Friday, May 12, 2017

Discriminatory Pricing



Jessie J: Price Tag

For several years Marcus and Agata have relied pretty much exclusively on Wiggle, a UK based company for all our sporting goods.

Things like Wetsuits,  Bicycle Components, even Swimwear.

But thanks no doubt to better Computer Systems, oh and maybe greed? their usefulness for delivery outside of England (to our home in non EC Switzerland) may be less in the future.

The Reason?
The reason is that their once fair pricing system is now being withdrawn, my explanation is that they can simply 'charge more' using Discriminatory Pricing.

To Marcus Discriminatory Pricing is the tactic whereby the retailer charges more for goods dependent on the territory.

In our case Wiggle now charges us more for identical items shipping to Switzerland.   But it is not uniform discrimination.   It's more subtle.


An Example Problem

748 GBP Shimano Wheels to UK



728 GBP Shimano Wheels to CH

(951 CHF equivalent according to xe.com on 20170510)



Working in Swiss Francs, and with a large order to assure free postage in both cases you need to add

Customs Inspection 40 CHF
Swiss VAT  (8%) 80 CHF
Total  1078 CHF which is 825 GBP

Since the UK wheels attract 20% VAT and on export to Switzerland this VAT is not charged, the fair export price would be

749 * 100/120  =  624 GBP  (814 CHF base price)

Therefore Wiggle is charging me a Swiss Customer 728 - 624 / 624 =  16.7 %  more than it needs to.

Can you see why I'm rather upset?

---
On some items however there is no Discrimination, just take the UK price, remove the 20% VAT and that is the Swiss Price.  But at the time of writing the number of these 'fairly' priced items is dwindling fast.


Other Examples
Discriminatory pricing is nothing new.    Here is another famous example:   Porsche car pricing

In the USA,  consumers expect to pay little for their cars or servicing.

So remarkably, Porsche cars, made in Germany retail in the USA for considerably less than in their country of manufacture.

Meanwhile the same cars sold in Switzerland (VAT 8%) from where we write this article cost upto 15% more than even in Germany (VAT 19%).


I know, to me it is a disgrace.  To Marcus; a home country should certainly get the lowest price of sale anywhere, that is only fair to me!   Domestic (not International) shipping costs,  no Export paperwork, and support of the local economy are just a few of the reasons why.


Sadness
For more than 10 years I have been a constant and unwavering supporter of Wiggle.  I have done so; openly recommending them in  tens, or perhaps hundred of online articles that I have written.  I never derived a single penny (or franc) from them for this support, but my recommendation was based on their excellent service, comprehensive website, delivery, no quibble returns and fair pricing.   Now in 2017 my revised recommendation is goto to Wiggle, but then do you diligence and see if other Online or local retailers can match this price.   Because on a price basis they are no longer always the best deal in town.  And boy, do I hate discrimination  :-(


What is it called then?
I had a long discussion with Wiggle about this but an initially open and good natured conversation changed tone when I pointed out what I say is a clear example of Discriminatory Pricing.  They said that was not the proper term,  so I'm wondering Wiggle, what is?

Hmm.