Price points are converging across sales channels
The pandemic catapulted e-Commerce to a new level globally. Online sales for TCG grew by 35% in 2020 compared to 2019. In April 2021 they accounted for 34 % of sales value.
There’s been a growth in online sales share across all product categories with IT in the lead. All geographical regions enjoyed growth in online sales share and the prices charged, with a particularly strong performance in Western Europe and China.
We have also seen this trend in regions with relatively low online sales shares to date, for instance in the Middle East/Africa, Emerging Asia, and Latin America.
GfK’s online price index shows how these prices compare to the overall TCG market levels. During lockdowns shoppers were often forced to buy everything online.
Therefore, we saw a change in the online assortment which became more extensive and comprehensive in every region.
This had also an impact on average prices in the e-Commerce channel.
In Europe average online prices increased slightly as shoppers bought into new categories and ordered premium products online. A similar development, albeit on a lower level, can be observed in China. Here it is normal for mass market products to be available at cheaper prices via e-Commerce, but analysis of the price index points to increases in the cost of items online during the lockdowns when no traditional retail option existed.
In Latin America however we saw the opposite development. In this region, online which used to be the channel for a premium assortment, began offering a bigger assortment driving down average channel prices.
In addition to the general trend towards convergence between online and offline pricing levels, we also see converging prices at a product level. This has been happening for a while but has been accelerated by the
panemic. For many products the current price difference between online and offline is the smallest it has ever been.
One example is the price index development for TVs in Western Europe.
Looking at these developments on a product-by-product basis is crucial to offering the right pricing and assortment in the most appropriate channel.
According to our 2020 FutureBuy study, for 62% of global shoppers it is important that prices are the same online and offline.
Although the pandemic forced change in the right direction, online retail prices still vary from offline prices in some product categories due to differences in the regional and local retail landscape and the assortment mix.
With shoppers disliking these channel price discrepancies so much, and the inevitable move to omnichannel, retailers need to be
mindful of the issues it can cause, and work to equalize costs across all channels.
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