Editor´s note: This is a guest post by Burc, the CEO at Prisync.com, the competitor price tracking software for e-commerce companies of all sizes from all around the world.
Have you ever compared the customer journey in online vs. offline stores? In an offline store, a customer faces with a bunch of buying stimulant. Every corner of a brick & mortar store is designed to activate shopper’s purchase intentions. The most obvious act is; you can touch, try and feel the product. Eventually, you start feeling of acquiring it whatever it takes. Besides of that, the product placement, smell of store, music, decoration… all these external factors put you in a magical environment. After all these arousals affect, your sensitivity towards high prices becomes more fragile. So, we can say, all these marketing tricks applied in an offline store have somehow identical importance. Find out in this article, what you can learn about pricing from offline stores and how you can adapt it to your online shop.
Pricing matters a lot in e-commerce environment
Is this situation same in online stores? Should e-commerce founders / managers approach with the same manner? If they expect to get same outcomes from online stores, we can definitely say they are in huge delusion. The dynamics of an online world is completely different. The tricks that mentioned above have no importance as we can’t touch, try and feel the in-store atmosphere. The sole engagement point is your screens.
Differently from an offline store, prices are the first thing that an online shopper directly detects. Think about a product page. Prices are placed just next to the product image with red and bold fonts and considered as the major decisive factor of purchasing.
Let’s enrich this statement with some significant findings;
- Price comparison engines play a vital role for eCommerce companies. %20 of website traffic come from these sites. Moreover, a regular online shopper can find more than 50 deals from price comparison engines just in a few minutes.
- Almost every online shopper (more than 9 out of 10) crawl the online shops to find the best prices.
- %60 of consumers stated that prices are their major factor that defines purchasing decisions.
- %47 of consumers prefer discounted prices.
This is why pricing is making a huge difference in the competitive e-commerce industry and should be in prioritized issues. Not only prices attract new customers, it also improves your KPIs such as website visitors, conversion rates, profit margin and market share. As all these KPIs matters a lot for your business, pricing should be placed at the core of your strategy. If you target to dominate the market, then lowering your prices can be a good start. Offering discounts or special offers can increase your online store’s conversion rates.
Are you running a prime luxury brand? Then set your prices at a high level in order to strengthen your brand position and gain loyal customers. No matter which industry you are existing in, you must have a pricing strategy that supports your objectives.
The way to use pricing as a competitive advantage
But, how would you use pricing as a competitive advantage and to outcompete your rivals? When we are talking about the pricing in highly dynamic eCommerce environment, you need to track your competitors’ prices and monitor the market. The consumers’ behavior towards online prices and easy-to-reach product information are now a fact understood by almost every eCommerce companies. As a result, we can clearly say, there is a harsh competition in the online world. Applying competitive intelligence doesn’t just let you change the prices, it is also vital to see the big picture of the market in terms of pricing and its fluctuation.
Competitor price tracking softwares are extremely useful to build a fine-tuned monitoring system. Assuming you have minimum ten competitors selling more than hundreds of products. Can you imagine how many work hours you need to do this research manually? These repetitive efforts can be eliminated by acquiring competitive price tracking softwares, so you can enhance your productivity while getting automated actionable insights. Then, as an eCommerce manager, you can focus more on analysis and growth of your business.
Keep in mind! Your job does not end when you start getting intelligence from your competitor. Monitoring your competitors’ prices and responding to dynamic market by cutting or increasing prices are important but not the finalization of your pricing strategy.
You should also add these variables to your price;
- Your cost
- Expected profit margin
- Market demand
- Product & brand value
- Competitor prices
By knowing and getting all these information, you can put your products in different customer segments to have better conversion rates. Moreover, you can gain a great flexibility which will help you to compete better in an e-commerce world.
Pricing strategy and competitive pricing intelligence help you in these areas;
- As you get continuous intelligence from market and competitor ,your marketing activities will perform better. Because you know which prices are leading more conversions.
- Competitor intelligence softwares detect also the stock availability of your competitors. So, you can position your e-commerce store according to stock availability. To be more clear, you can increase your prices when one of your competitor is out of stock and you won’t miss the opportunity of improving your profit margins.
- Your KPIs will be significantly improved.
- You will have an important insight: an indicator of the current demand in the market.
- You will make accurate decisions and forecasts by knowing the historical data of the market. (For example; in your industry, August may be a bad month, so that you can apply some special promotions or discounts to boost your sales.)
Author´s Bio: Burc is the CEO at Prisync.com, the competitor price tracking software for e-commerce companies of all sizes from all around the world.