The Internet Souq Market

One of the things that I like about eCommerce and online retailing is that it should create more efficient markets. As a pop-economics fan and generally a free-market believer I like efficient markets. One of the fundamental attributes of a free market is that all information on the supply and pricing is known (if I’m wrong blame my A-level economics teacher.) The internet should provide the perfect medium for this complete knowledge. Rather than trapse around every physical offline store it only takes a couple of clicks or you can go to a price aggregator.

At a recent Hitwise round table discussion it was brought up that Voucher codes are making it more like a souq market than an efficicent market. Searching for voucher codes are the equivalent of haggling with the market trader for the best price you can. Even more than that, if you find a better code later it is as if you’ve returned to your hotel room to find someone else got a better deal.

I don’t imagine anyone in online retail wants to see it go down the route of the entertainment industry where the face value of tickets means nothing, just hunt around for the best deal and never pay more than half price. This disguising of prices only aids the middle man, devalues the product and reduces customer satisfaction. Brits, especially, feel hard done by if they have paid 1p more than the next person. Not to mention that this makes inefficient markets (many codes don’t work, some are public, some aren’t) and therefore resource that would be more productively employed elsewhere isn’t.

I favour a more open and honest approach from retailers. Online customers aren’t stupid and if your prices are cheaper than your competitors are including a discount then I think they are likely to shop with you. This should be achievable as you are not paying 3 times for a discount (customer, affiliate, affiliate network.) Any revenue lost from discount sites is likely to be made up from price comparison sites. I’m not ruling out a place for voucher code sites and offer sites but they should be short term and product targeted.

Having said that – retailers have created a monster, voucher code searches have only increased YoY and consumers are expecting a voucher code. Is it too late to turn back?……