November 19, 2014
Walmart stores get burned matching online prices
Last week’s decision by Walmart to formalize a policy of matching online competitors’ prices has come back to bite the retailer. According to the gaming website Kotaku, Walmart stores wound up matching, as it turns out, incorrect prices for Wii U, 3DS and Playstation 4 consoles.
In the case of the Nintendo Wii U and 3DS bundles, smart gamers took advantage of a pricing error on Sears.com that offered the units for $59.99 instead of the $300 and $200, respectively, normally charged for the items. Not all stores that participate in price matching agreed to the offer, believing it to be a mistake, but several photos showed that consumers were able to purchase the items at the $59.99 price. (It should be noted that Walmart was not the only chain whose stores matched this price.)
In the case of Playstation 4 consoles, some Walmart stores fell victim to an online scam. Fake listings on Amazon.com, including one under the name "AmzonElectronics," showed a PS4, which normally sells for $310, available for $89.99. Amazon took down this listing and other fraudulent ones, but not before some consumers were able to print out the offers. From there it was just a short trip to local Walmarts for deals that, as it turns out, really were too good to be true.
When Walmart announced it would match online pricing, the company’s management said it was just formalizing a policy that was being practiced by over half its stores anyway.
- Walmart Takes on Amazon by Matching Online Prices – The Associated Press/Daily Finance
- Wal-Mart told store managers to match online prices with Amazon – Reuters
- People Are Scamming Walmart With Bogus Cheap PS4 Listings – Kotaku
- Temporary Sears Glitch Let Some People Buy $60 3DS and Wii U Bundles – Kotaku
BrainTrust
Recent Discussions
Discussion Questions
Do you approve or disapprove of the decision by retailers to match prices posted online? What lessons can Walmart and others offering price match guarantees take from the examples cited in the article?
Poll
Giving the power to decrease their prices to ill-trained staff looking for a reason to stick it to their company is nuts.
Live by the sword, die by the sword. Competing solely on price is a very sharp sword that cuts both ways.
On the surface, price matching seems like a simple policy to garner consumer attention and drive store traffic. It is never simple to implement because it requires humans who can make decisions with potential customers waving a price printout in their faces.
If Walmart and other retailers continue trying to match Amazon prices in-store, this is only the tip of the iceberg of what can happen.
And oh by the way, there have been a number of documented studies recently on how Amazon actually raises prices on many select items during peak selling periods, especially Cyber Monday.
The lesson is to just price the items competitively. I think General Patton would have said: “No one ever made money matching prices of the enemy.” Make the enemy match your prices.
Competing on price is a slippery slope, one that few retailers can or should adopt. Online prices are tricky. It takes time, lots of time, for an employee to check an online price for product accuracy and authenticity. Walmart’s brand has always been about low prices. It can absorb the cost of mistakes like the ones described above. Most retailers cannot.
No reasonable person can assert that a price-matching policy compels a retailer to match erroneous or fraudulent competitor prices posted online. Some shoppers may try to “get over” in these situations, however, which could put unfair pressure on customer-facing associates to figure out who is gaming the system and do the right thing.
The customer may not always be right in such situations, and this calls for carefully defined policies, precise training and acceptance by top management that a certain amount of chaos is likely.
Much better for most retailers to forego online price-matching in favor of simpler pricing and policies. Walmart may not have a choice any more, since it evidently is no longer the lowest-price seller on every item every time.
Price-matching (especially at peak holiday shopping times) is fraught with problems, misunderstandings, fraud and check-out delays as Walmart (and others) have found out the hard way. Retailers should advertise their best possible price on items and then live with it.
What a mess.
Part of the issue here is that the price-matching decisions are being made by front-line cashiers who are making close to the minimum wage—not an ideal strategy. I understand how attractive an idea like this could be in the boardroom, but when it hits the store, that’s a whole different thing.
Price competition is slippery, especially the process to prevent fraud or errors. In this case, doing fake listings is basically fraud which they were unable to catch in the store. The key would be they need some way of verifying, or limits on the price-matching with fine print for protection.
I actually do approve. After all, Walmart long ago set a stake in the ground to compete largely based upon low prices. I also think that a low-price strategy can be a viable strategy albeit an unpopular one with critics. That being said, looking across the retail landscape today, I do not believe there are many companies, let alone retailers, that could effectively execute a long-term low-price strategy, even if they desired to do so. However, the largest retailer in the world seems comfortable in being a pricing leader and well-positioned to continue to evolve its pricing policies, assuming it executes in other critical business disciplines like omni-channel, supplier leadership, employee relations and most importantly customer service.
Sure Walmart made mistakes in the execution of this price-matching decision but that doesn’t make the decision to match some form of online pricing a poor decision. In fact, they are late to the party on this tactic. I am only surprised their decision to formalize a policy to price-match online offers hasn’t come sooner.
It sounds like the policy needs some tweaking and the stores need time to digest the tweaks. Having been through several chain-wide policy roll-outs myself, I know firsthand there is always some degree of execution in getting everyone on the same page. Additionally, I never find too much fault when store employees are duped when trying to do what they think is the “right thing” for a customer, or when dishonest people commit frauds by bringing in false ads or putting up bogus websites in order to cheat retailers.
Lastly, I suspect Walmart will learn from this miscue, make a few policy adjustments, and still manage long-term profitability and growth for their shareholders and manage it all without abandoning their position in the marketplace as a low-price retailer.
Whatever wrinkles Walmart experiences are well worth the cost. They must match online prices to win against online competitors. And the more PR they get for it, the better. Even if it involves a few hundred thousand dollars of “mistakes.”
When you enter the “price gaming” business, anything can happen. If you can’t afford to lose a few, you shouldn’t get in the game.
And that’s my 2 cents!
The price matching decisions are being made by the lower wage earners and staff not trained for anything but pressing a button or maybe stocking a shelf. The program to match is good if the “match” is realistic. Certainly a properly trained person would know a $150.00 difference has to be a typo. I would imagine companies will start doing more proofing before releasing ads for publication.
Do I approve or disapprove? Yes. Obviously that’s a(n overly) broad question, but what I CAN say I disagree with—and perhaps was the case here—is mindless pricing strategies. Businesses are certainly in competition, so they can’t simply adopt a(n equally mindless) cost +X% policy, but to set up your whole pricing policy as a reaction to what someone else is doing—oblivious as to why they’re doing it—is to invite the type of misadventure we saw here.
Disapprove. The above example shows the slippery slope. Too easy to produce bogus offers, print and take to the retailer who may not have the resources to check its veracity in a timely manner.
It is not about whether or not you care for Walmart or any other retailer, it is the thought that it is okay to be dishonest. Look at retail theft and how it has risen. Yet the media and social networks continue to support this behavior. Wrong is wrong, no matter what or who you wrong.
This is what consumers do anyway. Retailers are only being competitive and consumer friendly by doing the same thing. For retailers, this is their best way to compete and stay in business.
When we talk about price matching it’s always related (the largest percentage) to high profile consumer electronics. These matching “policies” are mostly marketing to assuage those who are very price sensitive and to give the buying public confidence that they, the consumers, are not wasting money. Online shopping is as significant and the in-store experience. You cannot argue with a consumer that there are different business models in place; it is not about being correct; it’s still about the customer experience.
While retailers can get burned by devious ads, Cathy Hotka is correct, the front line cashiers are usually the ones pressured into these decisions. Walmart can absorb a few losses here and there and most of their consumers buy other merchandise. Moving the lines and physical loss prevention is more a priority.
Management teams should do their due diligent research and prep their cashiers for any fraudulent ads. It is very legal to not accept an ad that is either a mistake, or “is too good to be true.” It doesn’t take long to research high profile items.
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Giving the power to decrease their prices to ill-trained staff looking for a reason to stick it to their company is nuts.
Live by the sword, die by the sword. Competing solely on price is a very sharp sword that cuts both ways.
On the surface, price matching seems like a simple policy to garner consumer attention and drive store traffic. It is never simple to implement because it requires humans who can make decisions with potential customers waving a price printout in their faces.
If Walmart and other retailers continue trying to match Amazon prices in-store, this is only the tip of the iceberg of what can happen.
And oh by the way, there have been a number of documented studies recently on how Amazon actually raises prices on many select items during peak selling periods, especially Cyber Monday.
The lesson is to just price the items competitively. I think General Patton would have said: “No one ever made money matching prices of the enemy.” Make the enemy match your prices.
Competing on price is a slippery slope, one that few retailers can or should adopt. Online prices are tricky. It takes time, lots of time, for an employee to check an online price for product accuracy and authenticity. Walmart’s brand has always been about low prices. It can absorb the cost of mistakes like the ones described above. Most retailers cannot.
No reasonable person can assert that a price-matching policy compels a retailer to match erroneous or fraudulent competitor prices posted online. Some shoppers may try to “get over” in these situations, however, which could put unfair pressure on customer-facing associates to figure out who is gaming the system and do the right thing.
The customer may not always be right in such situations, and this calls for carefully defined policies, precise training and acceptance by top management that a certain amount of chaos is likely.
Much better for most retailers to forego online price-matching in favor of simpler pricing and policies. Walmart may not have a choice any more, since it evidently is no longer the lowest-price seller on every item every time.
Price-matching (especially at peak holiday shopping times) is fraught with problems, misunderstandings, fraud and check-out delays as Walmart (and others) have found out the hard way. Retailers should advertise their best possible price on items and then live with it.
What a mess.
Part of the issue here is that the price-matching decisions are being made by front-line cashiers who are making close to the minimum wage—not an ideal strategy. I understand how attractive an idea like this could be in the boardroom, but when it hits the store, that’s a whole different thing.
Price competition is slippery, especially the process to prevent fraud or errors. In this case, doing fake listings is basically fraud which they were unable to catch in the store. The key would be they need some way of verifying, or limits on the price-matching with fine print for protection.
I actually do approve. After all, Walmart long ago set a stake in the ground to compete largely based upon low prices. I also think that a low-price strategy can be a viable strategy albeit an unpopular one with critics. That being said, looking across the retail landscape today, I do not believe there are many companies, let alone retailers, that could effectively execute a long-term low-price strategy, even if they desired to do so. However, the largest retailer in the world seems comfortable in being a pricing leader and well-positioned to continue to evolve its pricing policies, assuming it executes in other critical business disciplines like omni-channel, supplier leadership, employee relations and most importantly customer service.
Sure Walmart made mistakes in the execution of this price-matching decision but that doesn’t make the decision to match some form of online pricing a poor decision. In fact, they are late to the party on this tactic. I am only surprised their decision to formalize a policy to price-match online offers hasn’t come sooner.
It sounds like the policy needs some tweaking and the stores need time to digest the tweaks. Having been through several chain-wide policy roll-outs myself, I know firsthand there is always some degree of execution in getting everyone on the same page. Additionally, I never find too much fault when store employees are duped when trying to do what they think is the “right thing” for a customer, or when dishonest people commit frauds by bringing in false ads or putting up bogus websites in order to cheat retailers.
Lastly, I suspect Walmart will learn from this miscue, make a few policy adjustments, and still manage long-term profitability and growth for their shareholders and manage it all without abandoning their position in the marketplace as a low-price retailer.
Whatever wrinkles Walmart experiences are well worth the cost. They must match online prices to win against online competitors. And the more PR they get for it, the better. Even if it involves a few hundred thousand dollars of “mistakes.”
When you enter the “price gaming” business, anything can happen. If you can’t afford to lose a few, you shouldn’t get in the game.
And that’s my 2 cents!
The price matching decisions are being made by the lower wage earners and staff not trained for anything but pressing a button or maybe stocking a shelf. The program to match is good if the “match” is realistic. Certainly a properly trained person would know a $150.00 difference has to be a typo. I would imagine companies will start doing more proofing before releasing ads for publication.
Do I approve or disapprove? Yes. Obviously that’s a(n overly) broad question, but what I CAN say I disagree with—and perhaps was the case here—is mindless pricing strategies. Businesses are certainly in competition, so they can’t simply adopt a(n equally mindless) cost +X% policy, but to set up your whole pricing policy as a reaction to what someone else is doing—oblivious as to why they’re doing it—is to invite the type of misadventure we saw here.
Disapprove. The above example shows the slippery slope. Too easy to produce bogus offers, print and take to the retailer who may not have the resources to check its veracity in a timely manner.
It is not about whether or not you care for Walmart or any other retailer, it is the thought that it is okay to be dishonest. Look at retail theft and how it has risen. Yet the media and social networks continue to support this behavior. Wrong is wrong, no matter what or who you wrong.
This is what consumers do anyway. Retailers are only being competitive and consumer friendly by doing the same thing. For retailers, this is their best way to compete and stay in business.
When we talk about price matching it’s always related (the largest percentage) to high profile consumer electronics. These matching “policies” are mostly marketing to assuage those who are very price sensitive and to give the buying public confidence that they, the consumers, are not wasting money. Online shopping is as significant and the in-store experience. You cannot argue with a consumer that there are different business models in place; it is not about being correct; it’s still about the customer experience.
While retailers can get burned by devious ads, Cathy Hotka is correct, the front line cashiers are usually the ones pressured into these decisions. Walmart can absorb a few losses here and there and most of their consumers buy other merchandise. Moving the lines and physical loss prevention is more a priority.
Management teams should do their due diligent research and prep their cashiers for any fraudulent ads. It is very legal to not accept an ad that is either a mistake, or “is too good to be true.” It doesn’t take long to research high profile items.