Shopping online probably won’t save you money — Alberto Cavallo

MIT Sloan Asst. Prof. Alberto Cavallo

MIT Sloan Assistant Professor Alberto Cavallo

From MarketWatch

If you’re a bargain hunter, it’s common to spend time researching prices before making purchases. After all, you wouldn’t want to buy a washing machine at your local Lowes store only to find a lower price offered on Lowes.com. However, I found in a recent study that retailers’ offline and online prices are the same more than 70% of the time.

That’s good news for consumers, who don’t need to worry about price comparisons when deciding whether to use a retailer’s website or visit a local store. They can choose instead based on other factors like convenience and product availability.

This finding is important for economists too. Online prices are increasingly being used in measurement and research applications, including studies of pricing behaviors, price stickiness, international relative prices, and exchange-rate dynamics. Many national statistical offices are even considering the use of online data in official consumer price Indexes.

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Using optimization to improve bundle recommendations and pricing – Georgia Perakis

MIT Sloan Prof. Georgia Perakis

MIT Sloan Professor Georgia Perakis

From The Huffington Post

When you shop online, it is common for retailers to offer additional items in a bundle to try to increase sales. For instance, if you are buying towels, the seller may offer matching washcloths. Or if you are buying an airline ticket, you may be asked if you also want to purchase inflight Wifi and premium seating. If this “bundle” is appealing to you in terms of the items offered and the price, you might be motivated to buy it all. If not, the items or services are left on the table, eventually getting marked down even more.

With the online market projected to grow 57% from 2013 to 2018, retailers have the potential to significantly increase their profits through bundling. This strategy can be beneficial for customers too if they are presented with desirable items they otherwise may have missed — and at better prices. The key is creating an attractive enough bundle to incentivize the buyer to click “add to cart.”

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Valentine’s Day gifts: Are you giving knockoffs or the real deal? — Renée Richardson Gosline

MIT Sloan Prof. Renée Richardson Gosline

Gift giving can be fraught with anxiety, and Valentine’s Day gifts are no exception. If you decide to give a luxury item like jewelry or a designer handbag, the stakes can seem even higher. Naturally, it can be tempting to look for a “deal,” but buyer beware: If it seems too good to be true, it probably is, especially when it comes to counterfeit luxury goods. My research on the impact of counterfeiting on brands shows that the greatest risk in buying knockoffs is not to the brand, but to the user.

Why is this? First, counterfeits do not serve as substitutes for the real thing. Perhaps the biggest things that set luxury products apart from their imitators are quality and service. Design elements may be copied, but craftsmanship is difficult to replicate. That handbag found at a deep discount on eBay or at a street market may soon show signs of poor quality like frayed threading, broken straps, or ripped lining. Replacement time will be quicker since the counterfeit’s shelf life is shorter. Read More »