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Online Store and B&M Store Pricing

7:53 pm on Mar 11, 2009 (gmt 0)

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I am in the planning stages of opening a retail store in an under served niche market in Canada. Ideally, I would also like to open an online store to serve the rest of Canada (and the US).

There is very little in the way of competition in brick and mortar stores. However, there is some competition online.

The online competitors seem to charge much less for their product compared to the brick and mortar stores in my niche - which makes sense since they must have less overhead and more competition.

My question is: If I open both a brick and mortar store and an online store, how do I set my prices? I think the B&M prices need to be relatively high to be profitable. But, if I keep the same prices online as I do in-store, it will be harder to attract online customers.

Any thoughts on pricing when you have an online and B&M store?

2:41 am on Mar 12, 2009 (gmt 0)

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We charge a bit less online on most products. But of course online customers pay shipping too. They can't touch the product or take it home that day.

There's no problem with having slightly different pricing. I've only had customers mention the difference a few times and they seem to understand when I've pointed out the shipping charges.

You are correct: if you charge B/M retail prices online, you won't sell much. If you charge internet prices in a store, your B/M operation probably won't turn a profit.

4:31 pm on Mar 12, 2009 (gmt 0)

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eniven, my company does much as you're thinking -- we have one price for 'retail' and another price for 'web order entries'. I'd say it's a fairly standard practice.
In order to avoid potential problems, we acquired a different company which already had an established web business (this was back in 1998). We simply phased out the brand of their b&m and changed it into our original company.
The website URL and 'company', however, still exist as their 'original' form -- essentially, our web customers don't know that when they buy from our website, they are actually buying from a 'different' company. A bit of cloak and dagger-esque, but it's all above board. It's just the best way we have found to avoid conflicts...who wants a web customer coming into the b&m and showing their receipt to customers waiting in line?
5:39 pm on Mar 12, 2009 (gmt 0)

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I would keep it the same for the first several months and see how the sales go? One of the important things when choosing the price for your products is testing & reporting.

In the way of B&M Prices Vs Online Prices its a hard one as I know several B&M advertising campaigns say that buy online and its cheaper and others say online prices in store etc.

Why don't you try and do some research and see what others are doing? Then Test?

7:13 pm on Mar 12, 2009 (gmt 0)

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We live in what can be considered a "tourist hot spot" in the Northwest.

Most B & M's are running anywhere from a 300 to 400 % markup over wholesale.

Our in-store markup is just over 200% wholesale cost.

This increases local sales as it's way under competitor prices.

Our online sales - exactly same price.

Not the most profitable model, but what we lose financially is compensated tenfold by return business and customer trust.

It's a very specific niche, not competing with Wal-Mart. :-)

2:35 am on Mar 13, 2009 (gmt 0)

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If the website and B&M have the same name then you will skew business to one or the other depending upon how much money can be saved by the customer.

I'm sure your website will be on your business cards, physical address on your website or otherwise cross referenced to all your customers.

If the difference is eaten up by the shipping charges or it's not worth the time, difficulty or delay to comparison shop, no problem.

Any more then this and the customers will see at your B&M and then purchase online, or buy online and return at your store and other such complications.

8:29 pm on Mar 13, 2009 (gmt 0)

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We have retail locations and a website. Our online prices are lower. If someone asks, it's because the cost of doing business online is significantly less. Also, competition is stiffer-esp with designer brands.

Very few people asks-we aren't a household name.

Yet. ;-)