Is personalized pricing next on e-commerce?
" Today, consumers are more used to standardised pricing and the ‘law of one price’ generally prevails, based on the logic that differences between prices for the same good are eliminated by market participants taking advantage of arbitrage opportunities. Nonetheless, some online retailers are returning to the tactics of the bazaar, leveraging the data trails generated by Internet users to set different prices for different customers. Currently, a wide range of retailers use this kind of data to target individual shoppers with personalised offers and promotions.
Personalised pricing, so the economic theory goes, can save companies this lost revenue. By analysing customer data, a retailer can work out a customer’s “reservation price” — the maximum amount they would be willing to pay for a specific product, before they had “reservations” about buying it — and then charge them that amount.
There are no known cases of fashion companies implementing individualised pricing online. Yet the luxury fashion industry has long charged customers in different countries different prices for the same goods and is used to the idea of treating different segments of customers differently via personalised promotions, VIP discounts, exclusive sales and other tactics..."
Read the full article at Business of Fashion.
Image Credits: Rag Picking History