Yesterday we took a look at how pricing intelligence adoption by retailers is on the rise. We know that competitive monitoring can play a crucial role in refining your business strategy, and can be a significant advantage in the market. The more insight you have on what your competitors are doing, the better you can make adjustments to optimize your own strategy and compete intelligently.
What’s Driving the Need for Price Intelligence?
Business Intelligence (BI) is about the skills, processes, technologies, applications, and processes used to support decision making. In a nutshell, these systems are designed to gather raw data, analyze it, and provide historical and current information to help predict and inform future business operations. It’s not a new concept.
Pricing Intelligence in particular has become important due to the changing retail landscape. Prices change every day – sometimes every hour. In order to stay competitive, online businesses have found it increasingly necessary to track prices on a daily basis. Retail in particular has experienced significant growth in this area. Part of the push is Amazon – we know how much they love data, and their success means other retailers often (try to) follow their lead. Another part of the push is changing consumer behavior – consumers are dynamic themselves and shop around. If you’re not responding, then you could lose them to competitors who do.
To summarize, real-time pricing data is needed now more than ever due to:
- Competition – Increasing competition means a more saturated market. Tracking and analyzing your competitors is difficult to scale up if you’re doing it manually.
- Consumers – Customers are savvy and use price comparison tools with ease. If your consumers are tracking pricing, so should you.
- Impact on strategy – The retail environment is changing all the time and fixed pricing simply doesn’t help maximize profits when your competitors are changing prices frequently.
What is Dynamic Pricing?
Dynamic pricing utilizes market data (both performance and competitor based) to adjust prices on the fly, which makes it more important than ever to see what your competitors are doing and make the appropriate adjustments. It enables retailers to capture the most revenue for their products by optimizing based on real time inputs. Retailers using Wiser’s pricing solutions reported an average of 22% increase in sales revenue and 8% increase in bottom line profit. With fixed pricing, you could be missing out on potential sales/profit and leaving money on the table. While dynamic pricing is not a magic bullet, it’s a critical component to consider incorporating into your pricing strategy.
How Can I Implement It?
The old way of doing this was to identify competitors and get pricing and competitive data manually. However, the obvious problem with this method is that manual analysis is time consuming and difficult to scale. The solution is to automate dynamic pricing based on advanced repricing rules. Repricing tools such as WisePricer can help you stay competitive by essentially acting as your own merchandising assistant.
What to Look for in a Retail Pricing Intelligence Tool
Not all solutions are alike. There is a growing number of price monitoring tools on the market that collect data, but raw data is not enough. After all, it’s the analysis, reporting, and repricing that’s the hard part.
Ideally, you want to invest in a true pricing platform:
- Managed Service – If it’s your first time implementing a dynamic pricing strategy, you’ll want personalized attention from a pricing expert
- Assortment – Pricing and Merchandising go hand-in-hand. Insights on pricing and inventory
- Speed/Frequency – Check to see how often your service provider is updating price points and how fast the pricing engine is
- Advanced Repricing Rules – Solutions with a built in repricing engine means you can set complex rules and customize for specific products or categories of products. The most robust tools allow you to optimize profits by setting multi-dimensional dynamic pricing rules: reprice based on a combination of data including competition, inventory, sales velocity, time of day, site traffic, and more
- Automation – The human element is still important in setting rules and overall strategies, but you should be able to choose the level of automation you want in repricing your products
- Analytics & Reporting – Real-time analytics that are built in to the system make it easy to see the results and justify any revenue impact