Everybody knows that everyday products cost less when purchased online. Everybody except Alberto Cavallo, that is.
A new study by Cavallo, a professor at the Massachusetts Institute of Technology’s Sloan School of Management, finds that online and offline prices for many items are identical about 72 percent of the time.
Cavallo studied the online and offline prices charged by 56 major retailers in 10 countries. He chose retailers that sell the same products in physical stores and at their websites. Cavallo didn’t look at online-only retailers like Amazon.com and eBay, because in most countries such retailers account for a small percentage of total sales.
Cavallo hired 370 workers who scanned barcodes for a random set of products found at brick-and-mortar stores. Then he checked to see how much the retailers charged for the same products at their online stores. He found that prices were the same nearly three-quarters of the time. Prices were more likely to be the same for clothing and electronics, while drug stores and office supply stores showed greater price variations.
Price similarity also varied by country. In Canada and the United Kingdom, the prices were identical 91 percent of the time, compared to 69 percent in the United States and just 42 percent in Brazil.