Yes.”

piggy bankThere is an exception according to Anuj K. Shah from the University of Chicago who conducted research with Mullainathan and Princeton psychology professor Eldar Shafir. “Poorer people tend to value a dollar more consistently, irrespective of the context. It is not simply that those with less money pinch more pennies; it is that they are compelled to value those pennies in absolute rather than relative terms…A dollar saved is a dollar to be spent elsewhere, not merely a piece of token accounting.”

Mullainathan advises: “When it comes to money, stop looking at relative values and start looking at absolutes. Dollars, not percentages, matter. In this case, the well-off can learn something about money management from the poor.”

How much would you have to save to travel for 30 minutes? Are you, like most, driven more by the percentage of a discount—which was 20 percent off the $50 headphones and 3.75 percent off the $400 speakers–than by the amount of money saved?

Driving in traffic

Service of Sales Promotions: The Good, the Bad and the Ugly

Thursday, October 29th, 2015

Sales Promotion

Take Care: The Good

I got a generous 30 percent discount offer for online purchases from CVS, a pharmacy chain. Among other things I ordered a $45 OTC product my husband eats like popcorn. I’ve taken advantage of this offer many times.

CVS logoWhether in the store or online, I am very careful to choose the right version as there’s one for kids that looks pretty much the same as the one he uses. So I was surprised when I opened the box and there was the kid’s version. I clearly clicked the wrong package–I hadn’t reviewed the order when the email confirmation arrived. [I’d never made a mistake like this before.] I called customer service, admitted my mistake and was given a bunch of options. I chose to return the box of kid’s stuff to a retail store and the cashier gave me a gift card equivalent to the amount I’d paid: A seamless collaboration between online and retail operations. I’m a fan.

Fishy: The Bad

fresh fishI get email notices of special promotions from a fish store that assumes that everyone has a big family: You get a free pound of the fish of the day if you pay for a pound. If you like fresh fish–which is why people shop here–freezing the extra won’t do. So while it may seem like a great deal, it’s of little use to some–such as me. Why not just offer a smaller percentage off per pound?

Hot Dog! The Ugly

As I left to run errands I noticed a crowd of students who attend a college down the street from my office, gathered around a table on the sidewalk in front of a small food establishment. You often see a person handing out food samples in little cups from a tray. Tables on a city sidewalk are unusual.

hot dogOn my return only three people were in an orderly line so I could see what was on the table and I joined the line.  Along with a sign declaring “free hotdogs” were two bottles of condiments and a tray with the snacks. The line moved quickly, I was next and there was one dog left. Just then a man arrived at the table from the other side and he stopped. The server looked at me, looked at him, and handed him the last hotdog.

I calmly said to the server “You made a mistake. You saw I was next. My office is two doors up. I was about to tell the 10 young men in my office about this business–they order out daily. I won’t now.” She stuttered that there were more inside but I was off.

What a shame: The owner meant well and now someone on staff has turned off a potential customer who will never go inside only to expect to be faced with similar discrimination. Also lost is positive word-of-mouth, the best marketing tool there is for a food place.

Can you share any good or bad promotions of late?

Buy 3 for the price of 3

Service of Discounts

Monday, August 25th, 2014

15 percent off

Business must be brisk at Mary’s Gourmet Diner in Winston-Salem, N.C. as so many have now heard of the place thanks to interference from an organization some 850 miles away.

The diner has been in the news first for offering a 15 percent discount to customers who said grace before eating and then for dropping the offer because Mary Haglund, one of the owners, feared being sued.

Grace before eatingThe restaurant was approached by Elizabeth Cavell, lawyer for the Freedom from Religion Foundation in Madison, Wis. The foundation’s complaint: “Offering this discount violates the federal Civil Rights Act,” reported Hannah Bae in newsday.com. “Your restaurant’s restrictive promotional practice favors religious customers, and denies customers who do not pray.”

Red Valentine shirtNext will a restaurant or bowling alley that offers a discount to anyone who wears a red shirt on Valentine’s Day be warned because it discriminates against those who don’t believe in either the saint or the love celebration?

In this climate how does a credit union like Oceanside Christopher conduct business without being hounded? With branches in both Oceanside and Seaford, LI, it bills itself as the “Catholic Credit Union” and promotes free checking and low interest rates. There are funeral parlors that advertise their services to care for the deceased of certain religions. Should they expect to be threatened?

Anyone could have been eligible for Mary’s discount: It didn’t require a feat of physical dexterity eliminating the disabled, clumsy, the very young or old. Should a business’s hands be tied/held hostage for such a reason?

High jump

Get This Blog Emailed to You:
Enter your Email


Preview | Powered by FeedBlitz

Clicky Web Analytics