Cheaper CDs Available Again At CD Wow… But How?

Surprises

from the interesting.. dept

CD Wow, the UK-based online CD seller that got slapped down last week for daring to order (completely legitimate) CDs from overseas and reselling them in the UK at cheaper prices than their competitors, has now dropped their prices again. After they were told they had to stop, they raised their prices to account for the higher local prices of the exact same CDs. However, they’re now claiming that local suppliers have agreed to a deal that would lower the prices of the CDs so that CD Wow can continue to sell at their older, lower prices. While the details of the deal aren’t clear, what’s most interesting to me is that this is the inevitable result of arbitrage anyway. Prices tend to even out over time, as it becomes easier for companies to move products from one location to another. So, all the work to force CD Wow to raise their prices via a protectionist policy in the UK seems to have only served the purpose of convincing suppliers to lower their prices. Now, it will be interesting to see if other local retailers also demand lower prices from their domestic suppliers. In the end, this could cause much lower overall prices around the UK. When CD Wow had relationships with Asian suppliers, it was a barrier for other retailers – but now that other retailers realize their existing suppliers may offer a better deal, they’ll ask for it as well. Thus, the plan to force the UK to pay higher CD prices may have the opposite effect.