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.