Global pricing? Not yet, but maybe sooner than we think

March 8, 2010

What is going to happen as consumers in various part of the world use their Internet connections to become savvy about retail prices around the world? Think about it, a consumer in, say Iceland, goes to the store to buy a product, pulls out a cell phone and checks prices, only to find out that the same product they are looking at costs much less in the US or Europe. How are they going to feel about their local retailer? What is that going to do to their consuming patterns? Will the Internet ultimately force a sort of “global pricing?”

That’s what went through my mind as I read an excellent email from a blog reader in, at least to me, a remote part of the world. The individual, who asked to remain anonymous, is a retailer who is beginning to get price push back from some of his customers. They are becoming aware of prices around the world. Here is how he put it:

I understand the need to be competitive in a local market, but I’m not sure that manufacturers realize how the end customer is starting to use the internet and how it’s affecting their brands & price perceptions. It’s very easy now for a customer anywhere to get a retail price from … anywhere!

Some of the pricing differences between markets are being picked up and commented on… we have started to get customer feedback in our stores. Small volume of feedback at the moment I admit but I can only see the trend increasing especially as retail becomes more global.

It is hard for me to imagine true global pricing. There are just too many variables in shipping costs, currency valuations, and economic models to make that fully possible. You could, however, begin to see some of the inefficiencies in economic systems begin to come under pressure; particularly elements like distributors and other middle men that add cost but not value to the consumer.

Thank you, anonymous reader, for raising the issue. Readers, what do you think about “global pricing”?

Posted by Richard Gottlieb on March 8, 2010 | Comments (5)

March 22, 2010

In response to: Global pricing? Not yet, but maybe sooner than we think
Paul commented:

I liked the idea of a Hot Wheels Cars Index. I think the rise of the Big Mac index in public awareness adds fuel to the notion of global pricing. NB There is also an ipod index. Consumers are savvy enough (and getting smarter) to recognise the costs of doing business vary country by country...remember they are buying from other countries via the internet. As transparency increases there are more reason to question when it gets too far out of line......

March 9, 2010

In response to: Global pricing? Not yet, but maybe sooner than we think
Jay Udow commented:

Global pricing is neither realistic nor desirable. As long as nations remain autonomous, factors like wages, taxes, localization, and economies of scale will always impact costs and prices. As a Canadian, I can state that even with knowledge from the internet gleaned from around the world, the logistics and associated costs involved in moving products from one country to another are rarely worth the effort for the consumer. Jay Udow www.purplehusky.blogspot.com

March 8, 2010

In response to: Global pricing? Not yet, but maybe sooner than we think
Manuel Torres commented:

Richard, I wonder if there should be a "Hot Wheels" Index similar to the Big Mac one started by the Economist years ago... we need as an industry to understand the true inhibitors of demand creation for a given brand in a given geography....

March 8, 2010

In response to: Global pricing? Not yet, but maybe sooner than we think
Colleen McCarthy-Evans commented:

P.S. Just last night, my son Dylan was 'scanning' with his iPhone, the bar code on a Cliff Bar, to find the cheapest place to buy them...the future is now. The iPhone app is called "Shop Savvy" (of course).

March 8, 2010

In response to: Global pricing? Not yet, but maybe sooner than we think
Colleen McCarthy-Evans commented:

I'd like to hope that the retail customer who is savvy enough to check prices globally, would also be able to understand the issues of variable shipping costs, etc. And I like to believe that global pricing, if understood as having some reasonable fluctuations from region to region, could be a step toward fair wages for workers around the world. Change doesn't happen overnight and is often uncomfortable in the transition process. My hope would be a gradual and graceful shift toward global pricing, that is in the best interest of all parties!