Why Pricing Intelligence Should be a Part of Your e-Commerce Strategy?
Whenever you’re shopping, what is the first thing you look at when you find the product? Is it the name of the seller? The reviews of the product? The delivery dates? While shopping, you never look at these factors on the first go. You always check the price first. If the price sits well in your budget, then you look at the other factors before buying.
How pricing influences customer behavior?
Similarly, around 70% of shoppers have agreed that the first and important factor for them when shopping online was the competitive pricing strategy. It is a subconscious decision to compare the prices and then buy a product with the least price and best reviews.
On average, a potential customer will visit at least three different websites before purchasing the product or at least finalizing the product.
This figure alone is enough to help you realize how important product pricing strategies are. This is also why many businesses rely on pricing intelligence for better profits and to increase the sale of products.
The process of continuously tracking, monitoring, analyzing, and changing the product's prices is known as ecommerce pricing intelligence. This work is done by professionals who have experience handling various products of several companies and can change with every changing price of products.
The professionals need to develop a dynamic pricing strategy, and their job is not to reduce the prices because the competitor has reduced their prices. So, what do the professionals do to keep up with the change?
They introduce selling their products as premium products at a premium price, come up with good deals such as “buy one and get two free,” discounts at the end of the checkout, promotions, or free shipping. These kinds of deals make the consumer shift from the competitor’s products to your products.
For example, a study found that around 60% of online female shoppers looked for new and attractive deals on different websites. At the same time, only 46% of male shoppers looked for more deals. When you offer such deals and discounts, the customers will be automatically attracted to your website.
Why is pricing intelligence important?
The data generated by the retail industry has been on the rise since the past decade due to the sudden boom of the digital revolution. The data generated by the retail industry is also constantly being used by organizations for coming up with the perfect product pricing strategies.
Famous e-commerce websites such as Amazon, Flipkart have been known to change the prices of their best and most popular products around 10-12 times a day. They change the prices depending on the competitive pricing strategy. A study found that some e-commerce websites change their prices every 3 minutes on average for a better sale.
Three main steps for better long-term growth using online pricing intelligence
For better long-term growth, keep in mind these three steps when deciding the price.
Use pricing intelligence tools- Since the competition is fierce, monitoring your competitor’s prices manually is time-consuming, inefficient, and due to human errors, might be inaccurate. As a solution, you can use several automatic price intelligence software at your disposal for better results.
These automatic tools use algorithms to keep in check the prices of the products. However, the layout, names, and pictures of the products will be different from the competitors; it does give an idea about the pricing using keywords.
Come up with a good pricing strategy- Initially identify who your competitors are in the market. Look for competitors with the same products or products somewhat similar to yours. In addition, to identifying the competitors, look at their selling patterns.
Once you have enough data, use the data to get a good idea of the market. For example, if you're selling clothes, look when the competitors are conducting sales, starting their promotions, raising or reducing the prices during the holidays, etc. Use Excel spreadsheets to analyze your direct competitors and also use pricing intelligence software for better results.
Take action- You won’t get the desired effect if you do not take action when needed. Once you have analyzed the competitors using pricing intelligence tools and developed retail pricing strategies, the last step is to implement everything.
The pricing of the products changes daily. 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.
Benefits of pricing intelligence for e-commerce
The benefits of pricing intelligence for e-commerce are many. Some of the main benefits are mentioned in detail below.
- Helps the seller boost sales
- Enhances the product search performance
- The customer is always satisfied
- You will get rid of the old stock
- Helps increase your brand and does the marketing
- The shopper won’t abandon the cart
Once you monitor your competitor's prices, you get an idea about how the competitors are pricing their products, and you can use better strategies to price your products. It would be best if you always quoted the price of your product in such a way that it feels most appealing to the customer compared to other prices.
For example, when the customer looks at your price, they should feel like your product is better than the rest as the price is within the market demands. It is a fitting reply to the competitive prices and also helps save the customer a few bucks. If your price has managed to meet these requirements, you would see an increase in your sales.
Optimizing the website, making proper keyword identification, and adding the right content are not enough to gain clients. Your products' prices play a crucial role in deciding how well your clients will see 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.
If you’re asked the time when you were most satisfied with the shopping, the answer will be that one time when you paid less and got more. It is found that around 49% of shoppers have left the website and abandoned their buying cart because of unnecessary extra costs.
Your prices should always make the customer happy, and they should get an idea that they have to spend less. In that case, your chances of selling several products to the same customer are increased drastically. Do not use hidden costs. This is another major thing that annoys the customers the most. They will remember your brand and will shop from you from time to time if your prices are reasonable and do not surprise them with additional charges.
No matter what you’re selling, every product has a trend and an expiration date. Once the trend has passed away, the clients will not prefer buying the products.
For example, there was a time when low-waist jeans were at the top of the fashion industry. Nowadays, you will only see a handful of people wearing low-waist clothes. The same is the case with perishable products. If the products are not sold, they will go bad, bringing your major loss.
During these times, pricing intelligence for retailers comes into handy. If you see your competitors are selling the products at the lowest rate, wait for a couple of days and try selling them at a somewhat reasonable price. You can afford a little more loss than throwing away your entire product.
When you put the right price, and if your products also last long, word of mouth is enough to help you sell all your products. Nowadays, with the help of social media, people can share anything they like. If they find your products useful at affordable rates, they will share this with their friends and family.
This will, in turn, increase the organic traffic on your website and help you improve your brand awareness. It was found that around 51% of traffic for B2B and B2C sites was organic. You can always choose to either show your brand and products to everyone online or your target audience.
Choosing the latter is always advised as only the clients who require your services will see your product and buy them.
On average, 69.80% is the cart abandonment rate. There are several reasons why clients abandon the cart, and only the pricing is not the main reason. Factors such as delivering the item late than your competitors, not giving free shipping, not getting the desired colors or pattern of the client, etc., cause the clients to abandon the cart.
Out of these, let's focus on the pricing. It is no secret that there are only a handful of e-commerce websites that show the actual amount the customer will pay at the end of purchase. There are several additional amounts charged by the website, such as shipping rates, miscellaneous charges, taxes, etc. These hidden charges irritate the customers, and they abandon the cart and look for another website.
Always remember that the only additional amount the customer is prepared to pay at the end is the taxes. 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.
Pricing intelligence for e-commerce is very important for every business to survive in such tough competition. You need to use all the pricing intelligence tools at your disposal to study the competitive pricing strategy.
With the help of solutions like PriceX, you can get intelligence on pricing for a product. This will help you come up with your retail pricing strategies that catches shoppers’ attention. Contact us at Wersel Brand Analytics to know how our pricing intelligence solution can augment your toplines.