eCommerce companies are using competitive pricing for not only competing vs. their rivals, but they are also able to attract more customers due to their analytical approach for online pricing. I am going to tell you how you can replicate the procedure above by concentrating on some hidden business scenarios which can occur in eCommerce.
I will be giving you 6 scenarios which show how an eCommerce business of any size can outperform their rivals by adapting the procedure of smart and competitive pricing tactics. My guide through automated competitor price monitoring technologies will help you avoid continuously undercutting your prices and giving away profit margins.
1. Stay Competitively Profitable
Focusing solely on costs is not going to bring any good for an eCommerce business. Product prices and competitors’ prices are two conflicting factors which are always at front in any eCommerce business. Every business’ main goal is a profitable portfolio. E-commerce businesses should focus on maintaining a cost outline that is competitive yet sustainable rather than taking every opportunity to reduce their prices which might sometimes disturb their profits as well. In order to decrease your prices to stay in the competition, you not only need to manipulate the product price, but you also need to reduce your own operating expenses. Please note that the price is not the only factor you can alter in your pricing decision making process, costs can be also studied further and can be optimized.
2. Find Windows To Increase Your Prices
In some cases, you might be too competitive by offering your products at a very low price. So be careful while choosing your lowest limit. You may price your products at the bottom of the low rates. In such cases, it’d be good to know who’s the next cheapest competitor that you’re competing with, and you may increase your prices till the level that still remains slightly below that competitor.
Such technical increases will not be a burden on your company – in terms of units sold – but it will be a good thing for those balance sheets at the end of the week. – in terms of incremental profit margins.
3. Do Research On Your Rivals’ Brand And Category Level Pricing Strategies
Often it is observed that the manufacturers give the retailers some sort of discounts on different deals for different brands. This fact has a big effect on the pricing strategy which is visible once we observe brand or category level pricing indices. This fact adds to the reality that only price control and smart and competitive pricing is not the key to big profits.
With the proper technology, eCommerce businesses can access valuable insight into the category and brand strategies of their rivals. We need to study aggregation of the site which requires us to combine certain products under a specified category or brand and then calculate their overall pricing performance for each particular rival.
Such analysis will tell you the strategy and the trend of a company on brand level compared to its rivals. It will also yield the information related to the rivals’ performance in certain categories and brands, where they are leading and where they are following. Based on these results, a company can take steps for adjusting their pricing strategy – and also purchasing strategy – which are related with brand management or category management.
4. Study The History Of Your Rivals’ Weekend Sales And Flash Sales
Shopping seems to be an activity of the present. However, having a keen eye on your rivals’ previous time based pricing strategies and discount strategies will yield big profits as you can predict their next move. Such insight gaining tricks can provide you a good handle on your rivalry down to the product level.
Looking out for such sales opportunities is important because these sales and discount trends are a good way of making regular customers, which is very vital. – retention is king, ain’t it?
5. Concentrate On The Products Which Are Out-Of-Stock At Your Rivals
Pricing is important in a business but it is useless if the availability of the product is not met. Online shoppers have a certain psychology which makes them move to the next store if a product is not available at a certain retailer even if it was tagged at a better price point. After all, a price point for an out-of-stock item is invalid and incomparable.
A smart e-Commerce business owner will know how to grab this window of opportunity. If a popular product with foreseeable demand is out of stock at your rival’s store, the potential shoppers of that store would be willing to pay even a higher price for that product on your own store. The smart owners can gain huge profits out of this. With the help of the competitive intelligence software, the online retailers can have insights on their rivals’ stock availabilities and increase their prices for out-of-stock products at their rivals’ stores. Not only this, but if he gives away interesting gifts with the product, he can also find stable and regular customers for his business.
6. Get Better Deals From Your Suppliers By Presenting Convincing Data
Importance of organized data is not hidden. If you present proper data to your suppliers about how his unit costs are affecting the business and the competitive landscape – i.e. you might demonstrate that a competitor is charging way below the market average for a specific brand supplied by that very supplier – you might get your supplier convinced for giving you the same products with same deal or even better. The correct use of data is something no one can ignore and suppliers to e-Commerce companies will also take that into account. This technique is very effective in not only getting a good price but also in making your suppliers realize that you are a potential buyer who knows what he is doing and that a better deal is worth it.
To wrap up;
- Stay competitively profitable. – Don’t race to the bottom all the time!
- Find windows to increase your prices.
- Do research on your rivals’ brand and category level pricing strategies.
- Study on the competitors’ historical pricing trends..
- Try to detect your competitors’ out of stock products.
- Get better deals from your suppliers.
We should not take competitive pricing smartness only as monitoring our prices and compare them with our rivals’. It a multidimensional analysis. It is true that price monitoring will give us good profits but we should not stop there.
Implementation of the above-mentioned strategies will surely help every e-Commerce business of any size to outperform their rival in the highly competitive market of today’s eCommerce business.