The Problem with Jet.comís Pricing Model

As you likely heard, yesterday Jet.com opened its virtual retail doors with the pledge that its shoppers will save 10% - 15% over rival ecommerce sites. Pretty alluring, right? In addition, Jet is adopting the Costco two part pricing (member and product purchases) – Jet pledges to make no profit from product purchases and instead, profit will solely come from membership fees. Sounds great, right?

There are many problems with Jet’s pricing strategy – ranging from it’s hard to fathom that Jet can negotiate product prices as low as rivals such as Wal-Mart to the assumption that Amazon CEO Jeff Bezos is going to roll over and not compete against Jet on price.

Please check out my latest piece for the Harvard Business Review which discusses Jet’s pricing strategy. My advice is to sign up for Jet’s free 90 day membership trial and enjoy the rock bottom prices…while they last! 

Posted on July 22nd, 2015 (0 Comments)

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The Logic Behind Amazonís Prime Day

If you haven’t heard about Prime Day yet, you soon will be…it’s going to be a blowout media hoopla event! Amazon has anointed Wednesday, July 15 to be Prime Day! What type of holiday is Prime Day you’re probably asking? It’s a self-interested homage to rock bottom prices and 2 day shipping.

So why is everyone interested in a sale created by a retailer? After all, larger retailers such as Wal-Mart and Costco wouldn’t receive such interest if they held a sale. Because we know that Amazon doesn’t care much about profit (on an impressive $89 billion in revenues in FY14, Amazon’s operating margin was a meager 0.2%...nope, that’s not a misprint.

Please check out my latest piece for the Harvard Business Review which discusses why Prime Day is a well-calculated invasion into the turf of brick and mortar retailers. 

Posted on July 13th, 2015 (0 Comments)

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Of Course Disney Should Use Surge Pricing at Its Theme Parks

Disney is reportedly considering implementing surge pricing at its theme parks, which makes total sense. Demand is stronger on some days relative to others – hotels and airlines change prices based on demand, why shouldn’t Mickey. While it makes sense to raise prices during peak periods, I think the bigger play is actually focusing on the growth generated by offering low prices on select “slow period” days.

Please check out my latest piece for the Harvard Business Review which discusses surge pricing. While peak/off-peak pricing is typically used to change demand in fixed capacity industries – I extend the applicability of surge pricing to instances when capacity is not fixed as well as when supply varies.

As always, thank you for reading my blog!

Posted on June 4th, 2015 (0 Comments)

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