Three weeks after launching its LivePrice scheme in Australia, Kogan is claiming that customers have saved a total of $370,000 on goods ordered so far. But what do those numbers really mean?
LivePrice essentially gives a discount for pre-production orders, based on the assumption that this will save financing costs ahead of manufacture. We already knew that some items offered through LivePrice had sold out ahead of their shipping date, and Kogan today announced that the first four items produced for Australian customers using the LivePrice model — an ebook reader, an HD camera, and two 32in LED TV models — had begun shipping to customers. (The $370,000 figure reflects all orders, not just the items that have actually shipped.)
There’s two important points to make about those numbers. The first is that total savings across a group of several thousand customers inevitably sound bigger and more impressive than the actual savings per individual customer. Based on my own tracking, for the four products that have shipped, the average “saving” ranges between $50 and $200. I’m not knocking saving even the lower amount, but it doesn’t have any “thousands” in it.
The second — and more crucial — point is that the idea that there’s a saving at all is predicated on the notion that customers would have willingly purchased the item at the full price. That’s not necessarily true at all; the $120 difference between the $369 “list price” for the HD camera and the $250-odd the first LivePrice buyers paid could well have been enough to put some buyers off. As we’ve said many times before, it’s only a saving if you planned to buy the item anyway. LivePrice is essentially a way to drive impulse buying while not offering immediate delivery. As ever, shopping around online before you commit makes sense (and is worth the few cents the item might rise while you’re doing that research).