Why Pricing Intelligence should be a Part of Your e-Commerce Strategy?
Price is the biggest catalyst between seeing a product and eventually buying it. According to the report by Mckinsey & Company , price is at the top of the list of consumers’ motivations for buying a product. Thus, competitive pricing is the biggest reason behind most of the purchases being done.
What is Dynamic Pricing exactly ?
Dynamic pricing, also known as real-time pricing, is a pricing strategy that utilizes variable prices instead of fixed ones. The foremost aim of dynamic pricing is to let companies sell their goods or services over the Internet and allow them to adjust prices on the fly in response to market demands.
In other terms, 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 for better long-term growth using online pricing intelligence
For long-term growth, every e-tailor should keep in mind these three steps when deciding the price –
- Use pricing intelligence tools- Since the eCommerce landscape is becoming dynamic day-by-day, monitoring competitor’s prices manually is time-consuming, inefficient, and due to human errors, might be inaccurate. Here, new-age pricing tools have the potential to play a vital role. These automatic tools use algorithms to monitor the prices of the products and you can develop strategies accordingly.
- Come up with multiple pricing strategies for backup- Market research is the first step while developing any pricing strategy. Always do a thorough research on competitors with the same products or products somewhat similar to yours. Also, look at their selling patterns and accordingly develop 3-4 different strategies.
- Take action– Once you are done with market and competitor analysis using pricing intelligence tools and developed retail pricing strategies, the last step is to implement everything. When implementing dynamic pricing strategies, sellers can shift the clients to their side by attracting them with good deals. You do not want to wait for months and then implement your retail pricing strategies when it is too late.
Key benefits of pricing intelligence in e-commerce ecosystem –
- Helps the seller boost sales
One of the key benefits of pricing intelligence is that it helps you monitor your competitor’s prices. By mapping competitors’ pricing strategies, one can develop better strategies to price their products. It is advisable to always quote the price of your product in an attractive way such that it feels most appealing to the customer as compared to your competitors’ prices.
- Discounting Model
One of the most used filters on the eCommerce website is discount. Every shopper loves discounts & sales. Buying any product at 80% off gives every person a “wow” feeling irrespective of the amount they have paid. Thus, it is advisable for sellers to from time to time discount their product in order to generate more sales.
- Get rid of the old stock
Fast fashion is now a large, sophisticated business. Once the trend is over, the customers will not prefer buying the products. Here pricing intelligence for retailers comes into rescue. If you see your competitors are selling out of fashion products at the lowest rate, sell those same products available with you at even more reasonable prices. By selling products at cheaper prices might cause you little loss but it is still better than throwing away your entire product line.
- Enhances the product search performance
Website optimization, running ads, making proper keyword identification, and adding the right content are not enough to gain clients. Your products’ prices play a very important role in deciding how well your clients will see and perceive your product.
Amazon uses the product’s prices to get an idea of the conversion rate and thereby shows the clients products that they might buy quickly. These products can be viewed easily and are placed near the buy box.
- Peak Pricing
Peak Pricing is also an important pricing strategy that can be used when the demand of the product is very high given that you are the only one offering that product.
- The shopper won’t abandon the cart
There are several reasons why clients abandon the cart, and the foremost reason is the pricing. It is very important for every website to keep the actual amount the customer will pay at the end of purchase very transparent. There are several hidden charges charged by the website, such as shipping rates, miscellaneous charges, taxes, etc. These all irritate the customers, and they abandon the cart and look for another website. In order to avoid the client abandoning your website, you can always give the client free shipping. This is the trump card that almost every e-commerce website uses.
Summing Up
Pricing intelligence for e-commerce is very important for every business to thrive in the present era of cut-throat competition. It is mandatory for every e-tailor to use the pricing intelligence tools to study the competitive pricing strategy and develop strategies accordingly. Right pricing software/ tools can help you improve your sales and profit and give you an edge over your competitors in an automated, hassle-free and easy-to-integrate way.
(The author is Mr. Gurjant Singh, Vice President – Technology, Paxcom and the views expressed in this article are his own)
