The Problems With Showing Competitor Prices

According to a study by the e-tailing group on consumer comparison shopping:

  • 63% of consumers say they would like to see competitors’ prices on a retailer’s site
  • 78% would likely return to a site that shows competitors’ prices
  • 36% would be “much more loyal” to a retailer who displays price comparison

“Savvy consumers are using the Internet to find value, particularly when shopping for commodity products. Efficiency of price comparison and the ability to merely Google it, check Amazon’s prices or visit a few competitors is core to today’s consumer shopping behavior…This survey certainly shows that consumers would like the convenience of accessing such information on any given retailer’s website.”

The study suggests adding price comparison because customers like it is a good decision. I disagree. 63% may like to see comparison, but will they purchase from you? They may return to use your comparison tool, but will they boost or dilute your site conversion? Does loyalty translate to sales or loyalty of visits? Are you spending oodles of money to drive new traffic only to guide them to another site? Are you confusing the customer and killing conversion by giving too much choice?

The cons of comparison

A couple years back I wrote about 3 pitfalls of showing competitor pricing on a product page when a Get Elastic reader notified me that one of his competitors was showing his website’s pricing (which was out of date).

1. Risk of Lawsuit

Unless you are posting accurate, up-to-date prices, you could end up in hot water legally. Continual manual checking and adjustment eats up time resources.

2. Advertising for the Competition

When you mention a competitor, you risk a customer interrupting the sales process to either verify the advertised pricing or check out what they have. Not everyone will do this, of course. Because price is not always the most important criterion for purchase, if you’re a smaller shop and you mention a more well-known store, the branding recall effect / trust for that site might override your undercut price. Or the customer may discover your competitor is offering free shipping or other incentive that you were not aware of.

3. Eroding Trust, Rather Than Building It

If you post the wrong information, you come across as deceptive (should the customer verify the price difference). This negative impression could last forever in the customer’s mind. If you post dates and don’t in real-time it could also raise questions about your accuracy.

At least with the widget in question, you can’t be sued because the retailers displayed have all opted-in and the prices are updated in real-time. You still risk advertising for the competition, along with retailer reputation ratings that may sway customers who aren’t sold on shopping with you (have you addressed their fears?)

You might argue such a widget builds customer trust, making you appear more open and transparent. But what about with customers who are aware you are only showing higher priced merchants? Is this like a merchant who only approves 4 and 5 star product reviews? It’s not really showing the whole picture – it’s more translucent than transparent.

Whatever happened to those good old fashioned value propositions?

If your value proposition is low price (which many in the industry agree is a losing fight unless you’re Amazon or Walmart), you may as an alternative offer a low price guarantee instead of on-site comparison tools. But even a price-matching is no substitute for a value proposition.

The problem here is making business decisions to satisfy the least profitable customers – the one who’s main purchase motivator is price.

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3 Responses to “The Problems With Showing Competitor Prices”

  1. yolanda says:

    As I am also a consumer, I prefer that a site not only has its own price, but also shows the competitors’s price, or at least leads a easy way for me to knoe the competitors’s price.
    And if the price of the good is on sale, I prefer to see the original price which can tell me how much discount I really get.

  2. Frank says:

    Comparing prices online is really as simple as the click of a mouse. No value proposition will prevent anyone from leaving to compare price–or prevent them from wanting that info.

    If you have a small site online (like I do) then you know that a lot of the people who find you do so by chance…and then go directly to Amazon! My business is well priced with very good value proposition but people are still going to go check out the industry “powerhouse” regardless.

    I think that comparative pricing on my site is a big help to me and my shoppers. They know that the info is just a snap shot of whats out there! No one looks at the competition I display and think that those results are the beginning and end of the picture. How could it be? After all there are hundreds upon hundreds of other sites online to choose from–and assuming that my shoppers are such simpletons as not to understand that is an insult to my consumers intelligence.

    I need all the tools I can to make a living and providing info that keeps people on my site for a minute or two longer makes a big difference.

  3. [...] for any new idea, there are pros and cons. Linda Bustos from GetElastic consider that is not such a good idea: “The study suggests adding price comparison because customers [...]

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