The Pricing Strategies of Online Grocery Retailers

Diego Aparicio, Zachary Metzman and Roberto Rigobon

No 28639, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Matched product data is collected from the leading online grocers in the U.S. The same exact products are identified in scanner data. The paper documents pricing strategies within and across online (and offline) retailers. First, online retailers exhibit substantially less uniform pricing than offline retailers. Second, online price differentiation across competing chains in narrow geographies is higher than offline retailers. Third, variation in offline elasticities, shipping distance, pricing frequency, and local demo- graphics are utilized to explain price differentiation. Surprisingly, pricing technology (across time) magnifies price differentiation (across locations). This evidence motivates a high-frequency study to unpack the patterns of algorithmic pricing. The data shows that algorithms: personalize prices at the delivery zipcode level, update prices very frequently and in tiny magnitudes, reduce price synchronization, exhibit lower menu costs, constantly explore the price grid, and often match competitors’ prices.

JEL-codes: D9 L1 L2 M31 O33 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-com, nep-ind, nep-ore and nep-pay
Note: IFM IO ITI ME
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Published as Diego Aparicio & Zachary Metzman & Roberto Rigobon, 2024. "The pricing strategies of online grocery retailers," Quantitative Marketing and Economics, vol 22(1), pages 1-21.

Downloads: (external link)
http://www.nber.org/papers/w28639.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:28639

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w28639

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().