Guide to Omnichannel Pricing
In the current retail landscape you have to admit that omnichannel retailers typically have a leg-up, compared to their single channel competitors. But one aspect of this unified retail experience that gets tricky is omnichannel pricing. Depending on the specific retailer, price parity or channel-based pricing may be most effective.
Shoppers have more information than ever at their fingertips. They can do all the price and product research on their own or even have a comparison engine do the work for them. Regardless, they are hyper-informed and quick to pick out any discrepancies that could lead them to choose a competitor over you. To clear up this confusion, we’ve written the guide to omnichannel pricing to help large scale retailers improve their pricing, all while providing a more cohesive customer experience.
Omnichannel Pricing Depends on the Selling Channel
The best way forward when determining optimal pricing is to take inventory of your selling channels and their respective guidelines. If you sell on Amazon, for example, they mandate that your Amazon list prices must be on-par or below the prices you post elsewhere. There are three ways to approach omnichannel pricing: a uniform pricing approach, channel-specific pricing, and hybrid pricing that varies along the spectrum.
Optimizing pricing across channels is always a worthwhile endeavor, but it must also sync up with your strategy to boost customer satisfaction. There’s a fine line between personalized and channel-specific promotions helping and hurting your brand image. The only way to find out how to stay on the right side of it is with thoughtful price and promotions tests.
How to Get Omnichannel Pricing Right
One way to conduct these tests and keep your omnichannel pricing in check is with a pricing solution. This software allows for intelligent price testing within reasonable boundaries and with data that you can easily analyze along the way. You can then draw actionable insights from that data in order to put your findings to use in your omnichannel pricing strategy.
If your aim is to stay competitive on overlapping products with competitors, you don’t want to end up behind the pack because pricing trends changed and you had to waste time scrambling to update pricing across your many selling channels. Keeping up with competitors helps you avoid falling into omnichannel pricing pitfalls.
Any international retailer knows that regional differences should always be factored into prices. Winter in Canada is summer in Australia, so heavily discounting swimsuits across channels will kill margins. Omnichannel pricing must take into consideration season, inventory levels, demand, and many more variables. Either you can have an internal team manage this scientific process or you can let a third party repricer handle the process seamlessly.
Uniform pricing often goes hand-in-hand with omnichannel strategies. Providing one price solidifies the unified experience retailers aim to provide for their customers. If a shopper wants your product, where they buy it isn’t nearly as important as their satisfaction with the path to purchase and the quality of the item. Ultimately, the omnichannel pricing strategy that is right for you is the one that upholds your brand value and increases your bottom line.
Omnichannel Pricing for Brands vs. Retailers
Omnichannel pricing is most complex when it comes to brands that also sell direct to consumer. A uniform pricing strategy nearly goes out the door when it comes to distributors. Minimum advertised price violations are rampant and keeping up with reseller pricing manually is next to impossible. To make matters worse, your distributors may have site-wide buy one, get one free sales or other promotions that impact the final price of your products. Keeping your products from being offered at unthinkably low prices is required to uphold your brand value. When it comes to the advertised price of your products, you can always automatically monitor those prices with minimum advertised price compliance software.
For retailers and especially brands, channel-specific pricing is difficult when consumers notice discrepancies. For example, last year I was interested in buying a sparkling water machine. I jumped the gun and bought one while at a Target and after I registered it on the brand’s direct to consumer website. I was a bit disgruntled when I was met with a sizable discount offer on the brand’s homepage. Despite my negative experience of channel-specific pricing, brands that incentivize shoppers to buy directly from their webstore, instead of a third-party channel, can bring in more revenue.
Similarly, retailers that sell on several channels may want to steer shoppers towards their own webstore since they can collect email addresses for future marketing campaigns. The key is to utilize targeted promotions via homepage, email, or social media to encourage shoppers to buy from your most profitable channel. Utilizing these channel specific strategies can help drive consumers through your optimal buying funnel, but should fit within your brand strategy and abide by rules put forth by marketplaces you sell on.
The Time is Now for Omnichannel
Your price is just one factor that encourages shoppers to check out. Any other added value should also be factored into the equation. Your free gifts, shipping policies, and rewards programs also need to be taken into account when determining the best omnichannel pricing.
Accenture Interactive found that, “Many retailers have reached a false state of omni-channel comfort. With many retailers having invested in some level of omni-channel capabilities, it may seem they are far along in their omni-channel initiatives. Yet customer expectations are constantly increasing.”
It’s time to accelerate omnichannel strategies to ensure that retailers and brands don’t fall behind in the market. After all, 62 percent of shoppers now expect omnichannel capabilities from retailers. And a large part of keeping customer satisfaction high is having pricing that your target market finds reasonable based on the quality of your products.
Pricing optimization is never over. It’s an on-going process, especially when it comes to omnichannel. Feeling comfortable about your omnichannel pricing strategy either means you’ve put a pricing solution (third party or homegrown) into place that will enable your pricing to change as needed or you’re not taking the fast moving nature of the industry into account.
Need better data to inform your decisions? Whether in-store or online, Wiser has you covered from pricing to assortment to promotions. Schedule a meeting today to learn how to turn retail data into action.