The price is right. . . or is it?

Feb 01, 1999 10:30 PM  By

You need a stapler. So you surf to the Office Depot Website and find that the stapler you want costs $13.49…if you live in Stamford, CT. If you’re in Overland Park, KS, you’ll pay only $12.99 for the same model.

The Internet may level the playing field for marketers, but it doesn’t necessarily level the pricing for customers. Two leaders in the office supplies industry, Office Depot and Staples, use regionalized pricing to charge their online customers prices based on location, requiring customers to type in their zip codes before allowing them to search for items. (The companies claim on their Websites that they ask for the zip codes to guarantee the items’ availability from local inventories.)

Christina Erridge, media manager for Westborough, MA-based Staples, says that the company regionalizes pricing in its print catalogs and that the online catalog’s pricing “mirrors our print catalog operations.”

Indeed, because they rely on ground delivery service to transport merchandise from warehouses located throughout the country, office suppliers have traditionally printed different catalog versions with regionalized pricing to reflect nationwide differences in warehouse and distribution costs, notes Lauren Freedman, president of the E-tailing Group, a Chicago Internet consultancy. Keith Butler, the director of merchandise and marketing for online operations at Office Depot’s San Francisco-based online division, cites those same reasons, adding, “We also make sure that prices aren’t out of sync with what customers would be used to paying” in their regions. But Office Depot is “working toward a single Web price,” he says.

One price, but inconsistent Competitor OfficeMax has already implemented uniform pricing on its Website, despite continuing with regionalized pricing in its print catalogs. “We see the Internet as one market, and one in which we compete not only against other online catalogers, but against retail outlets and print catalogs as well,” says Ryan Vero, vice president of the Shaker Heights, OH-based cataloger/retailer’s electronic commerce division.

But Dan Binder, an investment officer with New York private investment bank Brown Bros. Harriman & Co., doesn’t agree with the “one market” theory. The typical customer, he says, is likely to shop by catalog, Web, or store based on convenience. And he thinks it’s dangerous to have regionalized pricing in one channel and not the others. “If customers become aware of it, it could cannibalize the other businesses,” he says. “Consistent pricing is most important, regardless of whether it’s regionalized.”