The pricing strategies of online grocery retailers
Keywords: 
Algorithmic pricing
Price dispersion
Price discrimination
Online groceries
Scanner data
Amazon
Walmart
Issue Date: 
28-Nov-2023
Publisher: 
Springer
ISSN: 
1573-711X
Note: 
This article is licensed under a Creative Commons Attribution 4.0 International License
Citation: 
Aparicio, D. (Diego); Metzman, Z. (Zachary); Rigobon, R. (Roberto). “The pricing strategies of online grocery retailers”. Quantitative Marketing and Economics. (November) 2003. https://doi.org/10.1007/s11129-023-09273-w
Abstract
This paper documents the differences in pricing strategies between online and offline (brick-and-mortar) channels. We collect price data for identical products from leading online grocery retailers in the United States and complement it with offline data for the same products from scanner data. Our findings reveal a consistent pattern: online retailers exhibit higher price dispersion than their offline counterparts. More specifically, online grocers employ price algorithms that amplify price discrimination in three key dimensions: (1) over time (through frequent price changes), (2) across locations (by charging varying prices based on delivery zipcodes), and (3) across sellers (by setting dispersed prices for identical products across rival retailers).
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