Where Did All The Online Bargains Go?

cornflux writes: "There's something I've wondered recently -- 'Where did all the good deals go?' It seems I'm not the only one -- Business 2.0 has an article about the noticable lack of bargains available online, today. The author covers obvious reasons (dried up VC, need for real profit) and some others (pseudo-price fixing). The one thing that was missed is the ever-increasing number of morons who will pay full-retail price + 20% for things on eBay." Note that the piece is largely theoretical -- I've found consistently better prices on the web, even recently, than I have in-store for electronic goods, as well as obscure DVDs which I couldn't find locally anyhow.

Comments

Manufacturer price fixing

[s20451]

I've found consistently better prices on the web, even recently, than I have in-store for electronic goods

There was a related article in the NY times this week about electronics manufacturers who inflate their list prices so that retailers can easily offer their goods at a "bargain".

Re:Manufacturer price fixing

[Registered Coward v2]

Here is my axample, First they tell you their price (par for the course) then they tell you their markup from *their cost* (perhaps a note about cost of running the business, with a reference to their standard markup).

Then the markup would not be based on some artificial standard, but on a real hard dollar value of the product and the cost of getting it to the consumer. Then you would really know if your were getting a bargain or just their regular sale price. No hype, no sales pitch, just a smart business with informed customers.

The problems are:

1. There is no real direct link with price to cost, other than companies want the maximum margin possible. Pricing depends on what someone is willing to pay, not how much it costs to produce a product.

2. There is a point where the cost (time and money) of price shopping outweighs the savings. As a result, there is no real reason for companies to cut prices to the lowest possible point, since the chance taht they'l get an extra sale doesn't provide more additional revenue than a slightly higher price (and fewer sales).

A stores goal is to maximize their profit - not give you the best possible price.

price and perceived value.

[Alien54]

In other words, the market of potential buyers is growing, but prices are leveling off. Wood postulates that the market "depth" is increasing, meaning the Internet is attracting more -- and more sophisticated -- buyers and sellers. The result is that prices quickly reach the optimal market level, and items rarely go for much above or below that price point.

I can remember a lady at a coffee shop who started selling more cakes of a specific kind when she raised the price. Same product. The perception of the product was that it must not be any good if it was being sold cheaply, but it was alright if it came close to the expected price point.

Of course, with databases, etc, you can quickly find the optimal price point for almost any product online, from a sellers point of view.

Of course, experts know how to do better.

Re:price and perceived value.

[Registered Coward v2]

Diamonds/gold are expensive because they are rare

Actually, gold isn't rare, it just costs more to extract it from seawater than it's worth. Aluminium used to be more valuable than gold, but once a way was discovered (by two people, independently, at about the same time) to cheaply extract it from bauxite, its value dropped.

Diamond supply is similarly well controlled - primarily because the suppliers have more to gain by higher prices than by flooding the market.

Oil producers, however, stand to gain more by cheating on qoutas, which is why it's hard to maintain cartel prices.

And brunnete women are hotter in Sweden because the predominant feminine type there is blond.

Sounds like an arbitrage opportunitty - we ship you brunettes, you ship us blondes.

Market stabalization

[standards]

Retailers just can't sell at a lost. Their is a lot of competition. In addition, product manufacturers can't sell items at a loss.

But when the market is in flux, all rules are off. Retailers may sell at a loss, and manufacturers might "dump" product onto the marketplace (in lieu of sending it to a landfill, as they often do).

With the Internet economy what it is, retailers aren't willing to sell at a loss for market share, and the tech economy is in a somewhat conservative state (for now).

So no agressive price cuts, but no outrageous prices.

Except for MS Office, of course.

Re:Canada. Ever consider...

[cperciva]

statehood?

Quite a few people have considered it. However, most Canadians have too much respect for human rights and international law to join a nation which routinely ignores both.

(And if Canada did merge with the US, it would do so as 13 new states, not as one. Without the unifying influence of being "not American" Canada would fall apart entirely.)

Market Trends

[Afreet1]

From what I have seen, the trends of online retailers seems to mimic their brick and mortar counterparts.

What I mean by this is that for high turnover items (moves fast into and off of the virtual shelves in terms of sales volume), like new software, DVDs, PS2 games and CD-R blanks, will be almost identically priced. In fact the real storefront is sometimes cheaper when you take taxes/shipping into account. (note: this doesn't take into account rebates)

For items that aren't as fast to sell like older computer hardware or even new hardware that has a fast obsolescence track, online stores have the advantage for their own savings since it doesn't cost them as much to store the old inventory. In some cases the retail environment will be in such a rush to get rid of the equipment they will drop prices a lot lower than they should, just to clear space. Couple this with the fact that as a full chain of stores they have better bargaining power with the manufacturers and can get lower initial prices.

What this means is that for normal transactions an online store can sell older stuff for cheaper and sustain that price, but when new product lines come out, the physical storefront may or may not have a greater discount, depending on how well they manager their warehouses.

Basically we are in a situation where all of the discounts of online business are lost on the items that we buy the most, and they no longer have a nest egg of excess cash to pay for significant price differences.

Huh? Walmart is world's largest retailer, employer

[Ars-Fartsica]

Step outside your perspective and you'll see a nation of $35k earners who are religious WalMart shoppers. Why? Because its almost always the cheapest place to buy things. The stores are dumpy and the clientele dishevelled, but if were about something other than saving money, Amazon and Walmart would have changed places a long time ago.

Re:A fool and his money are soon parted.

[guinsu]

Actually, electronics consistently sell above retail if you are willing to put pictures and html in your auction (i.e. copy and past from the mfg's page for the product). I have a friend who consistently sells dvd players, digital cameras and other newer electronics for more than he paid for them.

Re:People shop online for convenience, not price

[Anonymous Coward]

Conveninece is an understatement. Most people aren't going to buy things online yet for several reasons:

* You can't touch them. Would you buy a mattress online, for instance?
* You don't necessarily get enough information.
* It's harder to return.
* It's not necessarily cheaper, either.
* Searching for a product all to often yields too many results, not to few, most of which aren't relevant.

E-Commerce, ebusiness, e-whatever... It's a really fancy, sophistacted modern day catalog ordering system.

Bad Online Experiences

[Darth_Burrito]

I don't know about anyone else, but I've never trusted online bargains. Once I was trying to order some parts off of pricewatch and came across a series of companies that were lowering their prices at night when the store was closed and raising them when the stores opened. The only way to get the pricewatch price was to call and mention the current price. However there was no way to place an order over the phone when the store was closed. When I asked about getting last midnight's price, they refused and would not comment on their pricing scheme.

Another time, I tried ordering a computer kit online (pricewatch), I was about to give him my credit card number when he suggested I upgrade to their special CPU cooler which was "better" than the one that came with their product. I asked him if there was something wrong with the cpu cooler that came with it and he said that while the cpu cooler that came with it was perfectly good, it only consisted of a fan. I spoke with him a few minutes to try and figure out exactly what he meant and determined the actual cpu cooler included in his 1.33GHz Athlon kit was somehow without a heatsink. Click.

Yet another time, in a fit of insanity, I decided to order a new video card online saving about $60. Everything went smoothly, I ordered from a company in California for about $270 (US). A week and a half later, it arrived with a return address somewhere in Brazil. I have no idea what I would of had to do had the product been defective (thank god it wasn't), but I'm sure it would have been hell.

Perhaps, bad experiences online have driven consumers away from these vendors and forced the online retailers to raise prices. Maybe most of the bargains out there never really existed anyway. As a kid scrounging for money to buy stuff, it sometimes makes sense. As a professional with a decent salary, buying online often isn't worth the risk.

Re:A fool and his money are soon parted.

[shayne321]

It should be obvious that only bidding in the closing minutes of the auction and only raising your bid the minimum amount would be the sensible thing to do and would get you a much better price than consistantly bidding and raising the price for several days.

Actually, there's an easier way than that to avoid paying outrageous prices for stuff on ebay.. When bidding simply figure out what the item is worth to YOU and put that in as your bid. Ebay will automatically raise your bid in the minimum increment as other people bid until they outbid what you're willing to pay. If that happens just move on to another auction... One thing I've found that helps is pick an odd amount for your maximum bid.. For example, if you're willing to pay $100 for something, enter your bid as $102. Most people will have $100 as their "too high" line and bow out of the bidding. I've won several auctions that way.

Shayne