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Feb 17, 2010 | 3 minute read

The Problems With Showing Competitor Prices

written by Linda Bustos

According to a study by the e-tailing group on consumer comparison shopping:

  • 63% of consumers say they would like to see competitors' prices on a retailer's site
  • 78% would likely return to a site that shows competitors' prices
  • 36% would be "much more loyal" to a retailer who displays price comparison

"Savvy consumers are using the Internet to find value, particularly when shopping for commodity products. Efficiency of price comparison and the ability to merely Google it, check Amazon's prices or visit a few competitors is core to today's consumer shopping behavior...This survey certainly shows that consumers would like the convenience of accessing such information on any given retailer's website."

The study suggests adding price comparison because customers like it is a good decision. I disagree. 63% may like to see comparison, but will they purchase from you? They may return to use your comparison tool, but will they boost or dilute your site conversion? Does loyalty translate to sales or loyalty of visits? Are you spending oodles of money to drive new traffic only to guide them to another site? Are you confusing the customer and killing conversion by giving too much choice?

The cons of comparison

A couple years back I wrote about 3 pitfalls of showing competitor pricing on a product page when a Get Elastic reader notified me that one of his competitors was showing his website's pricing (which was out of date).

1. Risk of Lawsuit

Unless you are posting accurate, up-to-date prices, you could end up in hot water legally. Continual manual checking and adjustment eats up time resources.

2. Advertising for the Competition

When you mention a competitor, you risk a customer interrupting the sales process to either verify the advertised pricing or check out what they have. Not everyone will do this, of course. Because price is not always the most important criterion for purchase, if you’re a smaller shop and you mention a more well-known store, the branding recall effect / trust for that site might override your undercut price. Or the customer may discover your competitor is offering free shipping or other incentive that you were not aware of.

3. Eroding Trust, Rather Than Building It

If you post the wrong information, you come across as deceptive (should the customer verify the price difference). This negative impression could last forever in the customer’s mind. If you post dates and don’t in real-time it could also raise questions about your accuracy.

At least with the widget in question, you can't be sued because the retailers displayed have all opted-in and the prices are updated in real-time. You still risk advertising for the competition, along with retailer reputation ratings that may sway customers who aren't sold on shopping with you (have you addressed their fears?)

You might argue such a widget builds customer trust, making you appear more open and transparent. But what about with customers who are aware you are only showing higher priced merchants? Is this like a merchant who only approves 4 and 5 star product reviews? It's not really showing the whole picture - it's more translucent than transparent.

Whatever happened to those good old fashioned value propositions?

If your value proposition is low price (which many in the industry agree is a losing fight unless you're Amazon or Walmart), you may as an alternative offer a low price guarantee instead of on-site comparison tools. But even a price-matching is no substitute for a value proposition.

The problem here is making business decisions to satisfy the least profitable customers - the one who's main purchase motivator is price.