Abstract
Online grocery platforms play an increasing role in many countries’ food sectors. However, little is known about their pricing strategies. Are online prices less rigid than prices in brick-and-mortar stores, as theoretical and empirical studies from non-food sectors suggest? What does an acquisition by an internet giant imply for price adjustments in a formerly traditional offline store? Using a large data set of daily Amazon Fresh price quotes, we analyze the frequency and magnitude of price changes online. We find highly frequent and mostly small price adjustments for all major food categories sold by Amazon Fresh. For products from Whole Foods Market, which was acquired by Amazon in 2017 and whose assortment has since then been distributed online and offline, price behavior is completely different: Prices continue to be sticky and to follow traditional offline retail pricing patterns. We conclude that Amazon has indeed introduced a new way of dynamic pricing into food retail. However, at least until now this change is limited to Amazon Fresh’s online channels and has not yet spread to the acquired Whole Foods Market stores.
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