Wednesday, November 26, 2008

Merrill Lynch Online Pricing Survey!

And the Survey says! Merrill Lynch as just released the results of their 4th annual onlin pricing survey. Many experts beleive the low prices will be the key to holiday season sales.

Pricing survey highlights Amazon prices and selection
For our Fourth Annual Holiday Pricing Survey, we aggregated prices for the 60 most popular Books, DVDs, CDs, Video Games, Electronics, and Toys at leading online retail sites such as Amazon, eBay, and Overstock, as well as multi-channel retailers such as Wal-Mart and Target (which is powered by Amazon) as well as specialty retail sites.   Among traditional retailers (excluding eBay), Amazon had the best prices in 4/6 categories (although differences were minimal vs Wal-Mart), up from 2/6 last year, and best selection. 

AMZN: Retail price edge in 4/6 categories, best selection  
Versus traditional retailers, Amazon was the low-price leader in video games, CDs, Toys, and Electronics, and was very competitive in the other categories we surveyed.  Amazon had the most selection of items with 59 of 60 items in-stock from Amazon or 3rd parties (Apple's iPhone was not available). The network of 3rd party sellers remains a competitive advantage over multi-channel retailers regarding hard to find items such as the Nintendo Wii and specialty electronics.  We are impressed with Amazon's search and shipping programs, and expect Amazon to continue to gain share given relative advantages.

EBAY: Deals available, customer experience the wildcard 
For the fourth year in a row, we found eBay to offer the lowest published prices (using buy-it-now) in most of the categories we surveyed; however, variation in shipping rates offered by sellers makes the experience less consistent and often eroded the pricing advantage (Amazon less expensive in 2/6 categories including eBay shipping fees). eBay (C-3-9, $12.88) gets a plus for selection, though, as 60 of the 60 items we surveyed were available including Apple's iPhone. However, we were at times frustrated with the search experience on eBay, as it was difficult to find even popular items within search results.  

Plenty of shipping offers this holiday
We found that most retailers in our survey (6/7) were offering some sort of shipping promotion, ranging from free shipping for purchases above a specified amount to $1 shipping for all items. Amazon has the most consistent shipping policy across products, but some 3rd party items do not have free shipping.

Conclusion: Amazon shines L.T., but margins a N.T. risk  
Online retail remains a highly competitive/transparent market for eCommerce consumers with limited price differential among general retailers, and we see margin risk this holiday from 1) increased pricing competition driven by a more value oriented consumer and 2) shipping competition.  For long term investors, Amazon (C-2-9, $42.19) is delivering on a strong customer experience with lower pricing, leading selection and site technology that we found to be best in class. 

Just my 15%

9 comments:

Henrietta said...

I wonder how much that survey cost to announce what any intelligent consumer already knows.

Oren said...

Randy

Have you noticed the "eBay search not working?"

Why oh why eBay had to reinvent the wheel?

Why couldn't do the reasonable thing and just leased search engine from google?

You can just buy a box from google.

So many organizations do that today.

It would have cost them a fraction and would have given a better results.
(Although then they would have to renounce their new religion DSR)


just my 6%
(I'm mainly in computer items so my FVF is 6%, or should I say %5.1 since I'm a powersaller?)

Randy Smythe said...

Oren,

Yep, I'm noticing some issues. Just checked on one of the new Diamond sellers based on a tip and all of their listings have been removed.

Things are not well in eBayville.

Henrietta,

Lots of money. We should all be in the survey business.

Anonymous said...

Randy-
Do you think Ebay pulled their listings or the Diamond shut them down themselves?

Randy Smythe said...

Anonymous,

The message says that eBay pulled them but it could have been at the request of the seller. I'm not sure what happened. It will be interesting to see how long they stay off the site.

name said...

Henrietta, we have to be glad of this survey. Analysts are always the last to know and the most reluctant to admit such facts.

But now, having been told by Merrill Lynch, the eBay Board has to know. Q4 earnings seasons promises to be interesting.

Oren, eBay couldn't outsource search because then they would have just had good search. Instead they convinced themselves that by their own technical wizardly they could tap a source of low-hanging fruit in unclaimed revenue while providing improved search. Big projects get done at eBay only if they promise immediate return on investment. That is the unanimous verdict of everybody who has ever worked there.

Unfortunately for the rest of us, eBay has neither the technical competence nor the market savvy to deliver on its intentions.

Judy said...

Randy and US readers, totally OT, but ... HAPPY THANKSGIVING!! Best wishes from Australia where we don't celebrate it.

Anonymous said...

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