New release: “Boomerang Commerce today introduced the Price Perception Index for digital retail. The index measures how retailers optimize prices to attract buyers, compete with other retailers and build their business on a mix of profit margins and volume. This announcement was made today at the annual National Retail Federation (NRF) Convention at the Jacob Javits Center in New York. The first Price Perception Index report finds that Amazon and Walmart are waging a complex competition online. Amazon undercuts Walmart’s prices by 4% on the most popular products, while Walmart is following a price matching policy with 63% of its products at the same price as Amazon’s. Additionally, analysis shows that Amazon has a sophisticated pricing strategy to own a majority of the SKUs for the most popular items and undercut 3rd party resellers on those products. Third party resellers offer more products in the lower demand product areas. Other findings in the report include:

• Retailers split products into three groups (popular or head products, core products, and tail products) and price each of those differently by category
• Savvy retailers test pricing on popular products well in advance of the holiday season dropping the price by as much as half to measure customer response
• During the holidays prices rise on tail products, the products consumers tend to add to a purchase such as a phone case or HDMI cables
• Amazon’s shipped and sold products are generally 2.5% less than the same products at Walmart while Amazon third party sellers, offer those same products for 9.7% more than Walmart.
• While Walmart price matches Amazon on 63% of the items, Amazon is able to drive lower prices on the most popular products and obtain a much lower overall PPI (-2.5% vs. +0.49%)
• PPI by category can vary greatly and each retailer optimizes prices in the categories where it excels e.g. Amazon focuses on Home Audio vs. Walmart focuses of Auto.”