Sunday, August 29, 2010

Internet Price Pressures

There's this theory with some anecdotal evidence that some customers will shift their purchases from their friendly, local, brick and mortar game store to the online store as the price goes up. They might buy that $30 board game locally, but as the price climbs they flee to the online market to save "real" money. It occurred to me in a dream (yes, I know that's sad) that the truth of that statement might be in the numbers.

My goal was to create cool bell curves of price versus sales, but the preliminary data looked good enough to share without all that flash. Bottom line: the average board game price on our shelves, which includes about 600 games is: $34.65. The average price of a board game sold in the store, since we've opened, is $34.07. That's a very small 2% price difference.

Ah hah, you might say, you self select your inventory based on your sales. If so, it's not intentional. Actually, I'm pretty even in my dispensing of retail justice with my turn rate analysis. A slow selling $20 game is just as likely to get dumped as a slow selling $90 game. I don't think I've ever backed away from a new game solely due to price. What does happen, I'm sure, is that potential price pressures slow higher priced games to where they get dumped, which could be reflected by their absence. In that case, all my data shows is that my inventory is "in tune" with my sales. Then again, the real story may be in card games, with their lower price point and sales quantities at twice board games.

So is that 2% price differential between available and sold a true reflection of Internet price pressures, or is this a case of knowing our customers? In any case, I won't be losing any more sleep over this.

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