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How businesses can deal with price comparison sites

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Retailers are forced to sacrifice margins to stay competitive. Worse, automated pricing tools have allowed retailers to interrogate the prices of competitors and undercut them automatically; creating a race to the bottom.

Even a few pence can seal a deal. Or ruin one.

How on earth are retailers supposed to thrive in the face of this price-war?

Brands such as Dixons are facing comparison sites head on by challenging the market on price, while still offering an in-store experience. Dixons recently showed it is embracing price transparency by launching a free app encouraging shoppers to compare its prices with rivals whilst in-store.

By launching this app, Dixons is combating so-called ‘showrooming’ and showing the consumer that their prices are actually not much different to Amazon, Argos, John Lewis or Tesco. It’s a bold move from Dixons, but is price really the only factor in consumer decision-making?

Often consumers will choose to buy from retailers they trust, favouring the overall experience to price alone. Particularly if they know they’ll be getting a valuable service that is important to them as part of the price. This could be anything from knowing that the courier the retailer uses is reliable; for example, ASOS uses DPD which sends texts with one-hour delivery slots. 

It could be that the retailer has an easy checkout like Amazon; for a logged-in customer, checkout with Amazon can take less than 30 seconds. Or maybe the retailer has a no-questions-asked returns policy, like luxury US department store Nordstrom. Of course, price is important but customers look at a retailer’s proposition as a whole.

Customers want to use a brand they trust so convenience and reputation are high up on the list of expectations from online and offline shoppers.

Becoming a trustworthy brand in this digital age comes down to three things:

1. Website 

Does your website work? How easy is it to checkout? How does your content speak to consumers through the purchase journey?

2. Fulfilment

Will ordered items arrive on time? Will they be intact? What promises do you make and do you deliver on those promises? Will the delivery company deliver when they say they will?

3. Guarantees

Do you offer a good returns policy? Do you make returns easy for consumers, especially if they have ordered online? What kind of warranties do you offer on electronics?

Retailers fulfilling customers’ needs by providing consistent service, following through on their promises and exceeding expectations will convince consumers that a low price isn’t everything. 

Take John Lewis for example. They offer a five-year warranty on televisions. That’s four years longer than a typical manufacturer guarantee. This shows that John Lewis realises that a television is a large, considered purchase. As a result, retailers like John Lewis who are exceeding expectations on service will reap the most reward.

Customers want more from brands than just the cheapest deal, as consumers continue to become more aware of the overall proposition offered to them by retailers, the importance of comparison websites will wane.

Where customers may have once used price comparison sites as their first port of call, as with the priorities of customers they will begin to slip further down the list of top destinations.

Rationally, shoppers want to find the best price for what they are buying, but several other factors come into play psychologically when making a purchase. Consumers understand that very few retail purchases are commodity items, like with insurance for example – price isn’t the only factor. 

The real differentiator is service. Especially with the economy on the rise, I predict a fall in discount hunting and a rise in loyalty to brands that can offer and deliver on a great customer experience.

Darryl Adie is the MD of Ampersand Commerce.

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