How can you keep your eCommerce site competitive? The answer for retailers today is with frequent price changes, also known as repricing. This makes sense—plenty of the biggest retailers, like Amazon and Best Buy, change their prices multiple times a day (or even multiple times a minute).
However, the smaller to mid-sized retailers are often still repricing manually. This puts them at a competitive disadvantage to the major players. Here’s why manual repricing isn’t always worth the time or effort.
No. 1: Human Error
Let’s face it, nobody’s perfect. When you’re manually repricing, you’re scouring the web for different prices. You’re updating spreadsheets and logging into your platform to update the price. This increases the odds that you’ll make a mistake, such as writing down the price for the wrong item or mis-entering the new price into your sheet. The fast-paced nature of eCommerce leaves too much room for human error.
No. 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. Trying to keep up manually is just not possible, so the best case when manually repricing is that you’re always slightly behind.
No 3: Too Many Competitors
There’s not a major barrier to entry into eCommerce retail. It’s fairly straightforward to set up a seller account or add a webstore to your site. As a result, this means that most retailers have to deal with new competitors every week, on top of the hundreds they already compete against on a daily basis. There’s simply too much product overlap across sellers to keep track of everyone manually.
No 4: Too Random
It’s hard to find a retailer who will share their pricing strategies. Therefore, the frequency of their price changes is usually undisclosed, and you’re left to make educated guesses based on what’s public knowledge. So, it goes back to the question of whether the price you see on their store is the most recent price? Or is it going to change in two hours? It’s really hard to be confident in this when pricing manually, and it’s better to trust a tool to monitor competitor price changes to identify patterns.
No 5: It’s Tedious
Scanning the web for prices is about as much fun as it sounds, even for pricing analysts. Imagine looking for prices for the exact same model of laptop across 20 retailers every day. You need to make sure the UPCs match, and you’ll need to update your pricing strategy to be competitive and profitable after you capture this data. Measuring competitor prices against your own desired margins and costs leaves room for error, as well. All in all, it’s a tedious process that can be simplified with technology.
Instead of short-term solutions with manual price changes, look into automated pricing software to stay competitive in today’s eCommerce landscape.
No 6: Too Many Products
How many products are too many to manually scour the web for pricing, then update your own SKUs? 10? 20? It doesn’t take a massive catalog before it’s just too much, even if you specialize in selling to a niche market. When doing this manually, you may have to set some SKUs aside to reprice tomorrow. That sets you back when your competitors are pricing more frequently.
No 7: Missing Internal and External Metrics
Creating new pricing strategies based on competitor behavior can be effective, but wouldn’t it be nice if you could also use your internal sales data and other metrics? Maybe even conversion rates, website traffic, seasonality, and the like? You can see where we’re going—ingesting all this internal data to build better pricing strategies is really tough when doing it manually, and is another area of pricing that can be automated to make your life a lot easier.
No 8: 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.
Repricing isn’t just finding the right price, it’s about setting the right price at the right time. What if that time isn’t within your typical 9-5 business day? Do you want your team working late nights and early mornings? This brings a whole bunch of HR, culture, and business concerns. There simply aren’t enough hours in a day to be manually repricing around the clock with a smaller, leaner pricing team.
No 9: Manual Labor Costs More Than Tools
The costs would be monstrous if you built out a team of pricing strategists who can work 24/7, track all your competitors, and reprice every one of your SKUs. Instead of doing it all with people, offset some of that with software. This can remove the human error element, help you reprice at off-hours, and save you money (and keep your culture intact).
Implementing 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. 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.
Editor’s Note: This post was originally published in June 2015 and has since been updated and refreshed for readability and accuracy.