Online vs. In-Store: Anthem Marketing Solutions Study Shows Clear Trends in Pricing

CHICAGO, IL, October 30, 2010 (Press-News.org) Reviewing a basket of commonly purchased household items across a range of consumer categories, an Anthem Marketing Solutions study found two natural inflection points where there were marked differences in online and offline pricing: Items with prices below $50 were generally cheaper in store, and those priced above $90 were generally cheaper online. While conventional wisdom suggests that online always offers the better deal, Anthem's study found that an item's price tier, category, complexity and usage type actually better suggest which channel will have the lower price.

Items included in the study were selected to represent a typical basket of consumer household purchases, and to qualify, were required to be available in 3+ online and 3+ in-store retailers, in the same size, packaging, and model number, where applicable. Pricing was recorded across a total of fifteen online and offline retailers on a single day, independent of applicable taxes or shipping fees.

Among the items studied, 70% of the goods priced below $50 could be found at the lowest price in a physical store, while over 85% of the items priced over $90 could be found at a lower price online. In addition to price, the study found that an item's usage type and product category were significant determinants for online and in-store prices. Convenience purchases, those that require little research and for which a consumer is unlikely to compare prices among multiple retailers, were typically less expensive in physical stores. Considered purchases, for which research and active comparison shopping are more likely, were generally less expensive in-store for items below $50, but cheaper online for those above $90. Furthermore, Anthem's study found that products within certain categories, such as electronics, are typically cheaper online, whereas consumables including grocery, cleaning supplies and most personal care products are less expensive in-store.

While listed price tends to be the primary motivating factor, shipping costs and taxes can also affect consumer behavior. Shipping policies vary based upon type of retailer. Office supply stores such as Staples offer free shipping for most shopping carts over $50, making it sensible to purchase all items from one site rather than individually searching across retailers for the lowest price. Drug stores add weight surcharges, which can deter consumers from purchasing certain items online. Because online taxes are assessed if a physical store is present in the state of purchase, it is generally difficult to avoid paying these fees when comparing online and in-store deals.

These results suggest that for offline retailers, highlighting lower prices and immediacy is key for lower-priced items, and trying to achieve price parity is important for high-priced goods. For online retailers, strategies for lower-priced items should focus on convenience and bundling opportunities, and for higher-priced items, reinforcing the best deal as well as the convenience of home delivery.

ABOUT ANTHEM MARKETING SOLUTIONS
Anthem Marketing Solutions is a strategic consultancy focused on helping clients acquire, retain and grow profitable customer relationships. For more information on this study, please visit anthemedge.com