New Research Reveals Online and Brick-and-Mortar Retail Prices Are Identical 95% of the Time
A new economic study by The Brattle Group finds strong evidence on the dynamic competitive relationship between online and brick-and-mortar retail sales channels: Both channels fiercely compete on price, and typically match on both price level and trends in dollar sales volumes.
Read More: Social Media Platform SoMee Secures $50M Investment Commitment
Key takeaways from the report include:
- Online and offline prices are identical 95% of the time for the same product, retailer, location, and date.
- When one channel’s price changes, the other channel typically changes to match it quickly.
- Online prices rarely deviate away from brick-and-mortar prices, but when they do, they can deviate both upwards and downwards.
- Online and offline trends in dollar sales volumes closely match one another.
- The convergence between online and offline retail prices and sales trends is likely impacted by the rising popularity of retail options like omnichannel, which blends elements of online and offline retail experiences.
“The latest retail research suggests that both online and offline retail are subject to the same competitive forces,” said report coauthor Dr. Rosa Abrantes-Metz, Brattle Principal and Co-Leader of the Global Antitrust & Competition practice. “Not only do online and offline prices match 95% of the time, but online and offline retail displays nearly simultaneous price movements in almost identical magnitudes across channels. Moreover, the two channels displayed nearly identical trends in dollar sales volumes.”
The report, Competitive Dynamics of Online and Brick-and-Mortar Retail Prices, was developed by a Brattle team led by Dr. Abrantes-Metz and Senior Associate Mame Maloney and was prepared for the Computer & Communications Industry Association (CCIA). The report draws from a combination of data sources, using point-of-sale data from NPD to analyze nationwide online and offline prices and volumes for a set of products, and using hand-collected price data from Premise to analyze online and offline prices from individual retail locations in a major metropolitan area. The results suggest that both online and offline retail price and volume data should be considered when analyzing retail markets for antitrust purposes.
Read More: SalesTechStar Interview with Eric Westerkamp, Chief Executive Officer at CaliberMind
