Price Differences Between Organic and Conventional Products in E-Commerce

Abstract

The global market for organic foods is expanding, with consumers willing to pay more for their perceived health and sustainability benefits. However, expressing willingness to pay does not guarantee that sellers can charge a price premium for organic products and pass it along the supply chain. Empirical evidence on the extent to which sellers can set a price premium for organic products is fragmented, especially for e-commerce. This paper uses big data on online prices to provide first insights into the relationship between the product price and the organic attribute across the entire food and beverages variety of the largest full assort-ment of e-grocers in Germany, the world’s second-largest organic market. Our findings show that, on average, organic products are about 5% more expensive than conventional products in the same product category, although the individual estimates vary widely, calling for more data collection efforts and in-depth research for individual products categories.