Internet, apps have changed negotiation landscape
April 6, 2012 The Arizona Republic
My wife recently saved us significant money on new furnishings for our family room. In shopping around, she found surprisingly large price differences for identical products.
Similarly, a training program attendee recently told me he received three very different bids to redo his patio, ranging from $10,000 to $20,000.
What’s going on here?
Overall, the consumer negotiation landscape has been fundamentally transformed over the last 10 years due to 1) the Internet and online retailers like Amazon, 2) individuals’ ability to efficiently to buy and sell almost anything on sites like eBay, and 3) the availability of comparison shopping apps. This change has been accelerated with recent recession.
Bottom line – consumers now rule to a much greater extent. This change has greatly impacted three negotiation elements, each of which can be used to get better deals on significant purchases.
1. Leverage Now Largely Favors Consumers
Consumers’ ability to efficiently shop around and find the same or similar products on multiple online sites plus in traditional storefronts – and to do so in minutes – provides strong leverage.
If I want Product X from Store A since it has great customer service, but can buy it from Online Sites B and C for much less, that’s strong leverage when negotiating with Store A.
Store A, of course, knows this and will price their products lower than otherwise as a result. And they will seek to differentiate themselves from the online sites by emphasizing their service, trustworthiness, quality assurance, etc. But they will still need to be price competitive or else many consumers will just walk away and go with their Plan Bs.
Our recession also helped consumers as retailers were desperate to sell and fewer consumers were buying. Being desperate with fewer Plan Bs is very weak leverage.
2. Independent “Fair” Standards Have Become More Accessible
The Internet has empowered consumers with market and cost data and retailers’ pricing strategies that can be used to get better deals. Consumers can also now find many more deals out there (including with GroupOn, etc.), shedding more light on what has always been significant price variation in the marketplace. Some customers even share online the discounts they negotiated for various goods.
All these standards will help you get what you perceive is a “fair” deal. If you know Store A marks up its clothing by 100% but regularly has sales of 25% off, few will pay the original price.
3. Do Your Homework
Just because consumers can get better deals these days doesn’t mean they will. As the price differentials above illustrate, stores continue to include significant markups expecting many consumers to buy on impulse or just not to negotiate. And they’re right.
Of course, there’s nothing wrong with this, especially if the possible discount isn’t significant. Remember, though, it doesn’t cost you anything to ask.
Interestingly, my seminar attendee redoing his patio told me he was strongly leaning toward the $15,000 bid even though it was $5,000 higher than the low bid. Why? He felt that contractor would provide much better service and higher quality work. Quality and service were more important to him than price. Keep this in mind, too, in your negotiations.