Price and Deals When Buying Tea Online

I recently received a box of samples from the newly launched Paisley Tea Co, which is an effort of Two Leaves Tea (Formerly Two Leaves and a Bud).

This post is not about the company's teas; I have more to say about them later; if you're itching to read more, you can peek at my lengthy review of their English Breakfast on RateTea. This post, however, is about a phenomenon that I've seen occur with a variety of companies that sell online. This post is directed both at tea shoppers and tea companies, and I hope there will be some useful tidbits in the post for both audiences.

Pictured here is a clipping from a screenshot of the page for Paisley Tea Co's Organic English Breakfast, on the official online store of Two Leaves Tea:

The price, for a box of 24 tea bags, is $5.95. Now, take a peek at this screenshot, taken from Amazon.com:

Now the price is $3.82. But the product is out of stock. I discovered this page, supposedly selling this tea, after reading a post on The Everyday Tea Blog, titled Paisley Tea Co, Organic Double Earl Grey. This price is discounted over 35% off the price listed on the company's official site. A little more searching turns up the following listings:

These are sold by Amazon.com's Add-on program, and some of them are in stock. This program lists items that would be cost-prohibitive to ship on their own, and they are intended to be purchased when someone makes a larger ($25 or more) purchase from Amazon, and they ship for free in these large purchases.

Sometimes you can find deals online:

If you are looking to buy a product online, you can sometimes find it cheaper than the list price on the company's main website. You may also sometimes find coupon codes if you search for them. This can be good news if you are a tea drinker looking to buy tea online. Three suggestions I'd have if you want to look for deals on a product you've already decided to buy would be:

• Check Amazon.com, eBay, and other major online marketplaces.
• Try searching Google shopping.
• Do a basic search for coupon codes for the company you are buying from.

Is this sort of setup beneficial for the company selling the tea? Often, yes, as I explain below. I do want to point out, however, that these "off-the-main-website" deals usually are limited to larger, more mainstream tea companies.

Why do such discounts exist?

Teas can be available at a discount for a variety of reasons. Some of them include:

• If a company is hoping to sell a major portion of their products through Amazon, eBay, or any other marketplace website which has its own reputation system, sellers sometimes initially sell products at a discounted price in order to establish a track record. They forgo additional profits as an investment to establish their reputation. This practice is most common with smaller companies.
• If a company is launching a new line of teas, or a new tea brand, like Paisley tea in this example, they may offer a discount to help jump start their new products.
• Sometimes packaged teas end up in the hands of a company (or individual) that cannot easily sell them or put them to use, and wants to get rid of them, and they then mark the price down below the company's list price, as a way of recovering some of their loss. Discount stores can also buy random shipments of tea for discounted prices, and sell them at a modest profit, still below list price.

A word of caution on bargains being displayed but not available:

I just want to highlight one potential problem that can arise from a setup like the one here, especially if it persists in the long-run.

I think that it can be potentially problematic, and can hurt companies, when there is a lower-priced item available on a third party website, but the item is out of stock. This is especially true if the price is presented as a normal price, rather than being advertised as a special discount (sometimes this can be harmful even if it is in stock). If a person searches around and somehow finds the bargain-priced item labelled as normal (like the Amazon example above), they may get excited and think: "Wow, at that price, I want to buy this product." But then they go to buy it and it is out of stock. But then they see the same product for sale on the company's official site, or in a supermarket, or another store, for the normal price, and it seems overpriced, in comparison to the discount price. They'll be likely to think: "Wow, this store is price gouging." or "This tea is overpriced." and not buy it.

Policing prices:

Pictured here is a rather old police car, a Ford Mustang to be precise; the concept of price policing really has nothing to do with the actual police, and tends to be enforced through contracts between wholesalers and distributors, rather than criminal law. This picture is included strictly for amusement.

Some companies actively police their pricing, enforcing minimum retail prices, because they worry that if their products are too widely available for low prices, they will lose money because people will become less interested in buying the products at a higher price. For example, there is a shoe store that I like very much, called The Natural Shoe Store, on 40th street in Philadelphia. The staff of this store have told me that one company threatened to stop selling them shoes because they had priced them too low, even though they were still selling the shoes at a comfortable profit over the wholesale price.

I don't like the idea of price policing like I described here. I think it goes against the idea of the free market economy, and even if it benefits one business, I think it tends to harm the economy as a whole. But I do think that it is good for businesses to think critically about who is going to see what prices where, and what conclusions they will draw from them. Offering discounts and deals can be a great way to jump-start a new line of teas, or a new brand of tea like Paisley here. In some cases, though, it may be better not to discount.

Rather than policing prices, I think a better approach is to be cautious about where, when, and how much you discount your products.

What do you think?

Do you ever shop around for deals on tea online, that is, deals that go beyond the price listed on the company's main website? How about when buying other sorts of products? For companies: when do you think the best time is to discount? And what do you think of the idea of price policing. Tea companies: would you ever do it? And tea drinkers, do you think it's acceptable for a company to do, or does it undermine the ideals of a market economy?