Three errors to avoid in your pricing strategy

22/02/2018

Angela de la Vieja

The price is a key variable for the success of an ecommerce, this is no secret. Of course, the value proposition, the product catalogue and marketing in all its breadth are also important. But in an environment of digital buyers more and more experts, the price is final for an electronic commerce to gain a place in the portfolio of its customers.

When defining a pricing strategy, any ecommerce knows that it must do a thorough job, ranging from analysing the prices of the competition to thinking about promotional actions based on the behaviour of customers. And yet, despite the well-known and studied importance of the price, it is still common for online stores to make mistakes, often quite basic.

And those price errors should be avoided at all costs, otherwise they can not only weigh the benefits, they can directly condemn the brand forever. These are three of the most common:

1.- The lack of knowledge of the costs

A priori it may seem a mistake that nobody in the business world is capable of committing, but it is not like that. In principle, it is something as simple as knowing that the sale price of a product must be greater than its cost.

But in electronic commerce, an over simple analysis can lead to very serious errors, because very often the right components are not included in the equation to calculate the cost.

Here may be the beginning of the problem, since the unit cost of a product is not only what the ecommerce pays the provider, there are many other costs (direct and indirect) that must be considered for the calculation to be correct. Many times, the search for simplification means that companies do not adequately consider the costs of staff, financial, commercial, marketing, delivery, etc.

The red numbers appear very fast if a cost calculation is not made in detail. If, in addition, the pricing strategy is based on costs, a price is presented that can be attractive to customers and triggers sales, which will only increase the red numbers.

To avoid this 'oversimplification' error, it is essential to define a perfectly detailed cost calculation system.

2.- The price update process

Prices in electronic commerce expire, age, and have an end date. The entire e-commerce ecosystem is constantly boiling, with launches, news, offers, new competitors, events, promotions and a long etcetera. And prices are not an exception, they must move.

It is striking to see how in some sectors, prices are still set for quarterly or annual periods, against all the dynamics of the sector.

The price is a critical variable in electronic commerce, but that does not mean it should remain untouchable. On the contrary, if it is a key variable of ecommerce, it must be managed and respond to the dynamics of sales and marketing operations. The optimal price point should be sought, questioned, and improved, as if it were a marketing campaign.

So to not lose the context, the ideal thing is to use technology that allows you to monitor the prices of the competition. In this way, the internal vision of electronic commerce over its own prices is combined with the price movements of the sector or the price strategy of the competition.

3.- The attitude to the downside

Digital buyers are experts in finding the best prices, but supposing that they only buy the cheapest can lead to an error: the permanent downward price attitude. And this can put profitability at risk.

Obviously, with the importance of the price for online sales, before acting on the price to the downside, it is necessary to make price intelligence and resort again to technology. If you analyse the main competitors, their prices are tracked, their catalogues are tracked and their stocks are tracked, the information can be very valuable and can provide two types of opportunities:

On the one hand, price intelligence allows prices to be seen in perspective and in comparison with direct competitors in the market. With this panoramic vision, the reflection on whether or not to lower prices, or the decision of how much to lower them if it is decided to do so, is taken in context and seeking to maximize the benefit.

On the other hand, opportunities could be detected of not touching the price to the downside, when the prices of the competition are much higher than what was believed or when they no longer have stocks of the same product that sells the ecommerce.

11/11/2022

Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies.

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking.

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other.

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well.

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers.

17/02/2015

Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.

28/12/2022

Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.