There’s an interesting piece in yesterday’s New York Times by Steve Lohr that’s worth checking out. The gist is that many companies are looking warily at Google trying to work out how it might affect their own business models. This ranges from telcos worried about Google Net and VoIP to Real Estate agencies concerned about hybrids of Google Maps and house listings.
Wal-Mart is cited as another potential victim of the Google effect, even though is seems amazing that a 7 year old company could worry the retailing behomoth. Wal-Mart’s angle is that Google (or mobile phones generally) might empower their customers to do instant in-store price comparisons, by clicking on a product’s bar code. This concept has been around for yonks actually, with Scan (now defunct) set up in the UK back in the late 90′s, as one example of realising this vision.
However, once you start to think this through, price comparison apps are no where near as threatening as one might suppose, for the vast majority of products.
At one end of the scale, we have cheap, impulse buys at say, $15 or less. So you’re in Wal-Mart and about to purchase a carton of milk or a couple of steaks. Are you going to go to the hassle of clicking on the bar code to find if you can save a few cents by going elsewhere? Even if you do find it’s cheaper, how many people will bother to actually get back in their car and spend the potential saving on fuel to get there?
Of course, with the above examples, it might well be that there is no direct comparison anyway, as in all likelihood, these sorts of products will be exclusive to the store anyway. Plus, the cost of using the service (even just in data charges alone) might well be more than you’d save anyway.
So low cost items are pretty safe.
If you’re looking to purchase a high value item – let’s say $250 +, but the figure will vary with everyone – the chances are that you’re going to be doing a little research before hand. You’re likely to look at online product reviews and ask friends – and that’s also the point at which you’ll do your price comparison, if you’re that kind of person. No one is going to walk into a car show room, for instance, and click of a bar code to see if they can get a new Lexus cheaper elsewhere.
So that really only leaves a a relatively small window of products in the $15 – $250 purchase range, that aren’t exclusive to that store, that would be attractive for this kind of comparison shopping.
Admittedly, this price range hasn’t been derived in a remotely scientific manner, but I have used the surprisingly accurate gut feel method. Clearly, the range will differ from person to person, depending on factors such as personality type and income. However, I think the principle is correct and we’re not suddenly all going to rush out and start comparing prices for every purchase.
Which means that Wal-Mart really doesn’t need to worry about this kind of threat.
On the other hand, what the bar code does represent potentially is a way for brand owners and brand consumers to establish a direct dialogue with each other in-store, cutting round the retailer – or Wal-Mart, in this case. The consumer can get information in-store about the product, its ingredients, forthcoming promotions and potential recipes, for instance.
This will make the likes of Wal-Mart distinctly uncomfortable, if nothing else, as they ruthlessly control the in-store experience and communication agenda. But it’s hard to argue why they would seek to prevent their suppliers communicating in this way, if it was proven that that’s what the empowered customer of today’s marketplace wants.
And once that new communication channel is open, who knows what new and surprising applications might emerge?
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