All’s Fair In Love, War And Price Matching

What's Next In Payments®
4:25 PM EDT December 3rd, 2012

“The unluckiest buyer paid more than triple the price that the luckiest buyer paid.”

That statement, courtesy of a New York Times piece on real-time price matching practices by some U.S. retail giants, sums up just how insane the price matching wars have become.

The Times used pricing firm Dynamite Data to track the price matching practices of Walmart.com, Amazon.com and Target.com from the week before Thanksgiving until Tuesday, Nov. 27, and some of the methods revealed are surprisingly aggressive.

One example the Times offers concerns the Dance Central 3 game, and its pricing on Thanksgiving. Amazon offered the game at a price of $49.96 the day before Thanksgiving, undercutting Target’s price by 3 cents and matching Walmart’s offering.

The next day, Amazon dropped the price to $24.99, then to $15 after Walmart undercut that price. Overall, Amazon changed the price seven times in seven days, engaged in some serious gamesmanship with its rival retailers. 

As the Times notes, retailers now use advanced computer algorithms to engage in up-to-the-minute price matching, and often set price limits based on competitor pricing, inventory and more. Gone are the days when a company would send an employee into a rival store and then launch a sale a day or two later. Now, the process takes hours or minutes to complete.

The motivation behind such tactics is three-fold. First, retailers want to increase sales volume. Second, they want to boost their search-result performance and bolster their “thrifty reputations.” And finally, retailers can attempt to bait competitors into offering money-losing deals and depleting inventory.

The price shifts can sometimes be practical. Other times, they can seem, well … petty. For example, Walmart undercut Amazon’s LeapPad1 Explorer price by $0.02 once on the Monday before Thanksgiving and then again the following Sunday.

According to Rafi Mohammed, a pricing consultant, such methods can sometimes lead to negative consumer reactions.

“People are starting to realize, ‘I can’t trust the price I’m getting, because it might change,’” he told the Times.

To read more about the escalating price matching wars, read the full New York Times article here.

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