Service of Online Sales—Such A Deal Or Not
March 17th, 2016
Categories: Discounts, E-Commerce, E-tailing
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.
One 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.
Streitfeld 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 Commission 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?