Everyone’s seen the message on Amazon, and other online retailers that says “Click here to see the price”. The explanation (on Amazon) says:
Okay, what’s really going on here?
Maybe the price is higher than it should be and they’re fishing for people to click the “order” button without checking?
Certain manufacturers position their products as “premium” products, and want to maintain that image. Part of that image is price. Extremely low advertised prices can undercut that image. Also, if there are multiple vendors in an area, advertising a low price can start a price war, which further undercuts that “premium” image.
Online merchants add an additional factor: the ability to seriously undercut small local sellers. Why go to the small, locally-owned “boutique” store, when some online giant is selling the same product for 40% less? If too many people buy online (or even at “big box” stores), those small shops can disappear. In certain industries, those small shops, staffed with people who are intimately familiar with the products, are the bread and butter of these manufacturers.
There’s also the possibility of big merchants (online or otherwise) hurting a niche market by undercutting the smaller stores. Sometimes this doesn’t involve price so much as simply creating a market. For example, tabletop gaming. Small, dedicated game stores attract new gamers by providing a gathering place for people with similar interests. It’s in the best interests of the game manufacturers to make sure these small shop remain in business, and continue to attract new customers. So, for example, Wizards of the Coast, the company that makes the Dungeons & Dragons roleplaying game, does not allow Amazon to sell newly released D&D books and accessories for the first two weeks after they’re released. This forces people who want to buy the books the day they come out to go to the local gaming store to buy them, at full cover price. Sure, the same books are immediately available at the local Borders/Barnes & Noble/Hastings too, but at the same full cover price charged by the gaming store (so they can’t undercut the small stores, either). Once that initial buying rush is over, and the gaming stores have sold most of the copies they’re likely to sell, then Amazon is allowed to sell the books at steep discounts.
The Amazon explanation is more or less correct.
Manufacturers, especially of consumer electronics, often have a “Minimum Advertised Price.” In order to buy wholesale items direct from the manufacturer, a retailer often agrees not to advertise a price below the MAP and recieves perks for doing so, such as reimbursement for promotional materials or being allowed to call themselves an “authorized dealer”. The manufacturer can’t actually specify a minimum selling price, as that would be illegal. They can, however, choose who to sell to.
That’s all well and good, but it still boggles my mind that they can’t display the price, unless I click on this other button over here, at which point they’re free to show it in big purple flashing numbers. The boggling part is that this satisfies some byzantine contract stipulation.
My guess is that doing this prevents the price from being found via a price search website (like Froogle or Shopping.com).
Very nice explanation, Phase42.