Online retailers have gotten so good at intentionally confusing consumers that there’s now an entire industry designed to help shoppers figure out if they’re actually getting a good deal.
Most of these services, like kayak.com, have sprung up around pricey categories like flights, hotels, cars, etc. But now there’s a site that’s still in its experimental stage in the U.S. that helps determine whether we’re getting duped on the most basic everyday purchases — groceries.
MySupermarket launched last summer in the U.S. and has a couple hundred thousand users per month. CEO Allon Bloch says his company, essentially, repackages publicly available information to keep you from spending two hours to save $20. “We’re a tech company that understands grocery,” he explains.
The site presents shoppers with the price of a product on a per unit basis — cost of toilet paper per 100 sheets, cereal by cost per ounce — across eight different national online retailers for easy comparison. You can swap items in or out to further reduce your cost if you don’t care about brand (say, Crest for Colgate).
At the end of your shop, MySupermarket adjusts your order to make sure you’re getting the lowest price possible on shipping. It also takes into account online coupons.
The average spend on the site in the U.S. is $110 split across 2.5 stores. Bloch says he’ll often see 15 to 20% savings on a product, calculated by comparing the average price on the site to the best price for the identical product at different sizes. He adds that you can typically save another 5% by switching to equivalent brands that are on promotion that day.
Beyond just serving as a shopping tool, MySupermarket collects an enormous amount of data that can give us some insight into how online retailers think about their often-elusive pricing strategies. He feels that the online shopping process is “designed as a mousetrap to optimize your spend and manage your perception.”
Bloch and his team checked the pricing of all products MySupermarket carries across its eight retailers for the 31 days in March. The chart below shows the average percentage of days that the retailer changed pricing across all products.
*The pricing analysis of Amazon includes only items sold and fulfilled by Amazon, not Amazon Marketplace. Bloch says the list price of a Marketplace item does not include shipping and is therefore not a good representation of the actual cost to acquire the goods.
Note that Diapers and Soap are presented together because they’re part of the same operating business (Quidsi) owned by Amazon, but run independently. They therefore have different merchandising and pricing from their parent company. MySupermarket has collected Sam’s Club data for several months but hasn’t added it to its site just yet. Even though Sam’s Club is owned by Wal-Mart (WMT), it also has its own merchandising and pricing.
Bloch also compared the average price and the maximum price of every product it carries to the minimum price for 30 days to show the cost shifts:
We can see here that Amazon (AMZN) is by far the most sophisticated when it comes to pricing. While there’s a perception that Amazon always gives us the best deal, and it often does, no retailer can always be the cheapest. “I fundamentally don’t believe there’s one retailer you should shop at all times unless it’s a pure convenience thing,” Bloch says.
The more you move away from popular brands, the greater the price disparity between retailers. That’s because customers are less likely to have a sense of the pricing if it’s a purchase they don’t make frequently. “No retailer wants to be caught charging double for Tide,” Bloch explains.
Here’s a sampling of what Bloch and his team call “outrageous price gaps” tracked on the same day at different stores:
“OUTRAGEOUS PRICE GAPS” — SAME DAY, DIFFERENT STORES
But as the second chart shows, there are also outrageous price gaps in any given month at a single online storefront. “Retailers like to call this dynamic pricing, but from a consumer perspective, it’s predatory.” You shouldn’t lose out, Bloch says “because you chose a shampoo on a certain date.” Here are a few examples:
MySupermarket launched in 2006 in the U.K., where about 7% of households shop online for groceries. In the U.S., that percentage drops to 1 to 2%. Bloch says the U.K. is a leader in online groceries because its largest offline grocer, Tesco, got into the game early. In the U.S. the crash and burn of grocery delivery business Webvan in 2001 scared away any entrants into the space for years. “It was the poster child for bad dotcom behavior,” Bloch notes. MySupermarket has raised $32 million in funding from Greylock, WPP, and Pitango Venture Capital.
