Positive price discrimination has always been a handy channel for distributors and retailers to maximise their profits. The basic principle behind positive price discrimination is information asymmetry between different consumer groups and also difference between demand patterns for different consumers (Shpanya, 2014).
With the advent of online auction sites such as eBay, both these principles are getting eroded. More and more information about the products and prices is freely available on the internet for everyone to process.
Further, the consumers have been able to adjust their demand patterns according to the product availability over time, with the same product being available at different periods of time on different platforms (Clark & Ward, 2008).
This has resulted in huge savings for the consumers in terms of effort to search for the best price of the product and also monetary savings in having to pay for the lowest price available on different platforms and not the price that is being charged by the traditional retailers.
A very common practice followed by consumers who get good price from traditional retailers is that they order and store the goods in large quantities, which is in surplus of their requirements. Then they sell those goods on such auction sites at a slightly higher price, but lower than the price which retailers quote to other consumer groups (Clark & Ward, 2008).
This serves as a win-win situation for the intermediate consumers, who earn profit margin, while benefitting the end consumers as well. However, this practice has caused large losses to the retailers and distributors whose average margins have gone down.
So overall, an increase in the subscription and popularity of auction sites has been a situation of loss for retailers while benefitting consumer groups.
References
Shpanya, A. (2014). What is price discrimination and is it ethical? Econsultancy. Retrieved from https://econsultancy.com/blog/64068-what-is-price-discrimination-and-is-it-ethical/.
Clark, J. M., & Ward, S. G. (2008). Consumer Behavior in Online Auctions: An Examination of Partitioned Prices on eBay. Journal of Marketing Theory and Practice, 16(1): 57-66.
