Anyone who ever shopped online is well aware of the immense advantage big box retailers have over small ones. And this is hardly news; it’s been this way for a decade or so. Breaking down the advantage, it’s half technological – the ability to optimise their pricing strategy relying on available software and services – and the other half is their undisputed ability to control the online space as far as brand awareness and presence.
In this post we’ll focus on the first half. If you’re looking to better understand your ability to control your brand positioning online, read on.
As technology becomes more affordable and much more accessible to less tech-savvy persons, more businesses – smaller businesses – are able to compete and put up a fight against the mega retailers. This becomes a double-edged sword for many companies. Price optimisation, or dynamic pricing, has become the name of the game for online retailers, and although more small stores are now able to compete with these price-setting advantages, going without may soon become a death sentence.
We are going to cover what price optimisation is, and what to look for in such software. You will soon see that your future as an online retailer may depend on what route you choose to take. You can also check this Huffington Post article about the future of online shopping.
Understanding Dynamic Pricing
Dynamic pricing isn’t necessarily new, but the technology allowing small businesses to do apply it for low costs definitely is. Before it was only airlines and big box stores that could openly get away with differentiating prices based on locality and demand. Now it’s an utmost necessity. Available software not only peers into your industry’s current buying practices, but compares it to seasonal averages and various other factors.
A quick summary. Dynamic pricing looks at long term trends, immediate factors, competitors actions, as well as likely scenarios in order to give you the most competitive price for every one of your products. This helps you keep prices high for products that are in demand, and being competitive when demand decreases. When you understand pricing optimisation software is the only choice for legitimate competition, the next question becomes what to look for.
What Dynamic Pricing Software Can Do
Dynamic pricing software takes the big picture into account. Industry trends, and seasonal trends going back years, as well as recent fluctuations, are all factored in. It may seem obvious, but even a slight bit of oversight can send the numbers spinning way off. You have to make sure your software has been verified by industry standards. Any legitimate dynamic pricing software can usually guarantee 10-45% increases in gross profit. That’s how effective the real ones actually are.
As an example, we can take UpstreamCommerce’ leading software for price monitoring, used by such mega retailers as ToysRus, Lowe’s and Petco.
Features To Look For In Dynamic Pricing Software
– The first, and arguably most important, is that it takes into account your main competitors and their listed prices. Though this should go without saying, ensuring you are competitive with your main competition is your main concern.
– Instant, or near instant repricing, If you can’t stay up to date, then you are already falling behind. Daily pricing changes is what you’re looking for.
– Predictive results. Staying up to date is good, but beating competitor prices when possible is infinitely better. The best software is predictive and will be able to give you optimum prices well in advance.
– Manual overrides and input. Computers aren’t always perfect. You want a system that lets you put in custom parameters for unique situations.
– Actionable Insights. Prices matter, but understanding who’s buying and why, can go even farther. Find software that gives you an insight into your customer and allows you to expand your offerings.
– Implementation guides. The best software will let you know how to take action, either via the software or their supporting teams. Find a program that help you make the best of any situation.
There is no one-size-fits-all solution, but you should ensure you invest in a product that takes your needs into account. Dynamic pricing is the future, and you need to board that train, just ensure it’s the bullet.