The challenges of controlling prices online

Have you ever searched for a product online and seen five different prices for the same item? Automotive aftermarket products aren’t exempt from this and it’s creating a challenge for suppliers to ensure their products are being priced correctly.

Neury Freitas, principal at management consulting firm Roland Berger, highlighted challenges in price transparency during a recent Automotive Aftermarket Suppliers Association’s Supply Chain Webinar Series session. He used the example of a battery. When searching for it on Google, he saw options to buy from five different retailers with prices ranging from $229 to $296 for the exact same product.

“The Internet and the online environment, in general, create a big challenge for pricing, which is the increased price transparency,” he said during the webinar Managing Pricing In A Complex Multi-Channel Sales Environment.

For suppliers, this risks upsetting their partners — why is one store selling at one price while a competitor sells it for a different price. That creates a competitive disadvantage.

“So if you are now a brand owner and you’re trying to manage [the] price of your products, you really need to be careful on how you deal with each of your customers — even more if they are selling online because now this information is clearly available for all companies to see,” Freitas said.

He added that Amazon is notorious for identifying price variances online and adjusting its pricing in response.

“That basically creates the challenge because if one store changes the price, Amazon will change almost right away. And then that creates the vicious cycle,” he said.

This type of price variance drives consumers crazy. They find it untrustworthy to see such a range. They don’t expect to have a different customer experience, whether that’s shopping for coffee or automotive parts.

“They are so used to having a flawless and seamless customer experience that they expect the same thing when they are dealing with automotive-related purchase as well,” Freitas said.

Barely half (55 per cent) of people said they have a good shopping experience with the automotive aftermarket, he reported. And there are too few saying their experience is any better than just ‘good.’

“If we’re talking about excellent — which is actually what [companies] should be aiming [for] — the number would be around 10-15 per cent,” he said.

So if brands want to improve the way customers feel about them, getting a handle on pricing should be at the top of the list, Freitas said. “There is a long way for automotive companies to basically catch up and find ways to meet customer requirements.”