Online retailers don't plan to sit and wait until online price comparison websites take away their margins, shows a research study by Michael Baye, a professor of economics at Indiana University's Kelley School of Business.
His findings wouldn't have been noteworthy at all if it weren't for the doomsday predictions from the days of the internet hype. The internet was predicted to take away all friction points that enable local monopolies to exist, among them time, physical distance and limited access to information.
Price comparison sites would take care of webshops. By making prices transparent worldwide, comparison services would force retailers to drop their prices until all profit margins were squeezed out of retailing. Amazon.com would rule the world. And pigs would fly.
But the webshops weren't going to sit and wait for their inevitable demise. They battle the newfound transparency by constantly changing their prices – not just lowering them but also raising. By the time the comparison sites have updated their databases, the shop already has changed its prices.
Battling transparency is a matter of staying one step ahead of the not just competition, but the comparison sites too.
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