Is Duplicitous Pricing Good Business?

In a transparent, information-rich world where showrooming is commonplace, a pricing tactic used by many retailers seems strangely shortsighted. For lack of a better term, let’s call this shortsighted pricing practice “Duplicitous Pricing” or DP for short.

Simply put, DP occurs when a retailer posts one price in their store while maintaining a different price somewhere else – like the Internet. Interestingly, the practice of DP didn’t originate with the Web; as it was fairly common for retailers like car dealers, electronics stores and others selling big ticket items to place a discounted price in their newspaper ad (to attract visitors), while maintaining a regular price in their store (to make better margins from the not-so-savvy shoppers). The thought was that only those who asked for the special price would receive it.

Prior to the spread of the information superhighway, practicing DP was quite safe and actually lucrative. It was rare that a customer would discover the lower price after they purchased, since that day’s newspaper ad was likely already in the garbage.

Duplicitous Pricing in the Era of Showrooming

According to Google, 82% of smartphone users turn to their devices to help them make an .... When pricing is a part of that product decision, these consumers often are forced by high in-store prices to participate in the growing act of “showrooming.” Showrooming, simply put, is the practice of visiting a physical retailer in order to check out a product prior to buying it online at a lower price (often with free shipping and no sales tax).

What happens when (in their search for product help) these consumers find your online price is well below what you’re advertising in-store? Do they just showroom you? Do they ask for the lower price from your physical location?

Or… do they just trust you less and buy from someone else?

Newsflash: Staples in Failing and Duplicitous Pricing Will Not Help

The question is not “will Staples fail?” The question is “Will Staplers fail before, after or with Office Max/Depot?”

I happened to be near a Staples location recently and thought I would drop in to pick up a copy of TurboTax. If it wasn’t discounted, my plan was to use my Amazon PriceCheck app and ask Staples to match that price. Of course, if the copy of TurboTax was presented in-store with a decently discounted price, I would just buy a copy there without checking the price app.

Staples, you may not know, has a 110% price match guarantee that explains “If you find a currently available lower price on a new, identical item, show us the lower price when you buy the item at Staples and we will match it plus will discount it by 10% of the difference.”

Sounded great, except I still don’t know what that means, since they weren’t willing to do more than match the Amazon price on this trip.

Of course, that wasn’t the weird part of this attempted purchase.

Staples showed an in-store 15% discount on the TurboTax software I needed. Despite the fact that they claimed this to be a “Hot Deal,” I was sure I’d seen it priced elsewhere for less. Grabbing my iPhone, I quickly opened and navigated the Staples app to the page displaying this exact item.

Staples in-store “Hot Deal” price: $84.99

Staples online “Yawn” price: $64.85

Yes, you’re reading this right, Staples was willing to give me a 35% discount and free shipping online, but only a 15% discount in the store. Moreover, this meant I was now obliged to use Staples’ own online price to force them to honor their 110% price match guarantee. Weird, if you ask me.

Not only weird, but a little slimy.

Duplicitous Pricing and Customer Trust

I understand why Staples tried to pull this fast one on me, but I don’t condone it. It’s already a very painful experience to shop in their stores; and when their own online pricing blows away what you can find in-store, there’s no reason to waste the trip. Plus, I now trust nothing I see in-store there; and I will forever showroom when in Staples.

Does DP describe your pricing strategy? If so, be prepared to observe a significant growth in showrooming with your customer base. Your customers will allow you to make profit; though they draw the line at being played for fools.

I’ve always liked the saying “pigs get fed and hogs get slaughtered.” In retail, this means it’s okay to be a little bit of a pig, but be prepared to lose my business if you become hog-like. Duplicitous pricing is the epitome of hog-like behavior. It’s short-term thinking that ensures you have fewer pesky customers in the future.

Not a good strategy if you ask me.

Good selling!

4 members like this

Comment

You need to be a member of DealerELITE.net to add comments!

Join DealerELITE.net

Comment by steven chessin on April 1, 2016 at 12:44pm: The very word "duplicity" is a watered-down term for "LIE" because it means double-meaning or half-truth -- but a half-truth is like half-pregnant. A lie is a lie. A little white lie --- is a big fat deception.

Nobody cries louder than a dealer at the auction arbitrating a car that was mis-represented by a little "fudging".

I have seen some practices that go beyond unethical that are outright criminal fraud ! Buyers need to be extra careful of documents that are not needed for the state that are dealer exclusives. Different pricing online is not right but doesn't bother me as much as bad cars that put lives at stake. I was considering buying a car - so I examined it underneath and found fresh undercoating masking rust.

Comment by steven chessin on March 31, 2016 at 12:50pm: http://www.dealerelite.net/profiles/blogs/20-things-dealers-may-not...

Good-or-bad / right-or-wrong .... LEGALLY this more recent post settles any debate. INTERNET PRICE is dead. One price, brick-or-click is law. Dealers will still try to interpret the law by advertising in tiny print "one available at this price" and of course this specific car won't still be available - but consumers may challenge that by demanding an identical substitution - and the battle over it won't be worth losing the media / social media war which can't be won. As Mike wrote : In WA state it has been the law for decades and many dealers have had legal issues when a vehicle slips through the cracks and inadvertently gets sold for more than the advertised price. --- The penalties are not worth the risk.

Also anticipate that some buyers out there will be "out to get you" and just looking for a discrepancy - they do not actually have to buy to nail you. "Internet Price" was a bad idea - now it is a ticking bomb.

Comment by Roger Sowers on March 31, 2016 at 9:41am: Real fun sitting face to face with a customer and explaining why the internet price is lower than the walk in the door price. Even better when it is a repeat customer of the dealership. My commission is greatly reduced but my workload is increased with these internet deals.

In some ways the Manufacturer encourages this by restricting the pricing that can be advertised when the final selling price in reality is way lower. All the trust created by a good sales process is wiped out in one click.

Comment by Steve Stauning on March 31, 2016 at 9:17am: I'm glad you read the post Brian, though I'm sorry you were unable to comprehend my message. If I choose to post here again, I'll try to write more clearly in the future.

Comment by Brian Bennington on March 30, 2016 at 10:20pm: Well, I knew sooner or later the content here would end up being a "place to vent" when the world seems off kilter. While Mr. Stauning's personal and very moving narration of his "Confrontation with dishonest and greedy tactics at a well-known nationwide retailer" sure got me to read it thoroughly, I think it may have been more appropriate on Yelp! Character really is an individual thing, and the fact that people can get together under the guise of "The Mighty Corporation" and be more dishonest than they would on their own always surprises me.

Comment by Mike Stoner on March 30, 2016 at 4:43pm: Jim Radogna is right. In WA state it has been the law for decades and many dealers have had legal issues when a vehicle slips through the cracks and inadvertently gets sold for more than the advertised price.

As a GSM more than once I surprised a customer when I called and told them the vehicle had purchased had actually been advertised for a lower price and our process discovered it. Sometimes it was a salesman that thought it would be ok because the customer didn't know about the advertised price.

Once in a while we would see a local dealership featured in a news story about just such a thing having happened and when the customer called they were told "too bad". It was usually followed by a story about the AG investigation of the store.

Too much exposure to engage in this kind of practice.

I have been to states working in my other car biz life where practices such as this were acceptable and even encouraged. Not very ethical.

Comment by Jim Radogna on March 30, 2016 at 4:20pm: Great post Steve! It's also worth nothing that DP can lead to legal problems. Many states require that dealers sell a vehicle at the advertised price, whether or not the customer is aware of the advertisement.