Public data suggest that over Thanksgiving weekend, the large internet retailers changed prices more than 2 million times. It’s fairly clear that they did so for reasons related to revenue optimization and competition. But what about the “rest” of retailers… did they change prices, how fast, and how optimally?
Our examination suggests that the science of dynamic pricing—dynamically changing prices to optimize revenue—is a new practice at most retailers and at many it’s not yet in practice at all.
Price competition in retail has always been intense, but it used to take weeks or months to play out. Now changes can happen by the minute. With the growth of online and mobile phone-based shopping, fast-changing prices create real-time sales implications that many retailers aren’t equipped to manage.
In the wild world of travel, millions of prices are in flux each minute and technologies have long been established to extract every marginal revenue dollar from the system. But in the retail world, we still live in an environment where prices are often set for a season, and coupons or some similar sales-period-based merchandising program are how price stimulation or competition is managed. Even the stalwart price sticker represents a limitation to effective management today.
Where do we go from here?
I think it’s clear we’re witnessing the rise of the always-connected, price-conscious consumer as a permanent and growing segment. But the mobile devices and back-end technologies that allow these consumers to search for the best deals anytime and anywhere also make it easier than ever for merchants to target them, match prices if necessary… and importantly, monetize.
Here are 5 ways merchants can maintain profitable relationships with price-conscious shoppers:
- Implement a smart approach to dynamic pricing: A smart approach to dynamic pricing is one that’s driven by strategy, governed by algorithms, and as close to real-time as you can get. The Wize Commerce price and search APIs that support our Shopping Network and Silhouettes allow merchants to do just that, by aligning specific search terms to specific products and current prices across a wide variety of competitors.
- Make comparison shopping work for you in-store: Our in-store optimization service, now in prototype, allows merchants to offer real-time mobile price matching guarantees and upsells to targeted shoppers currently in your store. By integrating POS, Web, and existing loyalty programs, merchants can create more personalized relationships and increase shopping cart size, while ensuring that the right percentage of sales and customers stay margin-positive.
- Optimize your online channels: Make sure your online presences offers broad product assortment, easy and clear access to product information, expansive marketing customization, and expedited delivery. Optimize (in other words: redesign) your online experience for mobile and tablet.
- Provide unique value in-store: Head towards unbundling the services in your store so that your in-store and online experiences fully complement each other. Innovate with new touch points to create new customer benefits. Empower your associates with information and the best mobile devices. At every touch point, acknowledge the online shopper in your store. If an in-store function isn’t equal to or better than its online equivalent, change or get rid of it.
- Create new channels specifically targeted at price-sensitive shoppers: Our new site Price Machine is an example of this strategy—giving merchant customers already using our Shopping Network the ability to add an online channel for price-conscious shoppers without undercutting their current channel strategies or performance.
Contact us to learn more about how our price optimization services can help your business thrive.