Why are online retailers more inclined to price discriminate

Why are online retailers more inclined to price discriminate compared to brick and mortar retailers?

Solution

The two pre-condition for profitable and effective price discrimination are:

(1) The seller can correctly identify different market segments with different price elasticity of demand, and

(2) No re-sale of the good is possible from the lower-priced to higher-priced segment.

The brick-and-mortar retailers cannot effectively segment the customers who visit their store on the basis of their elasticity of demand, since they cannot correctly assess the reservation price of each customer (or group of customers). At the same time, such stores cannot prevent customers to buy cheaper from them and sell at higher price to other customers outside their store, therefore price discrimination is more difficult for them.