Is price information power?

Amazon has launched an app for iPhone that lets users either scan the barcode of a product in a store or take its picture in order to ompare the price with that offered online by Amazon and other online merchants.  It gets even better – the app also lets a person type or say the product name to complete an online purchase using their account.

It’s not the app itself that is unique – those type of apps have been around for awhile – it’s that Amazon launched one.  The timing of their launch is a shot across the bow of brick and mortar stores.  IDC Retail Insights, a technology-focused consultancy, says a survey of 1,000 consumers carried out in September suggested that more than a third will use mobile devices as they shop this holiday season, including using them to compare prices both online and at nearby stores, and to check product availability.  In the US, 28 percent of mobile phone subscribers now own smartphones, according to figures from Nielsen, the market research company.

OK – so what?

I don’t me “so what” as in “who cares” – I mean “so what” as in, “what does that mean?”  Let’s say that people do download the app (sticking with the Amazon app for example – I know there are a lot of competitive apps) – and the app shows that the price is lower online.  How will a consumer react?

Will the customer go ahead and order from Amazon – even though they are standing in front of the product in the store?  Instant gratification has a lot of value.  What is the value of having the product right then and there versus having it shipped?  It just depends on the person and the perceived value gained from instant gratification.  It’s the basis for most grocery stores – a gallon of milk might be $1 cheaper at a store down the street, but people factor in the time and hassle of going to a different store and decide that $1 is not worth going to the other store.

Will the customer care?  They must care a little to have even bothered to download the app in the first place, but people are not rational consumers.  Some people use apps to validate their purchase decisions.  People check online for a range of prices and determine that they paid fair market value, or similar, and reassure themselves that they made the right choice.  This is often shown with collectibles – as long as people can validate that they fell within a certain range, then they are often comfortable with their choice.  “Oh, you got that Picasso for $1,000,000 – I’ve seen other paintings go anywhere from $750,000 to $25 million.”

Or, people could use their newfound knowledge to haggle the price in store.  Greg Girard of IDC says that retailers need to prepare their sales staff for customers presenting them with lower-cost online offers, just as mass retailers and supermarkets have in the past matched rivals’ promotional offers.  I don’t think I have ever tried to haggle at Walmart, but that’s just me.  Haggling is a sound economic course of action – people do it all the time, but for some reason, people just don’t haggle at brick and mortar stores (especially chains).

Many retailers have been courting smartphone-equipped shoppers.  Macy’s, Best Buy and Target have all launched in-store location-based marketing aimed at smartphone users.  Shari Ballard, head of Best Buy’s North American business, says the retailer is expecting more than 10m visits to its mobile site over the holiday period, compared with a “minuscule” number of visits last year.  “Our mobile site is the fastest growing of all the channels we have for reaching customers.  I think we are in the very, very early days of what is going to be a significant trend,” she said.

There is no doubt that online sales are now an important part of the holiday season.  What remains to be seen this season is if mobile becomes an important part of the holiday season – and if so (which I think it will), how?

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