The price is right. . . or is it? Feb 1, 1999 12:00 PM
, Moira Pascale
JobZone
Search and post jobs for the Multichannel Merchant. Including jobs for brand & agency marketers, e-commerce, catalog marketers, ops & fulfillment, direct marketing and more.
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."
