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Technology comes into play because Lowe’s uses it to identify which products lend themselves to buying online and picking up in-store. Not only does it save the chain on shipping costs, but also it increases the chances of those customers buying even more when they’re in the store, where they are less focused on price and more focused on convenience and the great service of Lowe’s knowledgeable customer service employees. 2. COGS and shipping variable costs: When assessing their place in the current state of price wars, retailers need to consider more than just the price of their products. The climate has also placed increased importance on cost-of-good-sold (COGS) for retailers. Obviously, the better they can negotiate with various brands and labels, the less gross profit margins will be affected when prices are lowered. When it comes to shipping, there is an opportunity for retailers to save money by encouraging shoppers to pick up items in the store to drive up contribution margins. Walmart, for example, passes shipping savings to customers by offering lower prices to those who agree to pick up items in the store. This builds positive sentiment among consumers, and as the Lowe’s example showed, increases the chances of these consumers spending even more while they’re in the store 3.
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