Psychological pricing in online food retail

Purpose This study aims to analyse the use of psychological pricing in online food retailing. In stationary grocery shops, psychological prices with nine-endings have been a well-documented phenomenon for many decades. However, little is known about the relevance of this pricing practice in the growing grocery e-commerce sector. Design/methodology/approach The authors investigate the frequency of nine-ending prices at Amazon Fresh for more than 10,000 products from May 2019 until March 2020 for the customer location Berlin, Germany. Applying a within-between logit model, the authors identify the determinants for the use of nine-ending prices. Findings The authors find that more than 70% of all prices end in the digit 9. This indicates that Amazon Fresh applies psychological pricing to a similar degree as traditional offline grocers. Nine-ending prices are more likely for so-called want products such as snacks and sweets than for should products such as fruits and vegetables. Also, psychological price endings are used less for products with a higher price level and for products with temporary sales promotions. Originality/value This study is the first to analyse psychological pricing practices for the world's largest online food retailer Amazon Fresh. The study results contrast with most previous empirical and theoretical studies, which suggest that the use of psychological prices would decline in an online context.

Automated summary

This study analyses the use of psychological pricing in Amazon Fresh and finds that over 70% of prices end in the digit "9", similar to traditional offline grocery stores. The study also reveals that "9" endings are more likely for "want products" such as snacks, and less likely for products with higher price levels or temporary promotions.