The e-commerce industry is known for its fast-paced, constantly changing environment and so do the consumers who need to be tempted to make ‘that’ purchase. It’s a very common practice for a serial shopper to hop to a couple of websites before making an online purchase purely due to ‘Price’. According to Shopify’s Future of Commerce Report 2022, price is a crucial factor influencing 74 per cent of consumers. On an average, a potential customer will visit at least three different websites before making the purchase.
This is why e-commerce giants like Amazon, Myntra, Walmart, etc., initiate price change every 10-12 minutes, and hence the concept of price intelligence comes into play. To stay competitive in the marketplace, retailers are adopting price intelligence for their pricing decisions.
Amazon changes product price 2.5 million times a day, meaning that an average product’s cost will change about every 10 minutes.
Using price intelligence, e-commerce businesses gain valuable insights into customer behaviour, pricing strategies, etc., allowing them to more effectively compete in a crowded market.
Pricing tools accelerating companies’ RoI
In the current e-commerce landscape, retailers are constantly looking for ways to gain an edge over competition. By setting up competitive prices, keeping an eye on market trends, and analysing the impact of price changes on sales and profits, e-commerce pricing tools help businesses optimise their pricing strategies and increase return on investment (RoI). Features like automated repricing and competitor price tracking are offered by some e-commerce pricing tools, allowing businesses to stay ahead and maximise profits. By using an e-commerce pricing tool, businesses often make more informed pricing decisions leading to better conversions.
Price intelligence for e-commerce is the practice of monitoring and analysing online prices to make informed business decisions. E-commerce pricing tools also offer features such as automated repricing and competitor price tracking, which help businesses stay competitive and maximise their profits.
The importance of price intelligence in online business
With more and more people turning to e-commerce in order to shop, one of the biggest challenges that e-commerce businesses face is setting the optimal pricing for their products. This can make or break a business, since getting it wrong could lead to too much money being lost or too much competition.
There are many benefits of having price intelligence in online business. First, businesses avoid undercutting their prices and losing potential customers. Second, they optimise their prices to maximise profits. Third, they use price intelligence to inform about their marketing efforts and better target the audience. Finally, they use price intelligence to negotiate better terms with suppliers.
Thankfully, technology has come to the rescue as well. By taking advantage of technologies such as AI and Machine Learning, pricing tools help businesses to set the right prices for their products and services. By keeping track of what competitors are charging, businesses ensure that they are not undercutting their own prices and leaving money on the table. At the same time, they also avoid overpricing their products, which may lead to lost sales and customer dissatisfaction.
Price intelligence also helps businesses to identify opportunities to bundle products or services together in order to create more value for their customers. For example, a business that sells vests might consider bundling vests and underwear with its products in order to create a more attractive offering.
Another benefit of price intelligence is that it helps businesses to stay ahead of the curve when it comes to industry trends and changes. By continuously monitoring prices, businesses usually identify shifts in consumer demand and respond accordingly. This is especially important in fast-moving markets where new products and services are constantly being introduced.
In addition to these practical benefits, price intelligence also helps businesses to build trust and credibility with their customers. By offering competitive prices and a clear value proposition, businesses demonstrate to customers that they are committed to providing a high-quality product or service at a fair price.
Therefore, price intelligence is a crucial aspect of e-commerce, as it helps businesses to set the right prices, create value for their customers and stay ahead of industry trends.
Let’s take a few use cases:
Repricing is essentially the capacity to calculate and update prices. Brand A is aware that it must alter prices frequently to remain competitive, increase sales and sustain profit margins. What brand A may not know is the optimal price that is required to achieve these objectives.
Consequently, pricing tools are the lifeline. They are able to optimise prices based on objective information and not guesswork as they have access to accurate pricing data. Brand A can observe that X price generates Y sales and re-prices accordingly. They can also monitor the competition and track the results of their pricing strategies before re-pricing their SKUs.
Another could be AI-based competitive pricing intelligence.
It is true that obtaining real-time information on how the competition is pricing its products is crucial because prices for similar goods are constantly changing. Only an artificial intelligence (AI) pricing intelligence tool will give Brand B the edge it needs to optimise its prices and grow its brand.
By attaining a holistic picture of its competitors’ products, Brand B can acquire actionable competitive intelligence and effectively follow its pricing strategy. Though the platform provides real-time data, it’s very important to adjust the price optimisation strategy and competitive product benchmarking as per the decisions on price adjustment which take place.
In a highly competitive online retail environment, AI-powered marketing analytics platform is important and all these are subsets of price intelligence which ensures the losses are narrowed.
A powerful price intelligence software is a game changer. It enables retailers to monitor competitive prices across all relevant SKUs in real time and vary their offers to obtain the maximum margins. Some of the most popular providers include Growbydata, Insitetrack, Price Intel Guru, PriceZombie, RepricerExpress, PriceSpider, Competera, Tgndata, QL2 netRivals, Pros Guidance, Zilliant etc.
Dynamic pricing, subscription-based pricing and tiered pricing are, however, among the most widely used methods of setting prices. Businesses that need the flexibility to adjust prices frequently in response to fluctuations in supply and demand can benefit greatly from adopting a dynamic pricing strategy. Businesses that provide ongoing services or products, such as online memberships or software as a service, benefit greatly from adopting subscription-based pricing models (SaaS). Also, businesses that provide varying quality levels of their services or products can benefit from tiered pricing structures, such as those with basic, intermediate and premium pricing.
Choosing an optimum pricing tool and how it usually works
The importance of retailers defining their needs necessitates that the majority of tools require updating product information and the desired price point. Then, the tool generates a list of comparable prices that other businesses are charging for comparable products or services. From there, retailers adjust their prices as necessary until they find a sweet spot that satisfies both their profit goals and their customers’ expectations.
Price Intelligence typically analyses the market and gathers pertinent data from competitors, enabling retailers to enhance their pricing strategy, gain competitiveness and increase conversions. Henceforth price trackers scan the products of competitors multiple times per day and provide the retailer with relevant data that aids in enhancing pricing strategy and adjusting prices.
Typically, when a retailer has access to up-to-date and detailed information about its principal competitors, it segments the data to optimise its pricing strategy. Due to the proper in-depth analysis of competitors’ prices, retailers are able to make more justifiable decisions regarding how to adjust prices for their e-commerce stores and how to determine the optimal prices for their products. In this way, it provides information for adjusting competitive prices and boosting conversions.
“Research shows that price management initiatives can increase a company’s margins by 2 to 7 percent in 12 months—yielding RoI between 200 and 350 percent.”
A greater product basket leads to greater options but what also comes into consideration is the pricing. Customers often apply a filter of the price brackets, meaning that the company’s best offerings may fall outside of the appropriate range and lead to overstocking or discounted options. It does create an uneven synergy. Hence price optimisation and planning tools and software basically help e-commerce players ensure products sold on apps or websites possess the best-selling price helping them generate more revenue.