Tomorrow is Today

…shoppers are becoming more comfortable with the idea that a price is going to change frequently, and increasingly, very frequently, meaning intrahourly on certain sites, like eBay, Amazon, and Google, and we expect this to continue.

That consumer behavior, or comfort with the dynamic price, is driven by the prevalence of smartphones, so consumers are armed with real-time pricing data when they’re making purchasing decisions in brick-and-mortar stores.

It’s driven by the frequency with which retailers are willing to submit or promote products with deep discounts via e-mail to existing customers or prospective customers. And it’s certainly driven by recent emerging retail business models from the likes of Groupon, with Groupon goods, and ShopLocal, Amazon, and eBay, of course, but also the private-label sites Gilt Groupe and Rue La La.

So consumer behavior is changing. We’re seeing retailers react to that with the application of technology as well.

Pricing in today’s marketplace has become a fascinating big-data problem. Initially this trend has been a race to the bottom, where retailers have tried to push back against “showrooming” by matching (cheaper) online pricing. Now online retailers are using what they know about individual customers to improve margins, by pricing relative to what that consumer has spent on similar products in the past.