Why Needn’t Care About Improving Prices

Written by Evan Schuman
January 2nd, 2013

To make shoppers happier, Walmart need not improve its pricing, Amazon can leave Web site functionality as it is and CVS’s content is just fine the way it stands. Welcome to the highly nuanced—and seemingly non-intuitive—world of ForeSee’s online shopper satisfaction survey.

What makes ForeSee’s report worthy of study is that it doesn’t take 24,000 shoppers’ answers on their own. Instead, it compares the responses to multiple similar questions and then compares those answers to what other similar shoppers said. In effect, it draws conclusions that are sometimes are odds with an individual’s answer.

Let’s look at this with a political survey analogy. The typical national poll asks registered voters who they are likely to vote for and then reports the answers directly as, for example, “56 percent of the voters surveyed said they would vote for Candidate A.”

What ForeSee does is much closer to, “Yes, 56 percent of registered voters said they would vote for Candidate A. We then asked them asked them about their views on key social and economic issues, their feelings about change, whether they are demographically similar to Candidate B (father of similar age, children of similar age) and their thoughts on global warming and religion, and they gave very different answers to the candidate question. Given all of those answers—and the answers that others have given, plus who they ended up voting for—we’re predicting this guy will end up voting for Candidate B, despite the fact that he said he wouldn’t.”

Many consumers have no idea of the real reason they make a particular purchase. Was it the strong price and product functionality? Or was it the cumulative effect of 20 billboards from the last six months and nine colleague comments over the last three weeks?

Most importantly, though, the ForeSee report differentiates between an area where a retailer’s site could improve and become more attractive to shoppers and an area where such a change would likely have a material impact on shopper actions.

Walmart, for example, could always be strengthened revenue-wise (if not margin-wise) by lowering prices. Given that it’s already perceived as having low prices compared with most rivals, however, knocking a few extra cents off a box of cereal isn’t likely to help much.

That same type of discounting, though—according to the ForeSee report—could have some major revenue-boost potential for sites where pricing is not perceived as that strong; for example, Office Depot, Buy, HSN or Overstock. Again, the report was not addressing whether or not those sites in fact have stronger or weaker prices. It spoke solely to shopper perceptions.

The ForeSee report simply said that pricing improvements would help those four sites, along with 1-800-Contacts, Efollett and The Exchange (—but no others.

ForeSee CEO Larry Freed said the differences between where a site may need to improve and where such improvements will likely make a difference is vast. “Apple is a great example,” he said, pointing to the company getting the lowest score on price but also being the site that would be less helped by price changes.


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