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5 online errors in ecommerce stores prices setting

Online retail is going through radical changes associated with active growth of the number of customers coming to offline channels, manufacturability of new players, increasing price transparency and market awareness of customers – all these factors have an enormous pressure on pricing business processes.

Over the past 5 years, the active use of the Internet has led to the fact that the buyer of the product have expanded choices for the optimal price, in his opinion. Distribution price playgrounds made easily accessible information about the price of a particular product, respectively, increased buyer sensitivity to price.

But the methods of calculating the basic prices and the revaluation of most retailers are not so quickly changed – they continue to be guided in their business obsolete knowledge.

According to the data 60% of buyers in 2016 made a purchase at your favorite retailer, because they considered it the optimal price. Looking at the statistics of consumer preferences, we can make a clear conclusion: the price was and still is the main factor that attracts audience.

These companies research say that more than 80% of online shoppers are now reviewing their approaches to pricing, because the old methods no longer work.

If you have not thought about it, here’s the bad news: making ill-conceived strategy of “surgical strikes” on the issue of pricing, the company runs the risk of making a lot of mistakes, which leads to irreversible changes in the perception of the brand, and lost profits.

We want to draw attention to the top-5 of failed decisions that must give pricing specialist.

Unsuccessful solution # 1: Ignore the price sensitivity of its audience in pricing

Buyer intuitively always determines what price he is willing to pay for the goods. For example, the client is ready to buy more expensive goods from well-known brand which he trusts, overpaying up to 2% of the user-defined price. But if the price of the goods interesting already above 5%, the value of the brand is eroded and no purchase will be made in this store. Moreover, the store loses not only the buyer at the moment, but also risks losing its confidence that it will be very difficult (expensive) to return.

The sensitivity threshold also depends on factors such as the elasticity of demand for a particular product, its category, the season, and the audience (consumer segment at a specific point of sales). For online store are also important sources of traffic (direct, organic, referral).

Shops who understand what it is advisable to set the margin to a certain group of products and properly calculate the price sensitivity of its audience in the end turn out to be more competitive in the retail market.

For more information about how to calculate the sensitivity of customers to price the channels to attract, groups of products, brands, visit here .

Price sensitivity is formed depending on the purchasing power of the audience, as well as in the store and for each category it is different, the perception of price is also determined depending on the involvement of channels.

Pricing Policy Store largely determines the price sensitivity of its audience.

If pricing specialist creates price without taking into account the price sensitivity of the core audience of his shop, and a specific category, there are two scenarios:

  1. If the price is higher than the perception of the customer value of the goods, it increases the time to return on investment in the commodity price store image falls.
  2. If the price is lower than the perception of the customer value of the product, sales are going well, but the company does in fact financially unprofitable deal, missed an opportunity to profit. It is also important that blurred the store brand value in the eyes of customers, since the longer the shop sells products with low prices without a strategy, the harder it is to return the premium.

The Company may decide to set prices for some goods below cost for a certain period. This solution takes only a Category Manager in the strategic interests of the company and only in relation to key products – “fishers of buyers.” However, to determine the successful store is always necessary to consider only two important variables: growth in sales and profit.

Unsuccessful solution # 2: Keep the price at the same level for a long time

Many companies mistakenly believe that the use of dynamic pricing will lead to customer dissatisfaction, so keep prices at the same level. Yes, indeed, a regular customer who makes a purchase only in your online store can now find items for one price, and already see another tomorrow. What outputs are companies that think strategically? They teach their customers and sales managers to the dynamic changes in prices.

How? With the use of dynamic pricing can increase the conversion of site thanks to the game components: the buyer is looking for the most advantageous offer, knowing that the price may change at any time. This encourages visitors to quickly make a purchase. Also help solve the problem of improving the service – systematic notification of customers about the money saving offers that appear after the price change.

It is also important to take into account the fact that 8 out of 10 customers from the core audience online stores often compared to the price of the goods interesting even with at least one store. Amazon Company reassesses the products by categories every 15 minutes. Large stores with a wide range need to react quickly to changes in competitors’ prices when pricing their own product categories in order to remain competitive. For niche goods stores revaluation speed often is even more important, since they are involved in a fierce price war.

pricing manager must accept the fact that in a volatile market, high competition, the proposed value of goods or services is changing, so hold the same level of prices for a long time leads to a situation when you have to sell stagnant for goods at prices warehouses, which do not give profit store.

Unsuccessful solution # 3: Apply discounts to attract buyers

Discounts are one of the most popular marketing methods among retailers. However, many stores often use discounts to somehow fill the gaps in the Privacy Policy.

On the part of the buyer’s offer discounts looks both attractive and repulsive. Problems arise from the misuse of discounts and customers, who are willing to part with money easily, and with customers, which is of fundamental importance for the low price.

Quality customer understand that the discount – it’s the easiest way to cater to their interests. For shopping, instead of improving service and take to win by careful attention to the needs of customers, offering discounts, selling at the expense of their profits.

The rest of the customers quickly becomes accustomed to low prices, as discounts form the buyer understated price expectations, which will be very difficult to overcome. You should always remember that the audience “discount hunters” worse responds to your other marketing campaigns and almost does not make spontaneous purchases.

Market leaders are trying to get rid of such an audience, to teach customers to make repeat purchases, promotions and discounts is formed only with the guarantee of the customer in the long term.

Unsuccessful solution # 4: Produce pricing manual control and without competition

In a highly competitive environment, changes in the price of your no doubt involve the reaction of other players in the market. Successful companies know everything about their competitors and make every step of predicting response.

Thus, these companies are prepared for the consequences, and may avoid price wars, protecting the profitability of the industry. However, in many companies pricing issue is resolved at the meetings of disaster. As a result – a hasty assessment of products or services, irregular reassessment and revision of the price management process. Present at these meetings often are not competent in the matter, and base their assumptions on the random case studies from practice, or what is worse on older competitor’s prices.

Data for the successful pricing are the result of research and measurement behavior of competitors in the market, as well as the calculation of the impact of their pricing policy for your sales. To make such an analysis in manual mode – a laborious and time-consuming process. Manual re-evaluation takes almost all the time, category manager – he cannot respond to the main challenges. In addition, this analyst is rapidly losing its relevance, given the rate of revaluation of the main competitors and the pace of market changes.

Failure decision # 5: Do not optimize the pricing process

Unfortunately, pricing strategy – the most neglected factor from those that significantly affect the company’s profitability.

The issue of quality of pricing in niche stores usually falls on the shoulders of category manager, in larger – it is the competence of pricing manager that is a specialist who has enough knowledge and time effective solutions.

The use of primitive procedures eventually leads to the fact that the store is missing the opportunity to increase turnover. In the best case, the company will keep its position and increase its revenue by expanding the product range. But frequently mentioned solutions adversely affect the gross profit.

In the top of the primitive procedures are such:

  • Pricing in manual mode;
  • definition of competitors on subjective views;
  • Ignoring the market impact of price deviations on the level of sales in the group category, the family goods.

“During our work, I noticed how much the change of pricing processes and presenting them at retail. If before the formation of prices was based on setting 2-3, now online shopping premeasured several times a day, based on the factors of 17-20. The scope of e-commerce is growing rapidly and the competition stream leaders are those who primarily understand what they are doing, they know how to collect and analyze the right information using quality resources.

Remember, the price – what most excites customers and forms the image of the price perception of the store. That is why the optimization of pricing processes can become a competitive advantage of the company that wants to increase profits and to unlock the full business potential in the highly competitive market.


The future of online Shopping in E commerce storefront

Every marketer or pricing manager at least once seriously thought about what would be the online retail in the future. Over the past few years, digital has changed the competition in e-commerce: the competitive advantage depends not so much on the product and the behavior of your competitors in the market, but on the experience that gets your customer together with the purchase. Welcome to the era of “Experience Economy”!

Today, digital – a parallel life of your buyer, its projection in the form of a separate mail accounts in social networks, search history on Google. This means that when deciding on purchasing a digital projection of your potential customer performs multi-channel travel network: compare prices, read reviews, browse ratings. And each of these points of contact affects the reputation of the online store, the perception and, ultimately, on users’ behavior.

At the same time, behavior and desires of customers are constantly changing and, therefore, e-commerce requires new approaches.

We have collected the main buying habits and user behavior characteristics, and compared them with the options of interaction and reactions online stores to help the latter to make a profit no matter what.

Advertising blindness

Consultancy examined the most important criterion of consumer experience “Digital-Aboriginal.” 58% of respondents believe that the key to success – understanding customer needs and offer the relevant experience and comfort in using a customer-oriented strategy. This concept is not new – excellent service consumers are perceived as a matter of course. But what is meant by client orientation? This term includes quality consumer experience that provides store for its audience. Only one store will get re-purchase, customer loyalty and profits that will accompany the buyer during the whole way – by reference to the stage “after purchase”, and back around.


- E-mails showing new products and preferred brands

- Mobile alerts focusing on user preferred products


- Product recommendations based on your search history and purchase history

- Website, advertising in social networks or mobile applications, banners, promote sales of preferred brands or product categories


- Support sales using data for cross- and up-sell

- “Last Chance” time-limited discounts on related products

After the purchase:

- Email-ranking queries on filling, writing a review, or a review for the product

- Follow-up article focused on how to use specific products


Influence the pricing strategy

Anticipate changes in consumer behavior is not easy, but it is fairly easy to predict that the emergence of new devices and applications is expanding the horizons of consumer experience. So any customer of your online store periodically “guests” at least one of your competitors. Loyalty based on the cliché ‘favorite online store “does not work anymore because of newly acquired habits of buyers” to compare and find the best price for the product. “Today, the buyer, while in the offline store can take a photo of the product of interest and looks for his (or analogs thereof) on the network, often – in several online stores at once

Another study PWC found that “60% of online shoppers are choosing your favorite online store because the price is optimal.” This is a big plus for retailers (through the price control marginality online store), because the “optimal” price – does not mean the lowest.

What is the optimal price? It is – in the current buyer’s psychological perception of the boundary between ” inadmissible cheap” and “prohibitively expensive”. Accordingly, pricing manager needs to get into the space between the borders and play simultaneously in two games: to provide high margins for the store in a highly competitive market environment, and earn customer loyalty, given their perception of the current price.


Automate pricing within the customer experience

Pricing online retail is gradually transformed to a format that online platforms such as Facebook Ads Platform – prices based on achieving various marketing purposes. Communication Future between online store and online buyer through price channel resembles the interface in which the buyer can choose all the product configuration or services which it expects to receive, and the online retailer, at the same time to set and achieve their own the KPI, where the price a significant part of the transaction process.

Today, e-commerce is moving toward the future: the most advanced players seek to understand the critical price range for each SKU or product group, and the price varies within the boundaries of the interval. . That is, buying a refrigerator for 21,500 p buyer is willing to pay a premium price of 0.5-1.2% (in other words – p 10000-2000.) But whether work is the same with the phone 6,500? Absolutely not. And if in this simple example is very easy to tell the difference, what to do if the store you need to understand the price range for the product category with hundreds or thousands of products?

The range of acceptable prices (from the point of view of the buyer) somehow built on the main store prices of competitors (in the perception of the buyer to affect the price the store’s reputation). To prepare for the compare prices from buyers, the manager of the online shop should be sufficient to use a simple algorithm:

  1. measure the impact of competitor prices in the sales of the product group’s own stores;
  2. find the critical level of prices at which the buyer refuses to make a purchase;
  3. To remain in the range of the most “optimal” and profitable prices.

Of course to do it manually to put it mildly, problematic – the slightest error in the table and formula … It is better to use one of the existing market of solutions, which provide automation of the process of revaluation of goods in the online store.

We need to choose a product that collects data on prices, the availability of products in stock and advertising campaigns of competitors, and, based on the data collected, to overestimate offers products in your store, according to pre-revaluation rules.

It is an automatic solution, whose actions are governed by the current business strategies can help your online store to provide an entirely new digital-consumer experience. And you, as the manager of the store, will benefit from the ensuing “Customers Era” and will always be one step ahead of the competition thanks to modern technology.

Data Insight: in early 2016 the Indian e-commerce market grew several times faster than in 2015

According to research company Data Insight , the growth of the average daily number of online orders from major Indian electronic stores was 14% at the beginning of 2016 – 30%. This is much better indicators of 2015, when the number of orders for the whole year increased by only 8%.

According to the Insight the Data , in February 2016 the average daily increase in the number of online orders from major Indian Internet stores was 14% compared with February 2015. Of the stores , outside the top 200 , 67% were able to increase their sales , including almost one in four ( 23%) achieved a more than 1.5-fold increase.

Even higher – about 30% – was growth in January 2016 compared with the same period a year earlier. The study’s authors attribute this fact to the fact , that in the past year after a sharp devaluation of the ruble against the dollar buyers no money left , and in shops – products.

Highest Data Insight for data growth rates shown online retailers of children’s products and toys , some players have increased the number of orders 2-4 times a month.

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