When in doubt, check it online. This has undoubtedly been the mantra as 65% of shoppers browse online when at physical stores to ensure they get the best value on a product. Product pricing is rarely a cakewalk. For e-commerce brands and retailers eager to win this game pricing intelligence is imperative. Digital players are constantly challenged to keep the fine balance between being too expensive and being undervalued as a brand through deep discounting. And this is just the tip of the iceberg.
This challenge gets multi-faceted when you are a retailer looking to compete across multiple product categories and SKUs. To help cope with these and many more pricing questions, we’ve rounded up some of the fundamental ways how pricing intelligence can help your e-commerce business stay competitive in the long run, peppered with relevant insights by our in-house pricing intelligence and digital shelf analytics expert Chaitanya Gadiyar.
1. Helps identify the right market price for your products
Customers now have more information at their fingertips than ever before. Price comparison sites and comparisons on product pages fuel price transparency enabling shoppers to make quick and informed purchases. When asked where can online players begin to ensure they are offering competitive prices, Chaitanya stated, “Digital brands and retailers would do well to ask themselves –
- How deep is my assortment?
- How quickly can I deliver?
- When and how often are my competitors changing their prices?
- Am I offering the best price?”
Understanding your market position across these key differentiators by analyzing your competitors’ data will help you arrive at the most logical product price. A leading marketplace fearing it would lose sales to its competition, partnered with us to gain a competitive understanding of its price position across a throng of SKUs spanning categories like fashion, electronics, and grocery. The collaboration equipped them with actionable insights doled via a customized dashboard that offered them a comprehensive analysis of pricing and discounting strategies adopted by its rivals.
2. Powers dynamic pricing to your advantage
Unlike brick and mortar stores, online retailers and brands can revise a gazillion products’ prices within a few clicks. Moreover, you can use this as a lucrative marketing tactic across a gamut of scenarios according to Chaitanya. “Today e-commerce platforms use dynamic pricing based on:
- Customer profile (for e.g. first time users, first app transaction, user demographic, etc)
- Seasonal events (for e.g. Black Friday, Republic Day, etc)
- Time of the day (to incentivize footfalls during a lull period. For e.g. a brand or marketplace offering midnight deals.)”
3. Allows automated price changes while maintaining margins
Pricing intelligence technologies that track, compare, and evaluate prices across various competitors in real-time, are examples of retail automation. This, as well as other customizable settings, are available on Netscribes’ proprietary platform to meet your pricing intelligence needs.
The platform delivers alerts based on pre-defined parameters, indicating when you should cut or raise your prices. For example, if there is no competition for a high-demand product, it will alert you to raise the price of your product to take advantage of the opportunity. In addition, real-time price intelligence tools, like ours, can:
- Provide meaningful competitive insights and business ideas for your entire assortment as well as specific products.
- Enable price change tracking for high-priority products with respect to your competitors on a regular basis, through visual dashboards.
- Fuel wiser and more aggressive pricing and discounting decisions, combine stock status information with competition price knowledge.
All of this works together to ensure that neither sales are lost when competitors decrease their prices, nor are profits risked when competitors raise their prices.
4. Enables tracking how third party sellers are pricing your products
The minimum advertised price (MAP) is the lowest price at which a retailer/seller may advertise a product for sale, and it is critical for brands to adhere to government regulations. While sellers are typically free to set their own prices on online marketplaces, this becomes a significant concern for brands.
When asked for an example describing why MAP monitoring is important, Chaitanya told us, “On a popular US marketplace, a footwear manufacturer received complaints about steep discounts on their products. When investigated, the brand discovered that these merchants were either selling counterfeit or grey market goods.”
5. Facilitates learning from demand-based pricing
From value-based pricing, bundled pricing to penetration pricing and beyond, there are multiple forms of demand-based pricing worth trying out. Value-based pricing is nothing but harping on the perceived value of a product. For instance, a luxury item’s price can be notched up a bit owing to its brand name and market value.
Similarly, bundled pricing has to do with bundling a popular product and an unpopular one together, at a slightly higher price so as to increase sales and clear off stale inventory of the unpopular item. Penetration pricing is when retailers deliberately price a product low to increase sales, gradually increasing the price as the product gains deeper market penetration. All of these demand-based strategies can be powered by pricing intelligence for your e-commerce website thus enabling you:
- Determine products that should be better stocked
- Earn substantial margins without meddling with your inventory, operational processes and marketing strategies
- Stay competitive without any fundamental product-based iterations
On a final note, we asked Chaitanya what pricing tools, tactics, or strategies, in his opinion, are bound to gain more traction in the post-pandemic future. “For brands, ensuring price parity between retailers and constant monitoring across channels to guarantee no deep discounting occurs that usurps the traditional player’s market share, will be key,” he says.
“For retailers,” he recommends “validating price elasticity on a smaller product assortment would be wise before rolling it out across categories. Avoid frequent price changes as they may dissuade customers from transacting with you in the long run. Focus on mentioning the ‘out-of-the-door price’ which generally includes shipping, taxes, etc., at the get-go itself. This way there are no disappointments later leading to potential cart abandonments. Finally, pay attention to accurate data collection to drive timely and confident dynamic pricing strategies.”
Insights by Chaitanya Gadiyar, Associate Vice President (Technology Solutions), Netscribes.