The Match Game: The Challenges of Price Competition and Comparison for Etailers

[Kristijntje]

To consumers, one of the great benefits of shopping online is easy price comparison. To retailers, that’s one of the great challenges.

The Internet gives consumers hundreds if not thousands of outlets—from the biggest to moms and pops selling at eBay—where they can buy goods. And that much competition drives prices down.

Many retailers offer the kind of price match that Jenson offered, but as Jenson found with its declining sales, it’s not enough...

... a retailer can’t sit by and watch its business dissipate because someone is selling at a discount—authorized or not. “As a retailer, we have to compete against other prices, whether they’re on the web, in a catalog or in a store,” Cachat says. “And so we tell the manufacturers that we’re just matching our competitors’ prices and put the problem back on their plate.” He notes that some manufacturers have used what they’ve learned from Jenson to cut off retailers who were discounting.

...Other retailers will need to get more sophisticated in their approaches to price matching, especially against eBay competitors, Cachat warns. “There is this mindset among retailers of rejecting eBay as an avenue of retailing because its whole premise is discounting,” he says. “But it’s not going away.”

full article: http://www.internetretailer.com/article.asp?id=17154