Competitive eCommerce pricing is not just price-matching or undercutting competitor prices.
By using the right competitive intelligence technology, eCommerce companies can go way beyond that and competitively price in a more analytical and profitable way. I’ll show you how you can do just that by focusing on some often-neglected business scenarios that occur in eCommerce.
Today, I’m sharing 6 business cases that prove eCommerce companies of all sizes can address and outsmart their competition with competitive pricing tactics. You won’t have to undercut prices and give away profit margins. I’ll teach you how you can act smart and fast by relying on automated competitor price monitoring technologies.
1- Stay competitive while remaining profitable
No eCommerce business company can survive by ignoring costs and focusing solely on their competition. For all eCommerce companies, competitor pricing and product costs are conflicting forces that both impact product prices. Profitability should be a goal for eCommerce companies of all sizes, and to achieve that, eCommerce companies should always keep an eye on their costs. This is especially true when you’re adjusting prices competitively against competitors.
Instead of undercutting the competition’s prices at every chance – no matter the cost – eCommerce companies should analyze their costs to achieve enduring and sustainable competitiveness.
When your prices are uncompetitive compared to the market average, you can fix this not just by lowering the price, but more importantly, trying to figure out ways to cut costs further up the chain. Only once you’ve lowered your own costs should you offer further discounts or lower prices for customers.
2 – Never undervalue your products and actively identify price increase opportunities
Even if you can offer your products at a very competitive price compared to your competitors, your prices might be too competitive.
You low prices will draw shopper attention, which will bring in potential customers. But how low do you go then? If the customer’s deal-breaker was finding the best deal online, why not price your product at the max of the minimums? In other words, consider raising your price until it is almost priced at the second cheapest competitor, yet remains well below that.
In shopping comparison engines, and in the minds of online shoppers, these price increases doesn’t make a difference. However, it will bring increased profit margins that lift up the balance sheet. Best of all, this price increase will not cost your company anything.
3- Study your competitor’s category and brand level pricing strategies
In most cases, eCommerce prices are driven by category or brand level decisions. This may be due to budgeting operations within a company, or supplier deals in place for specific brands etc. When we consider this fact, solely focusing on competitor product price monitoring and micro-managing product prices feel a little dull.
With the right technologies, eCommerce companies can gain brand and category level pricing insights into their competitors. Aggregation is the method to look to here, i.e. grouping products under a certain brand or category together, and calculating their overall price performance for each site. Calculating an index value for the aggregated level (a category or brand) will give you an idea about how a company is performing pricing-wise for that particular brand and category vs. its competitors.
Such analysis may reveal which competitors have significant pricing advantages in which brands/categories, and which are lacking. ECommerce companies can act upon those comparative results and adjust pricing levels based on overall category and brand management strategies.
Want to learn more about competitive pricing tactics? Check out part 2 of this article.
About the AuthorBurc Tanir is an SMB-loving, eCommerce evangelist and the CEO of Prisync.com, the competitor price tracking software, already serving companies from more than 40 countries.
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