Photo: RetailWire
A study from Harvard Business School finds “self-matching” — or enabling in-store shoppers to request they be charged a retailer’s lower online price — can be profitable and may be the best way to support omnichannel pricing.
While extensive research has explored price-matching against retail competitors, the study claims to be the first to explore self-matching.
On the negative side, online prices tend to be lower and self-matching often results in shoppers “obtaining the lower online price when they would otherwise pay the higher store price, an effect we termed channel arbitrage.”
But the study identified ways self-matching can enhance profits or at least minimize the channel arbitrage:
- Online competition dampening: If a rival doesn’t self-match, the self-matching retailer may be able to raise its online prices to offset any losses from shoppers asking for online price-matches in-store. The rival that doesn’t price-match will often likewise raise its online prices, lifting online margins for both.
- Store competition dampening: With a self-matching policy, retailers can charge two sets of prices to two in-store shopper segments: those who pre-shop research online with intentions of asking for an online price-match and those who don’t. Self-matching allows retailers to still charge a higher price to those who don’t seek out the lower online price and may provide elasticity to raise in-store prices.
- Overall webrooming dampening: An in-store shopper finding lower prices for a similar item at a competing store may be convinced to still buy at the current store at a higher price to avoid the time and travel cost of buying elsewhere. Being able to offer a lower self-match price may save the sale.
The study found the merits of self-matching depends on the product and competitive landscape. But with retailers apparently reluctant to match online and offline prices, self-matching was found to minimize the channel arbitrage and provide omnichannel customers with pricing consistency across channels.
The researchers wrote, “Broadly, our findings suggest that although a self-matching policy may at first appear to be an unprofitable but necessary evil resulting from a prisoners’ dilemma type situation, it has more subtle and positive competitive implications.”
- Match Your Own Price? Self-Matching as a Retailer’s Multichannel Pricing Strategy – Harvard Business School
- Should Retailers Match Their Own Prices Online and in Stores? – Harvard Business School
- Match Your Own Price? Self-Matching as a Retailer's Multichannel Pricing Strategy – Harvard Business School
- Should retail prices in-store be the same as online? – RetailWire