To stay competitive in eCommerce, many retailers have turned to to frequent price changes. This makes sense, since plenty of major retailers like Amazon and Best Buy change their prices multiple times a day. However, some retailers are still manually reprice themselves. This blog post is here to explain why that isn’t necessarily the best idea.
1. Human error
Let’s face it, no one’s perfect. When you’re scouring the web for different prices, you’re bound to make at least one mistake. Whether it’s writing down the price for the wrong item, or mis-punching a price into your own spreadsheet, the ever-changing nature of the eCommerce industry leaves too much room for human error.
2. Not fast enough
Major retailers reprice their items so frequently that it’s actually impossible for a human to keep up past a certain number of SKUs. Amazon is known to change its prices every 15 minutes, and when you’re constantly observing price changes, you can never know for sure if you just saw the most recent price change, or if it’s going to change shortly thereafter.
3. Too many competitors
Online retail’s barriers to entry are much smaller than you’d think. This means most sellers have to deal with new competitors every week, on top of the hundreds they compete against on a day-to-day basis. There’s simply too much product overlap across retailers to keep track of every single one of them.
4. Too random
The frequency of price changes for most retailers is undisclosed. So, it goes back to the question: is this the most recent price? Or is it going to change in two hours and thirty seven minutes? Unless you’ve discovered patterns, it’s impossible to know.
5. It’s tedious
Scanning the web for prices is about as much fun as it sounds. Imagine looking for prices for the exact same model of laptop across twenty retailers every day. You need to make sure the UPCs match, and you’ll need to update your price to be competitive and profitable. Measuring competitor prices against your own desired margins and costs leaves room for error, as well.
6. Not enough price changes in a day
If you did want to hypothetically change your price as frequently as a large retailer, that would leave you to refreshing a product page every ten minutes or so to look for changes in their prices. Not only is this tedious, but it also detracts from searching for other competitors’ products. You can’t frequently change your prices and collect all competitor data in a single day.
7. Too many products
Unless you really specialize in selling to a niche market, odds are you have a lot of product overlap between you and your competitors.This means you can divide the time to search for certain products in half, leaving some to be changed the next day. However, determining which products’ prices should change is a whole other process.
8. Can’t consider internal and external metrics
Changing your prices according to your competitors’ is effective, but what about using internal metrics? Changing prices based on conversion rates and website traffic is another way retailers can test their pricing strategies to find one that fits them the best. Doing this manually, as well as comparing the prices to competitors, is an astonishing feat.
9. Not enough hours in a day
With a high number of competitors and a high volume of products, the task of changing your own prices takes a lot of time. Price changes are not simply 9-5, they often go into the night to match slowed down demand. This would mean you’d have workers around the clock constantly checking for price changes.
10. Manual labor costs more than automated
If you add up the salaries of a team of pricing strategists, the monthly costs would be monstrous compared to an automated solution. Instead of hiring four people to manually check prices, consider using SaaS to do the hard work for them. It will remove human error, and will save (and make) you money in the long run.
Having an automated solution to keep your prices competitive will ultimately benefit your business. From searching the web for exact product matches to changing prices in a matter of seconds, automated solutions are simply the best way to keep your prices competitive in 2015. Not only that, but automated solutions can help you perfect your pricing strategy in the long run. Instead of short-term solutions with manual price changes, look into automated pricing software to stay competitive in today’s eCommerce landscape.