New study shows intense competition between online and offline sales channels

A new economic study by the Brattle Group found that online and brick-and-mortar retail sales channels are fiercely competing on price, with offline sales channels often directing the trends.

The Brattle study uses data from market research group NPD to analyze nationwide online and offline prices and volumes for a set of products as well as hand-collected price data from Premise to analyze online and offline prices from individual retail locations in a major metropolitan area.

Analyses of both data sources found that online and brick-and-mortar prices are identical about 95% of the time and that deviations are the exception rather than the rule. And when deviations do occur, they do so only briefly as the other channel quickly matches the new price.

In addition, the study found that both channels experience increases and decreases in dollar sales at the same time and to the same degree. These findings are highly consistent with a responsive and competitive market that includes both channels.

The rarity of price deviations goes both ways. Online prices are seldom different from brick-and-mortar prices, however, when they are, they can deviate both upwards and downwards

The study, commissioned by the Computer and Communications Industry Association (CCIA), suggests that in the context of antitrust, analyses involving dynamic competition and substitutability for retail goods should incorporate information from both online and brick-and-mortar retail sales.

Further, regulation affecting online commerce is expected to affect prices in brick-and-mortar stores, and vice versa.

The results are good news for consumers, who benefit from a competitive retail landscape through lower prices and diverse venue options.

“The latest retail research shows the intense price competition between online and offline sales channels. Moreover, the research finds nearly contemporaneous price movements in nearly identical magnitudes across channels, which shows that online and offline sales channels are subject to the same competitive forces. Any regulations affecting online retail would affect prices in brick-and-mortar retail as well,” CCIA Director of Research and Economics Trevor Wagener said.

© Copyright by Extensive-Enterprises 2024. All rights reserved. Staff Login