Published on: April 28, 2022
Yesterday we took note of an Axios Capital analysis concluding that e-commerce can be at least partly blamed for current rates of inflation. The logic:
"We no longer live in a 'Price is Right' world where any given item has a knowable true price that is broadly unchanged from day to day or from store to store. Instead, prices are constantly fluctuating and unpredictable - which makes them much easier to raise."
I commented:
I'm not sure that e-commerce is to blame as much as technology in general. But the point is fair - it is far easier to change pricing when all you have to do is touch a button. There's no cash changing hands, so the increases become largely invisible. Until you get the bill, of course … and the bill always comes due.
Changing prices may be easier, but that means that it also is easier to upset shoppers and ruin whatever relationship you may have with them.
One MNB reader observed:
Don’t go too far with your price increases, it’s also easier to comparison shop.
From another reader:
Interesting commentary from Axios Capital, but we might as well just blame “Capitalism”. I mean seriously, how dare a business raise their prices to cover higher costs.
By design, the ROI on many tech solutions are to do things “Faster, Cheaper, Better…etc”. The fact that any business can react quicker to rising costs should put that company in a position to stay in business longer. The good news for all of us is that we have choices. If you don’t like the business model, choose something different. Trying to blame e-commerce for rising inflation sounds like something from a Youtube conspiracy video…..(wait…could it be…oh no!....)
I take your point, and agree that retailers can and should be able to raise their prices to cover higher costs.
But retailers also have to be careful not to alienate the customers on which they depend. Sometimes that may mean taking lesser margin, and sometimes it may mean being transparent about the reasons for price hikes. Anything that smells remotely like price gauging - even if that is not a fair assessment - can do serious damage to a retailer's value proposition.
From another reader:
We have been having conversations about this issue for months. There is very little comparison shopping in e-commerce. Thus, the objective is to get the first purchase when you move in to the particular e-commerce ecosystem. Then the power of “repeat my order” or “subscribe and save” takes over.
A lost sale often becomes a lost consumer! With (almost) infinite variety an Amazon shop is completed in an average of fifteen minutes. This certainly supports that convenience trumps value. Inflation is absolutely real for many, many reasons but I would support the premise that an e-commerce shop will generally be more expensive than a brick and mortar shop, but on the basis of HOW the consumer is conducting the shop.
MNB reader (and my boss at Portland State University) Tom Gillpatrick wrote:
Great story about Smorgasburg today.... I totally agree, retailers need to connect!
This is a market development effort, that builds engagement, about food, experience and could potentially carry to retailer.
These are the kind of connections that customers value and tell their friends about!
And, on another subject, from MNB reader Steve Ritchey:
Shrinkflation is nothing new, it's been around for years.
The standard size tuna can is called a "quarter can" because it held 1/4 of a pound, or 4 oz. It's less than 4 oz. now, in an effort years ago to let us think the price hadn't gone up. Same thing with candy, the size of a regular candy bar shrunk, but the price stayed the same, that was over 20 years ago. A #10 can used to always be a 1 gallon can, now it tends to be 100 os., the standard canned vegetable can is a 303 can, it used to hold 16 oz. now it's 14.5 oz.
I got several emails yesterday about Larry Johnston's return to the food business through his purchase of a "major stake" in the Peach Cobbler Factory Franchise Company LLC. I made mention of the reputation that he earned while CEO of Albertsons, which prompted one MNB reader to write:
Thanks for letting us know never to go into a Peach Cobbler Factory (wherever and whatever that is).
That man is reviled throughout Idaho, much less at the Company. Legendary a****le and s*****g.
And, from another reader:
I was at Shaw’s when Albertsons took over and we were all called down to the cafeteria one morning to meet Larry Johnson, resplendent in his Steve Jobs designer tee shirt and he opens the meeting with “I bet you’re all wondering how tall I am”. We were all wondering how soon the layoffs and downsizing would start. We called him the Toaster Salesman.
Ah … feels like 2006 all over again.
And finally, reacting to comments made by both Michael Sansolo and me about the New York Mets' current winning ways, one MNB reader wrote:
Honestly, while the Mets are doing quite well now, even after 17 games with a 12-5 record, that means they still have 145 games left. I can't help but believe, going on their past history, they'll find a way to screw it up, it's still a long season.
But that doesn't mean you can't enjoy it while it lasts.
Trust me, Michael and I are nothing if not fatalistic about the Mets. But we're feeling good at the moment, and we're going to enjoy it.
And from another reader:
As my father used to say, “talk to me after the All Star break.” Gosh, I miss those conversations with him. No matter how upset he might be with me, or me with him, we could switch the conversation to the Dodgers and the anger would dissipate into why they were winning or losing. Those debates were the glue that held us together.
Best. Game. Ever. Indeed.
