How the price war affects the shopping cart

20/03/2020

Angela de la Vieja

The implementation of pricing strategies also comes into play for products in the supermarket. In fact, the battle to achieve the best prices is even tougher here than in other sectors due to the high concentration of edible products from various brands and with very similar characteristics. The appearance of new brands or new business models can threaten the retailers in the sector, who will have to reduce profit margins and find ways to maintain their market share. What other consequences can be suffered by these companies that offer basic necessities?

The first effect of entering a price war is the continued decline in prices, either naturally on strategic products or through promotions. Some physical or online supermarkets, to combat those who advertise themselves as “the lowest prices on…”, choose to launch aggressive offers that attract the attention of potential customers while risking a reduction in their profits. To compensate for this decline, some shops quietly raise the prices on other products, especially those of fruit, vegetables, and fresh items. This strategy can lead to dissatisfaction and the loss of more informed customers. Therefore, each act of repricing must be very well defined, based on studies of the market and the competition.

Brands can lose their value

The brands that are most committed to innovation and growth are those that will be the most affected by this price war. If they decide to enter into the game, they may have to lower their prices so much that they’ll lose any added value and difference value for buyers. Due to this tough competition, some brands have already had to withdraw from certain categories because they could not cope with the current product offering. In this situation, the launch of new products, both in eCommerce businesses and in physical stores, has to have a specific product to target.

In supermarkets, manufacturing companies also have to face the challenge of the low prices offered by private label brands. In most cases, a price war against these isn’t viable, given that their production and distribution costs are lower. On the contrary, a more successful strategy is to achieve good positioning in the customers’ ideology by building a history around your products, reaching the consumers sincerely and simply to gradually turn the brand into a benchmark in the sector.

The growth of online supermarkets

The price war over groceries is even more subtle in eCommerce businesses, where the movements of dynamic pricing can be more controlled. On the internet, not only do conventional supermarkets compete, which already have an online store, but customers can also place orders with younger, specialised companies that have an advantage.

In addition to price, delivery time also plays a key role in the war to dominate this sector. This is one of the factors that generate greater competition among eCommerce businesses since the customers put a great value on immediacy. This is why companies like Glovo, which is also responsible for the distribution of food and basic necessities, have carved a niche for themselves in the distribution chain.

Even though the introduction of new characters in this scenario, as is the case with Amazon, stands in the way of the profitability of companies, brands, and eCommerce businesses, they have to seek creative solutions that allow for the growth of their sales and of the loyalty of their customers.

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.