Chris writes: We’re just two weekends away from what’s traditionally the busiest online shopping weekend of the year. For our American readers it’s Black Friday (the date retailers turn from loss to profit) and Cyber Monday – the weekend following their Thanksgiving break. In the UK it’s the last pay day before Christmas for many workers who are paid at the end of each month.
Retail intelligence company Upstream Commerce have done some digging into the numbers of the “Special Offers” and “Discounts” offered by retailers and found a marked difference in pricing tactics from different companies in the 2013 holiday season. In fact they discovered that far from deep discounts, you might not be getting the deal you expected as Amazon regularly raised prices on Cyber Monday.
Upstream Commerce analyzed the pricing behaviors of Amazon, Walmart, Best Buy, Macy’s and Zappos over the past three holiday shopping seasons, it found that each retailer employed pricing strategies unto itself, and that Amazon went from low prices on Black Friday to higher prices each Cyber Monday.
Who traditionally discounts and on what dates?
Image reproduced with kind permission from Upstream Commerce
In the 2013 season, Upstream Commerce examined pricing of the twenty largest athletic shoe brands at Amazon, Zappos and Macy’s, finding that “Each lowered its prices to start the Holiday shopping season; and while Amazon discounted the most on Black Friday, it then raised prices the most for Cyber Monday,” said Upstream Commerce CEO/Co-founder Amos Peleg.
“There was no consistent strategy or head-on competition among the retailers,” Peleg noted. “The average discount rate attained at both Amazon and Zappos (at different times in the scale), was 2.8%, but was only 0.5% for Macy’s.”
Similarly, when Upstream Commerce checked out television and toy pricing by Walmart, Amazon and Best Buy in the 2011 Holiday Shopping Season, it found:
– Amazon discounted the most on Black Friday, then raised prices for Cyber Monday.
– Walmart’s average prices were actually HIGHER on both Black Friday and Cyber Monday (in 2011) than their pricing in the Upstream Commerce control group a few weeks earlier.
What does this mean for you as a competing retailer?
According to Peleg, “The most important takeaway regarding pricing for recent holiday shopping seasons is that, each retailer appears to dance to its own drummer with no consistently obvious pricing strategy in relation to each other.”
“Second, although different products are considered, Amazon exhibits the same type of behavior each year, where it raises prices on Cyber Monday”.
“Third,” says Peleg: “While there may be a smaller set of “show” products that are actually being discounted, it’s probably a myth that retailers provide huge discounts across the board during the holiday season.”
"Employing predictive pricing strategies based on competitive analytics is the only way retailers can price optimally to sell the maximum number of products most profitably.”
“Finally, retailers should stop chasing each other around. Employing predictive pricing strategies based on competitive analytics is the only way retailers can price optimally to sell the maximum number of products most profitably.” Peleg concludes.
What does this mean for shoppers?
It may well pay to monitor prices and time your purchases to the moment you believe the price to be the best you’re likely to get! Also whilst some of the larger retailers are constantly changing their prices, smaller retailers may not.
Do a price check on your Christmas shopping list now and then keep track of the prices for expensive purchases over the next few weeks. You’ll soon see which days the cost dives and there’s a genuine offer to be grabbed, but don’t wait too long – the offer may disappear a day or so later and you’ll end up paying more if you gamble on further price cuts which might never materialise.