Merchants leverage technology to tackle pricing challenges
In the post-recession economy, price means everything. When your average shopper is spending less money on the non-essentials, it's absolutely pivotal you are offering competitive retail prices when it makes sense for your business plan. This is particularly the case with online retail, where there is less overhead and more room to experiment with pricing strategies.
Fortunately, setting the appropriate price has become less of an art and more of a science with new technology solutions such as SalesWarp and Upstream Commerce, which can help merchants set the right prices for their goods.
A new report from eMarketer, called "Dynamic Pricing: What Retailers Need to Know About Competing in Real Time," highlights some of the challenges that merchants face as they strive to establish fair prices that appeal to the conservative American shopper. One of the leading problems is the increased price sensitivity of consumers (according to 57 percent of respondents).
Following closely behind is the increased pricing aggressiveness from competitors (41 percent), which are trying to win more transactions by slashing sales tags. Return on investment was another challenge cited by respondents (40 percent), as was increased price transparency in lieu of mobile price comparisons (33 percent).
Finally, many merchants felt the need to protect their brands image (34 percent) in terms of offering high-quality goods at affordable prices.
Using technology to set fair prices
Setting prices was previously a challenging practice because of the lack of meaningful data. Many merchants just didn't have enough business intelligence to identify pricing trends, and if they did, it would take them forever to generate reports – so long they would likely be outdated.
However, the cost of eCommerce software and pricing solutons have dropped considerably over the past few years. Modern retail solutions now offer a robust set of features, including pricing tools that can deliver greater ROI at a good value. End-to-end eCommerce solutions such as SalesWarp provides businesses with product and pricing management tools they need to be able to stay ahead of their competition.
Several established players in the retail space are already taking advantage of eCommerce software to help maximize their pricing strategies, enabling them to rise and lower price based on demand, seasonal changes, new product launches and other trends that could affect sales. Amazon, Best Buy, Sears and Kmart are all retailers who have used technology to improve their pricing initiatives to better fit the needs of their customers. Some of these brands, such as Sears, adjusted the prices of as many as 25 percent of their products during the 2012 holiday season to maximize their sale potential.
Still, pricing intelligence is a relatively new concept and many retailers are still trying to wrap their heads around it. According to a separate report from Retail Systems Research, only 13 percent of businesses have actually fully deployed these solutions. However, 54 percent of respondents said they were either exploring the option, evaluating different vendors or piloting a similar program, highlighting the value they see in the technology.
If you're trying to reach price-sensitive customers in today's competitive eCommerce market, you need to balance ROI with sales. Price too high and you'll lose sales to competitors elsewhere on the Web. Price too low and you'll struggle to keep the metaphorical roof over your e-business' head. ECommerce software and dedicated pricing solutions can help hit that perfect middle mark, allowing you to offload products at a cost that makes sense for both your company and your customers.