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How Digitec and company play with their prices and who was the most expensive in the test
Whether it’s an iPhone, a coffee machine, or an epilator – At large online retailers, software usually determines how expensive a product is. How prices arise is a secret. However, you can compare them. We did that. These are the most important findings.
Where can you find the best deal for the new smartphone? If you buy online, you can compare the prices of different providers in just a few clicks. And yet the uncertainty remains. Because distributors can set their prices dynamically. We know this from airline and ski tickets: there, weather, demand and other factors have a direct effect on how much you pay.
Online pricing is often not transparent to customers. We collect price data over a six-week period to investigate what strategies large online stores are following.
What do we investigate?
We compare the prices of the five best-selling online retailers with the electronics on offer: Amazon, Brack, Digitec, Galaxus and Microspot. To this end, the prices of 19 products were selected six times a day using software for six weeks, from June 29 to August 9.
TO Digitec Galaxus is a company with two online stores. They were combined in the evaluation because the prices are identical in the vast majority of cases. On Amazon, there were only enough values in eight categories. Due to the crown crisis, some products were not delivered to Switzerland. Therefore, the evaluation on Amazon is limited to these categories (see third point). You can learn more about the method here.
Who is the most expensive, who is the cheapest?
Of the Swiss suppliers in the test, Brack is on average the most expensive in eleven of the 19 categories, but the cheapest in only one. Digitec / Galaxus has eleven times the lowest average price, Microspot ten times; they are often the same price.
Amazon offers a split image. The US group only has enough data in eight categories to make reliable statements. In four of these categories it is more expensive than the Swiss competition and cheaper in three.
What stands out: if Amazon is more expensive, of course. As with iPhone 11: The smartphone is available on Amazon for the equivalent of 854 francs. At Swiss dealers it is more than 60 francs cheaper. Samsung’s current flagship, the Galaxy S20, it is even 75 francs more expensive on Amazon.
These figures confirm previous surveys that electronic products are often cheaper in Switzerland than in neighboring countries.
On the other hand, the difference is small where Amazon is cheaper, for example with Apple’s Airpods headphones: the difference with Digitec is one franc and that of Brack is four francs. The Philips epilator costs 11 francs. Only with the Lenovo Thinkpad Amazon is significantly cheaper (233 francs on average).
Who plays the most with their prizes?
Clearly Amazon. The American group leaves the Swiss competition far behind:
Consulting firm PWC writes in a study that Amazon changes its prices 2.5 million times, every day. For the individual product, the price moves every ten minutes. Quite the opposite is Brack. The Mägenwil AG-based distributor relies on stable prices. In our study, only ten price changes were observed. Digitec / Galaxus is the most active of the Swiss distributors.
The fact that retailers set their prices dynamically has both advantages and disadvantages for customers. The Foundation for Consumer Protection writes: “As a customer, you cannot rely on the fact that the price of a certain product will remain the same a few hours later.” On the other hand, a price change could also benefit the customer.
What time should I buy?
No retailer has a time window that is significantly more lucrative than any other. So getting up in the middle of the night to do some shopping is not worth it. However, some statements can be made within the limited scope of this investigation. Bargain hunters should shop Digitec / Galaxus at night. It is a little more attractive than in the morning. Products were priced new for 13 percent of page views at 6 p.m. In these cases, they were on average three percent cheaper than at 6 a.m.
Another number speaks at night on Digitec / Galaxus. Prices drop most frequently between 2:00 PM and 10:00 PM. About 40 percent of observed discounts occur during this time. In contrast, nearly half of the price increases occurred earlier in the day, between 6 a.m. and 2 p.m. (45 percent).
On Amazon, prices go up and down day and night. The only recognizable pattern: Between 6 a.m. and 10 a.m., three-quarters of all price movements decreased. Microspot changes its prices mainly at night.
Which stores have a particularly tight price duel?
Microspot and Digitec / Galaxus are closely watched. Behind this is the gigantic duel between the two largest Swiss retailers: Migros owns 70 percent of the shares of Digitec / Galaxus. Microspot is part of Coop. The duel is evident in several products, for example the Airpods. Microspot tends to react a bit late to its worst competitors:
Consumer protection came to the same conclusion three years ago when, among other things, it compared the prices of the Playstation game “FIFA 17”:
image: Foundation for Consumer Protection
For which products is the price war raging?
The prices of the four smartphones were above average:
Otherwise, no trends can be identified, neither by product type nor by price segment.
What are online retailers saying about the results?
Brack announced that they also had many products in their range that were cheaper than the competition. They are staying out of the tough price war because they see themselves not as a discount distributor, but as a “specialty online retailer.” All prices changed at most once from one day to the next.
Digitec / Galaxus relies “partially” on the prices of major competitors, as a spokesperson writes. It does not confirm that customers find slightly lower prices at night. The results could be explained by chance: “The time of day does not influence our prices.” On the other hand, new purchase prices and supplier changes could result in price changes or discounts to make room for more up-to-date products in the warehouse. Most prices are set automatically. So an algorithm determines how expensive a product is.
Dozens of online stores participate in the online commerce of electronic products. Amazon tries to undermine this particularly aggressively. The company says: “Our prices fluctuate, so we can match or lower the lowest competitive price offered by other retailers.”
Microspot does not comment on “strategic issues”.
Is it legal for an online store to play with its prices and adapt them to the competition?
Yes. Companies can change their own prices at will. Software is even allowed to automatically adjust prices to the competition. It would be problematic if several companies jointly used software for price coordination. The Competition Commission (Weko) currently has no evidence of such behavior, as the deputy director writes.
Do all customers of an online store pay the same for the same product?
In Switzerland, most likely yes. The Foundation for Consumer Protection is not aware of any company that uses custom pricing in this country. In Germany, there are indications that certain online shops or tour package providers use tailor-made prices. Amazon writes that the same prices apply to all customers on the amazon.de website at all times.
With custom pricing, a customer can see a different price than someone else’s at the same time and in the same store. The price may depend on the location or the brand of the smartphone or computer. (aargauerzeitung.ch)
