Liisa Matinvesi-Bassett, UK country manager at price and product comparison service PriceSpy, outlines five common sales tactics that online retailers use that they should tread carefully with.
As an online retailer, you may well have received a letter from the Competition and Markets Authority (CMA) recently telling you about its plans to crack down on what it calls ‘online rip-offs’.
In the next stage of its work into how information and choices are presented to consumers online, the CMA is looking to eliminate both misleading claims when it comes to price reductions and also unfair pressure-based selling tactics.
These are just two examples of, what some would deem, sneaky sales tactics. However, PriceSpy has also witnessed other tactics that retailers should treat with caution before the CMA’s spotlight shifts focus. Here we detail five practices that may well cross the line.
Rollercoaster pricing refers to gradually hiking a product’s price, before suddenly dropping the price and advertising a discount based on the highest previous price.
For example, claiming a discount of 50% compared to the previous day’s price, but – if compared to the price 30 days ago – it may only be a 20% discount. Or, it may even be more expensive.
Sometimes referred to as a ‘fake deal’, rollercoaster pricing is especially prominent around big shopping periods like Black Friday, the Cyber Weekend and Christmas. The CMA’s current activity covers rollercoaster pricing so it’s definitely worth ensuring this doesn’t feature in your pricing strategy.
Yo-yo pricing refers to prices going up and down multiple times per year – sometimes, as frequently as every few days or weeks.
Prices are lowered for a short period of time in order to boost sales, before they’re suddenly increased again.
These might be branded as ‘flash sales’ or ‘one day only’ offers. Again, yo-yo pricing is something the CMA is looking into (the CMA terms this ‘flip-flopping’) so it would be wise to review your tactics here.
PriceSpy research has found countless instances of brands and retailers offering very different prices for ‘male’ and ‘female’ versions of essentially the same product.
Especially common in beauty and clothing, men are typically charged more for outdoor gear whilst women face higher costs for beauty items.
PriceSpy’s research into this area also found that unisex products often come at a premium. Whilst not a feature in the CMA’s activity, it’s worth bearing in mind how your business deals with gendered products.
|Calvin Klein Eternity EDP 100ml||£26.13||Calvin Klein Eternity for Men EDP 100ml||£35.39||+35% (men)|
|Under Armour Rival Fleece Hoodie||£24.97||Under Armour Rival Fleece Hoodie||£17.00||+32% (women)|
|Hunter Original Tall Women’s||£45.00||Hunter Original Tall Men’s||£54.76||+22% (men)|
This refers to an item being offered for free when purchasing a certain product; ‘bundling’ items together.
Sometimes, promotions like this might be offered when retailers have surplus stock of the additional item or when they’re looking to boost sales of a certain product.
Often, however, the price of the main product will have been hiked to account for the additional ‘freebie’ – meaning the additional item is not free at all.
Again, this isn’t something the CMA is currently looking into but it would be worthwhile to review all pricing promotions to ensure they are fair and genuine.
The use of phrases such as ‘only one remaining!’, ‘last chance’, ‘get it before it’s gone’, ‘this is in 10 people’s baskets right now’ etc.
Pressure pricing is common, with advertising banners often used to alarm shoppers and coax them into buying at a certain time and price. Other tactics include countdown clocks which – often falsely – imply that a sale is about to expire. The CMA is looking to crack down on pressure pricing.
More regulation to come?
The UK’s consumer protection laws – many of which the CMA has authority to enforce – are very comprehensive but, in some areas, don’t go as far as peers in the EU.
For example, in December 2021, the European Commission adopted a Commission Notice on the interpretation and application of the Price Indication Directive.
This provided guidance to member nations on the issue of transparency of price reductions by introducing specific rules to ensure that discounts are genuine.
Retailers are obligated to be transparent in their pricing when it comes to price reductions: when announcing a discount, retailers must also indicate the lowest price in the last 30 days.
On the back of this, countries including Sweden, Finland, Germany, Ireland and France have updated their consumer law to tighten up regulation around the transparency of price reduction.
This isn’t currently written into law in the UK but, given this latest crackdown from the CMA, retailers should keep an eye on this EU directive in case regulators in the UK decide to follow suit.