E-Tailers Playing The Hide-The-Price Game, Thanks To The Supreme Court

Written by Evan Schuman
February 11th, 2010

It’s becoming a common tactic for E-Commerce and some mobile sites to now hide much of their pricing. But in an interesting piece on Sunday (Feb. 7), The New York Times pegged much of the recent price-games to a 2007 Supreme Court case that gave manufacturers much more power to dictate pricing. And it has motivated them to forbid retailers from advertising their merchandise for less than a dictated price—for E-tailers, “advertising” includes posting on a Web product (as opposed to checkout) page.

“As a result, those prices also did not show up on search sites like Google Product Search and The trend has arguably weakened one of the implicit promises of E-Commerce: that quick searches and visits to comparison shopping sites will yield the best deals,” the Times story said. “Most online retailers complain that the missing prices confuse consumers and give an advantage to big chains like Wal-Mart, which do not bear the same burden in their stores. They also say the practice of enforcing minimum advertised prices has gradually spread from the consumer electronics business to companies in other industries like sporting goods and jewelry, which are also trying to stem the downward pressure of prices online.”

The story pointed to an Amazon posting that challenges the policy. “Retailers like Amazon have the legal right to set their own prices independently, but some manufacturers place restrictions on how those prices may be communicated. Because our price on this item is lower than the manufacturer’s ‘minimum advertised price,’ the manufacturer does not allow us to show you our price until you take further action,” Amazon’s posting said. “This won’t require you to purchase the product. You can easily remove it from your cart if you decide not to buy it. We realize that this is an inconvenience and are regularly working to educate manufacturers on how their policies impact our customers.”

This game is a sure loser for all concerned, and that includes retailers that are primarily brick-and-mortar, E-tailers and manufacturers.

Manufacturers: Welcome to the year 2010. There are all kinds of non-traditional ways your products will make you money. Beyond eBay, even Amazon and others have toyed with recycling used products. Your ability to control prices is limited, but the bigger concern is your efforts to allow lower prices but to prohibit them from being discussed out loud. In the day of the Web, mobile and Twitter, this strategy simply won’t work. In the meantime, while you are futilely trying to make it work, you’ll alienate consumers and retailers. No matter how you FutureMap this one, it doesn’t work out for you, Mr. and Mrs. Manufacturer.

As for you brick-and-mortars, you better stop snickering. Pricing confusion—and this game certainly uses such confusion—always benefits E-tailers. To paraphrase Qui-Gon Jinn, “Online, there’s always a smaller fish.” And they don’t care much about rules from the likes of P&G and Sony.

You E-tailers out there already know this is a raw deal for you. You need to proclaim your pricing—be it good or bad—right away. Let it be a checkout surprise, and you’re going to see more abandoned shopping carts than ever. Don’t forget that today’s cynical shopper will assume that a hidden price is a really high price. Many will abandon your site before they ever get to checkout, which is ironic, because you wouldn’t be hiding the price if it wasn’t lower than what the manufacturer wants.


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