Myth Busting: “There is a best price for each country”

http://blog.vendoservices.com/vendo-blog/2016/04/22/myth-busting-there-is-a-best-price-for-each-country

GDP_(PPP)_per_capita_by_countries

You’ve heard this one before. Maybe you’ve even tried to answer the question yourself, “What’s the best price for Country X?”

The problem is it’s a myth. Let’s bust it. There is no best price per country.

Let’s start our myth busting by taking a walk in a park. It’s Central Park in New York. We’ll begin at the Apple store on the southeast corner of the park. The average annual income for people who live in that post code is $118,000. By the time we reach the other end of the Central Park the average income is $28,000. That’s a $90,000 difference. In the space of a park, which is in a borough, nestled inside of a city, which sits in a county, that is inside of a state which sits inside of a country.

To find a $90,000 difference between countries you would have to go from #1 (Qatar) to #92 (Anguilla). Most of the world’s population lives between countries 1 and 92. Close to 6 billion different people.

Country is hardly useful at all simply because the differences between people within countries is too big. There is a world of difference between visitors from Beverly Hills and South Central. Zoom out a little on the map and our data shows that people in San Jose, California spend twice as much as people in Los Angeles, California. Same state, same country but totally different shoppers. Check your Google Analytics and see if you have similar results.

Let’s look at country #93 (Peru). If someone is on a Mac in Peru then there is a good chance that they are part of that country’s wealthy elite. That visitor on a $1,200 laptop is likely much, much wealthier than the $12,000 Peruvian per capita income would indicate. Maybe that visitor even has a second home near the Apple Store on Central Park. Should we be offering this shopper a price based on income of $12,000 a year? Maybe not.

Location is only one data point to look at when you are trying to understand a visitor. They come at different times of day, on different devices, with different purchasing powers, etc. The differences are endless if you think about it. Look around you in your city. Would you consider everyone the same? How about everyone in your country?

Online retailers who treat people differently – and provide the best price to each shopper – are significantly widening profit margins. That’s why we stopped pricing per country five years ago. We’re proud of our dynamic pricing results. They’re worth the millions we have invested in better teams, tools and processes. To quote my uncle, a biology professor, “Adapt or die.”

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