Monitoring Holiday Pricing Trends
The jury is out as to whether this holiday retail season will be boom or bust. It is difficult to accurately assess consumer mood and guess how wide the purse strings will be opened. Retailers and e-tailers will be competing fiercely for consumer dollars and pricing will be more dynamic than ever before.
Have you had a chance yet to check out the first part of our 2015 Holiday Pricing Trends Report? It provides insights on the pricing behavior of four leading retailers (Walmart, Sears, Toys R Us and Best Buy) as well as four leading e-tailers (amazon.com, ebay.com, jet.com and rakuten.com) across seven popular holiday gift categories: consumer electronics, toys & games, health & beauty, sports & outdoors, arts, baby products, and home & kitchen.
We highly recommend that you download the full report, but here we take a look at e-tailer vs. retailer price leadership by comparing Amazon vs. Jet.com and Amazon vs. Walmart on a category by category basis.
A Look at Amazon vs. Jet.com
The following bar graph shows, for each category, on what percentage of their overlapping assortment Amazon had the lowest average price and on what percentage Jet.com:
The price leadership scorecard between these two e-tailers is as follows:
- Jet.com establishes its price leadership in one category only – Toys & Games – and only by a slight margin.
- Amazon has a small price leadership advantage in two categories: Health & Beauty and Home & Kitchen.
- Amazon takes a commanding price leadership position in both Sports & Outdoors and Consumer Electronics.
A look at Amazon vs. Walmart
Now let’s look at the same bar graph for Amazon vs. Walmart:
In this comparison between an e-tailer and a retailer, the scorecard is clearly weighted in Amazon’s favor:
- Walmart challenges Amazon’s price leadership in only one category: Toys & Games.
- In four other categories – Sports & Outdoors, Home & Kitchen, Arts and Baby Products – Walmart manages to keep the price leadership gap with Amazon at about 20%, i.e., Walmart is the price leader across ~40% of the assortment.
- In Consumer Electronics and Health & Beauty, Amazon is the unequivocal price leader.
E-tailer vs. Retailer Price Leadership Comparison
Although our holiday season report was not designed to provide conclusive insights into the price leadership of e-tailers vs. retailers, our data clearly indicates that it is the fellow e-tailer, Jet.com, that comes closer to challenging Amazon’s price leadership position than the retailer.
It is interesting to note that the two categories in which Walmart was least competitive with Amazon – Consumer Electronics and Health & Beauty – are also among the most popular categories for online purchases in the US, as shown by the following graph based on AT Kearney’s 2015 Global E-Commerce Index:
Similarly, the categories where Walmart was more competitive with Amazon – Toys & Games and Home & Kitchen – are among the less popular categories (Toys, Kids & Babies and Household Items) for online purchases.
Lastly, given the popularity of Electronics for online purchases, it is not surprising that Amazon puts special attention on attaining price leadership in this category, creating a large gap not only with the retailer, but also with the e-tailer.