5 Takeaways From April’s Digital Price Index

The April 2019 Adobe Digital Price Index (DPI) is out.

5 Takeaways From April’s Digital Price Index
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The April 2019 Adobe Digital Price Index (DPI) is out.

Every three years, the Bureau of Labor Statistics (BLS) releases its Consumer Price Index (CPI), which measures changes in the price level of consumer goods and services purchased in stores by households. The BLS reaches out to Americans and asks them to recall what they buy, how often, and how much they spend.

Our monthly DPI report, on the other hand, uses Adobe Analytics to analyze 1 trillion visits to retail sites and over 55 million SKUs. Adobe Analytics measures transactions from 80 of the top 100 U.S. online retailers. Our analysis is different from BLS’s because consumers aren’t asked to recall anything. We are using their anonymized transactional data online to identify trends.

The DPI was developed in partnership with the chief economic advisor to President Obama, Austan Goolsbee, and renowned economist Pete Klenow. With its unique capability to account for the quantities of each item sold and reflecting the change when customers switch from one product to another due to price, it is the one of the most effective measures of inflation, for the online economy, available.

Here are our top takeaways from April.

People are willing to pay for convenience

Online grocery inflation is higher than offline, yet people’s willingness to buy their groceries online is growing. The reason? We think it’s because of the convenience of having groceries shipped right to the home, proving that people are willing to pay more to make their lives easier.

Online doesn’t always have the cheaper option

Despite the fact that people will pay for convenience, many still assume they can find cheaper prices for items online than in-store. However, this isn’t always the case. For example, steel and aluminum tariffs are increasing prices for appliances both online and offline, and we’re seeing price increases are consistent regardless of where purchases are made.

Waiting could mean saving money

Electronics see a natural price deflation that can be attributed to the ongoing and accelerated innovation in the space. Older PCs, for example, become cheaper when newer models are released. According to the April 2019 Adobe DPI, online prices for computers are slightly cheaper than offline. So if you are trying to save a buck or two, you may have to sacrifice your bragging rights for being the first to own the newest laptop.

There is a way to battle showrooming

Retailers are increasingly trying to battle “showrooming” — the practice of visiting a store to examine a product only to buy it online at a lower price. For some categories, the online and offline worlds are starting to blur into one. For example, the cost for TVs online and offline are remarkably similar. That’s because brick-and-mortar retailers are working in lockstep with the online world with programs such as price matching.

One man’s loss is another man’s gain

We may be seven months from gift-buying season but it’s interesting to note that online prices for toys have started to exhibit a deflation in the last few years, diverging from toy purchasing trends in-store. There’s an easy explanation for this — since some toy retailers (read: Toys R Us) have exited the space, shoppers have fewer options for buying toys in-store for their precious kiddies. Online shops, of course, take note and begin to offer steep discounting for toys. Maybe it’s not too early for holiday shopping?

See the full report below, or click here to view it on Slideshare.

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