Is Price Comparison Dead? And, If So, Should We Celebrate?

Written by Evan Schuman
November 26th, 2008

A Supreme Court decision from back in June 2007—intended to give consumer goods manufacturers greater control over their products’ pricing—is fueling confusion, mistrust and runarounds among E-tailers trying to compete on price.

Indeed, some are going so far as to suggest that the decision could undermine Web comparison sites in general.

The issue has been exhaustively detailed in this comprehensive Internet Retailer story, but the key point is that enforcement has been lax, creating a situation where some E-tailers abide by the rules and others don’t. Like anything else, lax enforcement does little other than reward those who break the rules and punish those who frustratingly try and abide by those same rules.

And when the comparisons involve pricing, abiding by an unenforced rule can put an online storefront at a serious disadvantage.

There’s a bigger issue, though. Competing on price is, ultimately, almost always a losing proposition. The winner rarely has enough profit to make it worthwhile. Even if the profit is adequate, low pricing has no barrier to entry. It’s only a matter of time before someone with lower costs undercuts that first price undercutter.

If manufacturers start rigorously and consistently enforcing MAP (minimum advertised price) numbers, it could indeed undermine Web price comparisons, at least for the impacted products. That would force E-tailers to differentiate on much more strategic areas such as customer service, support, range of products offered and a desirable customer experience.

It’s a shame that it would take a Supreme Court decision and aggressive MAP enforcement to accomplish this, but it would be good for E-Commerce. With all due respect, those merchants who could only compete on price probably would not have lasted long anyway.


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