Why should Pricing Intelligence be part of your e-commerce strategy?
Price is the biggest catalyst between seeing a product and ultimately buying it. According to the Mckinsey & Company report, price tops the list of consumer motivations for buying a product. So, competitive pricing is the main reason behind most purchases made.
What exactly is dynamic pricing?
Dynamic pricing, also known as real-time pricing, is a pricing strategy that uses variable prices instead of fixed prices. The main purpose of dynamic pricing is to allow businesses to sell their goods or services over the Internet and allow them to adjust prices on the fly in response to market demands.
In other words, dynamic pricing models allow sellers to sell the same product at different prices to different groups of people. In practice, retailers can update their prices whenever there is an opportunity in the changing market.
Three main steps to better long-term growth with online price intelligence
For long-term growth, every e-tailor should keep these three steps in mind when deciding price –
- Use pricing intelligence tools- As the e-commerce landscape becomes dynamic on a daily basis, manually monitoring competitor prices is time consuming, inefficient and, due to human error, can be inaccurate. Here, new era pricing tools have the potential to play a vital role. These automatic tools use algorithms to monitor product prices and you can develop strategies accordingly.
- Offer multiple pricing strategies for backup Market research is the first step in developing any pricing strategy. Always do thorough research on competitors with the same or somewhat similar products to yours. Also examine their sales models and develop 3-4 different strategies accordingly.
- Take action– Once you have completed market and competition analysis using pricing intelligence tools and developed retail pricing strategies, the final step is to go all out. When implementing dynamic pricing strategies, sellers can move customers to their side by enticing them with great deals. You don’t want to wait months to implement your retail pricing strategies when it’s too late.
Key benefits of price intelligence in the e-commerce ecosystem –
- Help seller to increase sales
One of the main benefits of smart pricing is that it helps you monitor your competitors’ prices. By mapping the pricing strategies of competitors, one can develop better strategies for pricing their products. It is advisable to always price your product in an attractive manner so that it will be more appealing to the customer compared to your competitors’ prices.
- Discount model
One of the most used filters on the e-commerce website is discount. Every buyer loves discounts and sales. Buying any product at 80% off gives every person a “wow” feeling no matter how much they paid. Thus, sellers are advised to discount their product from time to time in order to generate more sales.
- Get rid of old stock
Fast fashion is now big, sophisticated business. Once the trend is over, customers will not prefer to buy the products. Here, price intelligence for retailers comes to the rescue. If you see your competitors selling fashion products at the lowest price, sell those same products available with you at even more reasonable prices. By selling products at cheaper prices, you may waste little time, but it’s still better than throwing away your entire product line.
- Improves product search performance
Optimizing the website, running ads, identifying proper keywords and adding the right content is not enough to win customers. The prices of your products play a very important role in determining how well your customers will see and perceive your product.
Amazon uses product prices to get an idea of the conversion rate and thus shows customers the products they could buy quickly. These products can be viewed easily and are placed near the buy box.
- Peak price
Peak Pricing is also an important pricing strategy that can be used when the demand for the product is very high since you are the only one offering this product.
- The customer will not abandon the cart
There are several reasons why customers abandon the cart, and the main reason is the price. It is very important for every website to keep very transparent the actual amount the customer will pay at the end of the purchase. There are several hidden fees charged by the website such as shipping rates, miscellaneous fees, taxes, etc. All of this irritates customers, and they abandon the cart and look for another website. In order to prevent the customer from abandoning your website, you can always offer the customer free shipping. This is the asset that almost all e-commerce sites use.
Price intelligence for e-commerce is very important for every business to thrive in today’s era of cutthroat competition. It is mandatory for every e-tailor to use the pricing intelligence tools to study the competitive pricing strategy and develop strategies accordingly. The right pricing software/tools can help you improve your sales and profits and give you an edge over your competition in an automated, hassle-free and easy-to-integrate way.
(The author is Mr. Gurjant Singh, Vice President – Technology, Paxcom and the opinions expressed in this article are his own)