Let the Internet Set Your Price

“Can you meet the internet price?,” says the shopper as she flashes at you the result of her mobile device search.
     Bricks-and-mortar (B&M) retailers face that question repeatedly. When replying, avoid saying the word “No.” That word irritates shoppers. One alternative is to say “Here is what I can do.” Then talk about items like:

• Discounts for quantity purchases by the shopper or by a group which the shopper brings together.
• Delivery at times when demand is likely to be slow for you. For services, keep in mind perishability. If you don’t sell the appointment for an hour today, it’s gone forever from your stock.
• Extras such as gift wrapping, training, and/or installation. You don’t need to give them away. Consider setting a price when they are value-added items the internet purchaser wouldn’t receive.
• A discount on a subsequent purchase. Be sure you’re ready to offer the same deal to everybody who comes into your store saying, “I want what you gave to my friend.”

     Another alternative is to answer the “Can you meet the internet price” with, “Yes, I can.” Shoppers love those words.
     As I learned in a “Profitability Tactics for Small Retailers” seminar I conducted last week for retailers in Modesto, California, this is the way B&M retailer Phillips Lighting & Home handles the issue. With items they carry for which the manufacturer enforces an Internet Minimum Advertised Price, Phillips Lighting & Home finds a compelling advantage in letting the internet set the price: The shopper who comes in knowing what they’d pay on the internet is thrilled they can get the same base price locally and probably take possession of the item immediately.
     Allowing manufacturers to set minimum prices is a relatively recent development in American retailing. It followed a 2007 U.S. Supreme Court decision which said that prior rulings failed to recognize how the practice is not always anticompetitive. Along with this, the practice of letting the internet set the price is relatively new at Phillips Lighting & Home. Owner Chuck Arnold told me that he’d resisted suggestions he do it for fear his profit margins would drop sharply, but this didn’t happen.
     From my consumer psychology perspective, I recommend a general policy of setting a price on each item, taking into account factors like degree of demand and costs of inventory storage. However, as with all good rules, there are important exceptions.

Click below for more:
It Takes Two to Say No
Distribute "Yes, We Can" forms
Set Your Own Prices

My thanks to Chuck Arnold and Carrie Arnold of Phillips Lighting & Home for teaching me about IMAP.