E-commerce: product prices …

+14% on chainsaws, +25% on hair dryers and even +69% on smartphones, champion in all price increase categories. E-commerce prices for non-food products rose in France between January 2021 and January 2022, according to a study conducted by price comparator le Déniceur for LSA on 29 categories of products that including consumer electronics, DIY, garden, kitchen, beauty, large and small appliances. The method of analysis, based on the analysis of the prices of tens of thousands of products, is detailed below. In all articles studied, the increase was on average 3% over the period. More than half of the products (16 in total) are seeing an increase in their prices between 2021 and 2022. This increase is not general, as the prices of thirteen products are declining, as shown in the table. below. But for seven of those categories, the price drop appears to be a corrective effect of higher price increases over the past year. The cost of computers, for example, dropped 2% between 2021 and 2022, but it grew 18% between 2020 and 2021.

Strong inflation of non-food e-commerce prices is associated with explosions in the price of raw materials and energy, as observed in DIY, household appliances and high-tech departments of supermarkets. and specialty stores. The price of a barrel of oil rose from just over $ 50 in April 2020 to nearly $ 120 two years later, driving up transportation costs. The raw materials used in the composition of these products, such as copper or steel, grew by 120 and 100% between mid -2020 and mid -2021. The market for semiconductors, which is important for manufacture of smartphones, is also very strict. Taiwanese group TSMC, world leader in this sector, plans to raise its chip prices for mobile phones by 10% in early 2022. The war in Ukraine exacerbates these supply problems. These increases have a direct impact on prices.

Rising cascading

But online inflation is also linked to an impact specific to e-commerce: “when prices rise sharply, consumers shop around to find the cheapest products, which are bought first”Explain Romain Gavache, country manager France with Price Finder. When these products are sold out, only more expensive items are left. The second least expensive product becomes the target of customers, who buy it … However, e-commerce sites and merchants selling in the markets spy on each other using these tools to check the price online to adjust their pricing to the competition. When, due to the mechanism described above, prices rise, they are likely to change their virtual labels upwards. “Their competitors, seeing this, are rising on them, creating a cascading rate increase mechanic”, he continued. This partly explains the sharp price increase of smartphones (which is also linked to the methodology used by PriceSpy, as explained at the end of the article).

The analysis of changes in these prices between January 2018 and January 2022, shown in the table below, shows the long -term mechanisms of the market. “Price inflation of high-tech products is important, especially for the smartphone category. These items have moved hard in the market over the past 5 years”, studies Romain Gavache. The new market standard is a phone worth more than 1000 euros each, which was previously a premium product, sold by companies such as Apple. Today, many phone manufacturers offer this type of product and price. In the vacuum cleaner category, companies like Dyson make very technical vacuum cleaner robots, using the same mechanics (+42% in 5 years). Hedge trimmers at -23% between 2018 and 2022, lawnmowers at -11% … Some categories, by contrast, are seeing a drop in their prices, especially in the vertical garden. “Probably because competition has intensified, with cheaper products coming from Asia”lay down country manager.

Procedure:

The calculations of these average prices and their evolution come from all price data collected online by PriceSpy. Prices for 500 to 1000 products, sold on thousands of sites, are included for the smallest category. For the most part, it’s between 1000 and 10,000 (again on thousands of sites). The indexes are then weighed according to the number of clicks collected by each article, the references that attract the most Internet users, which are the most visible, are overweight compared to the not attracting people. This influences this index, especially the price evolution of the smartphone category: Samsung’s new Z Flip foldable phones, which will sell for 2,000 euros in France when they are released in 2020, are attracting interest. click, for example. Their weight in the index is therefore greater than the more common and cheaper phones. This is also the reason why inflation is so high (137% in 5 years) on these products.

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