Fascinating observation (at least to me) about e-commerce
My, has it really been a month since I last posted? I am derelict in my duty, a shameful caricature of a blogger. Feel free to make one. A caricature. A comic. You can even show me burning the Kuraan while sticking my hand in the toilet or something.
Anyway.
The thought that prompted this post was driven by my hobby, which is European/German board games. Recently, a company called Games Workshop has released a limited reprint of a game called Space Hulk, in its third edition. Now, this game has been a holy grail of sorts to many gamers for about two decades, having been originally released in small numbers and gained popularity over the years to it being a fantastic game to play. Prices for used copies had increasingly gone from moderate to insane, with copies fetching upwards of $400 on ebay.
So Games Workshop finally relented and made a small run to satisfy this demand. They played it safe, and thus made only a couple of thousand copies, released earlier this month. Within 48 hours, every single copy was gone from every online store out there - or at least for it's list price of $99.
However, some stores still carry it, albeit at a higher price of $160 or so. Copies are now available on ebay for similar prices, and they are creeping up. The demand has by no means been satiated, and it also appears that some of those gamers, clued in to the trend, bought multiple copies for resale thus further limiting access to other gamers.
That's all normal. What isn't, however, is that plenty of copies of this game are still readily available on store shelves in all large urban areas for the original list price of $99 - including in Games Workshop stores themselves.
And that's where it hit me. Think of it for a second. For certain hot products, in certain niches, it seems that the online marketplace has completely segmented itself from other retail channels, to the point where pricing between the two no longer bears a relation. What would appear to have happened is that some segment of the US population - I think this is unique to the US, being as it is the by far most advanced country in terms of e-commerce - bricks & mortar stores have essentially become "non grata", just like online stores have been and still are for other folks elsewhere. They are essentially limiting themselves to online purchases only - to their own pricing detriment.
For this population, and taking advantage of their greater flexibility, online merchants are able to actually charge more than bricks & mortar ones. They are able to do this effectively because, I suspect, of being closer to their customers (yes, I know it sounds odd, but the actual touch points between owners and customers are more frequent for smaller online merchants), having a much larger market (the entire country), and taking advantage of technology to allow them to more effectively utilize things like dynamic pricing.
Online merchants benefit further from this because most of these "online only" shoppers are under the mistaken impression that prices online are always better - and they never bother to test that hyopthesis out.
My, how the world has changed, eh?
Anyway.
The thought that prompted this post was driven by my hobby, which is European/German board games. Recently, a company called Games Workshop has released a limited reprint of a game called Space Hulk, in its third edition. Now, this game has been a holy grail of sorts to many gamers for about two decades, having been originally released in small numbers and gained popularity over the years to it being a fantastic game to play. Prices for used copies had increasingly gone from moderate to insane, with copies fetching upwards of $400 on ebay.
So Games Workshop finally relented and made a small run to satisfy this demand. They played it safe, and thus made only a couple of thousand copies, released earlier this month. Within 48 hours, every single copy was gone from every online store out there - or at least for it's list price of $99.
However, some stores still carry it, albeit at a higher price of $160 or so. Copies are now available on ebay for similar prices, and they are creeping up. The demand has by no means been satiated, and it also appears that some of those gamers, clued in to the trend, bought multiple copies for resale thus further limiting access to other gamers.
That's all normal. What isn't, however, is that plenty of copies of this game are still readily available on store shelves in all large urban areas for the original list price of $99 - including in Games Workshop stores themselves.
And that's where it hit me. Think of it for a second. For certain hot products, in certain niches, it seems that the online marketplace has completely segmented itself from other retail channels, to the point where pricing between the two no longer bears a relation. What would appear to have happened is that some segment of the US population - I think this is unique to the US, being as it is the by far most advanced country in terms of e-commerce - bricks & mortar stores have essentially become "non grata", just like online stores have been and still are for other folks elsewhere. They are essentially limiting themselves to online purchases only - to their own pricing detriment.
For this population, and taking advantage of their greater flexibility, online merchants are able to actually charge more than bricks & mortar ones. They are able to do this effectively because, I suspect, of being closer to their customers (yes, I know it sounds odd, but the actual touch points between owners and customers are more frequent for smaller online merchants), having a much larger market (the entire country), and taking advantage of technology to allow them to more effectively utilize things like dynamic pricing.
Online merchants benefit further from this because most of these "online only" shoppers are under the mistaken impression that prices online are always better - and they never bother to test that hyopthesis out.
My, how the world has changed, eh?
posted by Blinkered at 9:24 AM
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