Price Matching in eCommerce: A Win-Win for Businesses and Consumers?
What is Price Matching?
At its core, price matching is when a retailer agrees to match or beat a competitor’s price for the same product. This can apply to both online and in-store purchases. In the eCommerce world, where consumers can compare prices in seconds, price matching helps retailers retain customers who might be tempted to buy from a competitor offering a lower price.
Why Price Matching Matters?
Price matching taps into the consumer’s desire for the best deal. According to a survey by RetailMeNot, 80% of consumers say they are more likely to make a purchase if they know a retailer offers price matching. The key reason? Convenience. Shoppers don’t have to scour the internet for better prices—they know they’re already getting the best deal from you.
For retailers, price matching provides a way to stay competitive without needing to constantly lower prices across the board. You’re effectively telling your customers, “We value your business and will work to ensure you get the best price.” This message can foster trust, leading to customer loyalty and repeat purchases.
Price Matching Examples
Let’s take a closer look at how Amazon and Walmart, retail giants, have used price matching, how their strategies evolved, and what each company achieved through this approach. Both companies utilized it in slightly different ways, but the common thread is that they found ways to keep customers engaged and coming back, even in the face of fierce competition.
Amazon: Setting the Bar for Competitors
Amazon has long been known for its low prices and dynamic pricing model. While it doesn’t have an official, advertised price-matching policy, Amazon’s entire pricing strategy revolves around offering the most competitive prices possible. Its automated price-tracking algorithms allow Amazon to adjust prices in real-time, often beating competitor prices before customers even have a chance to request a match.
Amazon’s automated price-matching tactics have played a key role in its rise as the dominant player in global eCommerce. Customers often default to Amazon because they know prices are likely to be lower or at least competitive with other retailers.
Without needing to actively promote price matching, Amazon has built consumer trust. Shoppers can confidently make purchases knowing they’re getting a good deal without having to compare prices manually.
Walmart: Battling for Online Market Share
Walmart offers a comprehensive price matching policy that applies to its own online store as well as to certain competitors’ websites. Walmart introduced it to address the growing competition from eCommerce platforms like Amazon. This policy allows customers to request a price match from a competitor at the time of purchase or after the fact if they find a better price.
In 2014, Walmart introduced a price comparison app called Savings Catcher, which allowed customers to scan their receipts and automatically match lower prices from competitors. This tool simplified the process for customers but was later discontinued in 2019 due to operational costs.
Walmart has used price matching to maintain competitiveness in the online space, which has been critical in its efforts to grow eCommerce sales. In fact, Walmart’s eCommerce sales grew by 79% in 2020, as it continued to close the gap with Amazon.
Price matching helped Walmart retain budget-conscious customers who might otherwise have shifted entirely to online platforms like Amazon. While it has discontinued the Savings Catcher app, the overall price-matching policy continues to reinforce Walmart’s brand as a destination for low-cost shopping. Walmart’s price matching contributed to a seamless shopping experience across online and offline channels, making it easier for customers to transition between the two without feeling like they’re missing out on savings.
What about Walmart’s biggest rival? Is Target emulating Walmart’s pricing tactics? This retailer offers price matching both in-store and online, allowing customers to show a competitor’s price and get an immediate discount.
Is Price Matching a Win-Win for Businesses and Customers?
The primary beneficiary is, of course, the customer. Price matching eliminates the need for extensive price comparisons, saving them both time and money. This can also lead to a more positive shopping experience, with customers feeling reassured they’re getting the best possible deal.
Retailers benefit by preventing customers from going to competitors, boosting customer loyalty, and reducing cart abandonment rates in eCommerce. By offering, retailers reduce the risk of losing sales to competitors offering slight price differences. Additionally, retailers like Best Buy demonstrate that price matching can help brick-and-mortar stores compete with online retailers. Brands benefit as well, but indirectly when retailers offer to match prices. It ensures that a brand’s products stay competitive across multiple channels, leading to more consistent sales and better market positioning.
The Downsides
While price matching can be beneficial for all, it’s not without its risks. One potential downside is profit margin erosion. Continuously lowering prices to match competitors can cut into a retailer’s profits, especially in industries where margins are already thin. Another issue is price wars. If multiple competitors are aggressively engaged, it can lead to a race to the bottom, ultimately devaluing products.
Additionally, these policies can sometimes be exploited by savvy consumers, who may misuse the policy to get deeper discounts, even when prices are only slightly lower elsewhere. For this reason, it’s crucial that any price-matching policy comes with clear terms and conditions to prevent abuse.
Who Should Use Price Matching?
Businesses that should consider price matching include those in highly competitive markets where customers have easy access to price comparisons. For example, electronics retailers or apparel brands often benefit from it because customers are likely to compare prices before making a purchase.
If your business operates in a market where brand loyalty or premium product positioning is key, you might want to avoid price matching. For example, luxury brands that rely on their premium image may find that price matching dilutes their perceived value. Similarly, businesses with thin profit margins should think carefully before adopting this strategy.
Is Price Matching Right for Your eCommerce Business?
Before jumping into price matching, it’s important to ask yourself a few key questions:
- Are your customers frequently comparing your prices with competitors?
- Is pricing a major factor in their purchasing decisions?
- Could a price-matching policy help you reduce cart abandonment and increase loyalty?
- Do you want to retain customers who are price-sensitive?
- Do you aim to boost sales by removing hesitation from the buying process?
- Are you hoping to build trust and foster long-term customer loyalty by guaranteeing the best price?
If the answer is “yes” to these questions, price matching might be a strategy worth considering. However, it’s also worth considering the operational aspects. Do you have the resources to monitor competitor prices consistently? Can your margins handle occasional price cuts without eroding profitability?
