Pricing scale techniques for eCommerce businesses

07/11/2019

Angela de la Vieja

When expanding or internationalising, one of the main challenges for an eCommerce business is how to scale the prices in its catalogue. We’ve already talked about the importance of this new localised pricing strategy and the need to adapt it to the online store’s target market. But there are so many other factors to consider when making this transition.

By using price scaling techniques for your eCommerce business, you’ll be able to control the margin your store needs to maintain its profit, no matter where it begins to operate or sell. What are these scaling techniques based on? They depend on all of the new costs that the online store is going to incur along with those derived from the expansion itself.

First and foremost, we should point out that price scaling doesn’t have to affect the entire product catalogue. While it’s generally believed that every item has to be modified as part of the pricing strategy of an eCommerce store, price scaling can only affect a certain number of products. These products should be the ones that, due to their special characteristics, account for a large part of the additional costs.

What should you consider when scaling? In the first place, there are the import and export tariffs for each market as well as the transport costs involved in moving products from one place to another. Also, you’ll have to assess the sales taxes and any other costs that come with sales. Finally, any new structural costs derived from storing the products in a warehouse will have to be included.

All of these factors combined will help define the per cent of price scaling needed when internationalising your eCommerce business. For many experts, the virtue of price scaling lies in the ability of businesses to maintain a competitive margin in the new market. Knowing where cost reduction is possible – on which items and in which fields – is another bonus. Software that monitors the prices of the competition, like the software offered by Minderest, is the perfect solution. It’ll allow you to analyse the competition’s strategy before you even set foot in their market. With this tool, you can know how the effect of costs and expenses on every competitor. This, in turn, will help you determine exactly where your eCommerce business can be more competitive.

How to soften price scaling

Of course, one option is to avoid the need to scale prices in the first place. If your eCommerce store limits its sales to the local market, it won’t have to face price scaling.

However, if this expansion can’t be stopped, there are other options you can consider:

Find markets with similar regulations to reduce export costs, for example.
Prepare for any effects on suppliers by using renegotiation clauses. These will allow you to renegotiate costs when your eCommerce business faces international expansion. Your store will have the capacity to readjust costs and prevent them from skyrocketing, ensuring that price scaling will allow you to remain competitive in the new market.
Enter the market through a third party. You can do this through a collaboration agreement that will allow the brand to gain publicity while avoiding the expense of a full entry in a new market.
For the first stage of expansion, position the brand using select products from the catalogue to establish a recognition buffer.

Price scaling is a necessity when trying to enter new markets. However, it doesn’t have to be a risky operation since there are ways to do so gradually, by taking accurate steps.

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.