Online grocery stores should mention price in standard weights
ALL those purchasing goods online would be familiar with this marketing strategy, wherein alongside the declared price, there will be a much higher reference price that would be struck off in red ink. Called ‘Strikethrough Pricing’ or ‘Reference Pricing’, this is used extensively by online retailers to claim huge discounts on their sale price.
There is nothing wrong with strikethrough pricing if the discount is genuine and there is transparency in the reference price or the strikethrough price on the basis of which the retailer claims a price cut. Or else, it becomes an unfair trade practice adversely affecting consumer choice.
Take vegetables, for example. Almost every online retailer, including those selling through mobile apps, uses strikethrough pricing to sell them. But there is complete opaqueness regarding the reference price, based on which the seller claims a discount. When a retailer offers vegetables at Rs 50 per kg and shows a redline running through Rs 100, one needs to know the source of that base price in order to know whether the discount claim is genuine or not.
With non-perishables, the reference price could be the price at which the seller sold the commodity in the recent past, but with perishables like vegetables, the prices of which vary daily, even that does not hold good. In respect of pre-packed goods, the base price could be the maximum retail price (MRP) declared by the manufacturer as required under the Legal Metrology (Packaged Commodities) Rules. But these are not pre-packed goods. Some of them refer to the strikethrough price as ‘MRP’. So what does the MRP connote? Is it the market recommended price? Or market retail price? Which market? How was this price arrived at?
In the absence of such clarity, the general impression is that the strikethrough price is the local retail price, and the online merchant is giving a big discount on it. To check the veracity of claims, I compared some prices. On August 15, for example, ladies finger was priced at Rs 35 per kg at an online store. The reference price that had been struck down was Rs 65. On another site, the price was Rs 34 per kg and the reference price that had been struck off was Rs 70.
To know the local market price that day, I checked the price of a kg of okra in an offline store that sells good quality vegetables in Gurugram and the price was Rs 30 per kg. And he was not claiming it to be a discounted price! At another store, it was Rs 35 per kg. So where was this reference price of Rs 65 and Rs 70 per kg of okra coming from? A pricing algorithm? If the retail price of okra on that day was around Rs 35, where was the discount of 46-51 per cent that the online stores were claiming?
A mobile app went even further to confuse and manipulate the consumers — the seller was not only using an exaggerated reference price, but was quoting his sale price in non-standard weights. He quoted Rs 12 for 225 gm of okra, with a strikethrough price of Rs 24. After considerable difficulty, I calculated that his sale price for a kg of ‘bhindi’ was steep at Rs 53.30 while the reference price was Rs 106.60.
Similarly, the selling price of potato was Rs 28 per kg at an online seller, with a strikethrough price of Rs 41. At another online seller, it was Rs 26.52 per kg, with a strikethrough price of Rs 39. So, if you thought they were giving big discounts, the price for a kg of potato at the brick and mortar store was Rs 25. At another store, it was Rs 30. So, obviously, the reference price is a highly embellished price concocted by online retailers to give consumers an impression that they are getting a discount.
It’s time online sellers stopped fooling consumers and started being a little more honest. Several countries have imposed steep penalties on online sellers for giving fictitious reference prices, and we, in India, too need to do that. We are well equipped under the Consumer Protection Act to deal with such unfair trade practices. It would be good to prohibit strikethrough pricing for vegetables.
It is also important to make it mandatory for all online stores selling groceries to mention the price in specified standard weights such as a kg, 500 gm, 250 gm and 100 gm, so as to facilitate price comparison. Declaring the price for 98 gm, 182 gm or 225 gm is very obviously meant to mislead consumers and prevent price comparison. It is an anti-competitive, unethical practice. It is also important to introduce, like pre-packed goods, unit pricing for all groceries sold loose at online stores.
