The speed of change in technology and business is rapidly increasing. Those who are unable to ride the waves of change risk falling far behind their competitors. E-Commerce businesses are always seeing new trends come and go as the online retail landscape continues to shift. Some of these trends are short-lived, while others permanently affect how you should be doing business.
Pricing Optimization Strategies Predict Trends
Dynamic pricing and price optimization are at the core of essential and long term trends.
They consist of pricing strategies that a company uses to take advantage of what consumers are willing to spend, when they spend the most, and their usual buying habits. These methods address a wide range of variables such as historical patterns and the supply/demand of products of the same type.
This creates a much more versatile and efficient method of maximizing profit than simply judging and repricing product based on its past success. We are simply overloaded in data about consumers and their buying habits. The level of detail in these data readouts can be overwhelming. That is why businesses have turned to advanced algorithms capable of making sense of all this information and distilling it into actionable pricing tactics.
Don’t Shoot Blanks Anymore With Proper Pricing Optimization
I like to make an analogy between pricing and target shooting. Back in the day, shooters would use what they called “Kentucky Windage”. If they saw that for some reason their shots were going to high or to the right, they would simply aim lower or to the left and hope for the best.
No shooter today would expect to be able to compete by simply eyeballing it and hoping anymore. The same goes for pricing. According to this Forbes’ article, companies like Amazon adjust the prices of their products dozens of times a day to maximize product competitiveness.
According to UpstreamCommerce, businesses can expect a 10-45% increase in gross profit from utilizing Dynamic Pricing and Price Optimization software.
Airlines That Didn’t Optimize Are No Longer With Us
Most large ecommerce companies have already adapted automated retail pricing optimization software, such as UpstreamCommerce’s, into their business model. The biggest stores were using rudimentary versions of these strategies decades ago. Now that this software has entered the wider world of online retail, you can look at examples of what happened in other industries.
Airlines are some of the most well-known utilizers of pricing optimization. They look at the date of departure, the date of purchase, the time left until the flight, your buying locations, your affluence level, and any other info they can get their hands on. This is why the prices of airline tickets can fluctuate dramatically depending on when you buy it, where you buy it from, and even what type of computer you are on (really) when you do.
They all do this. The airlines that failed to make the change when their competitors did are no longer with us. The same will likely happen to online retail. If you fail to keep pace, there is no guarantee you will be around for much longer.
Stay Relevant & Stay Competitive
Most online retailers know they have to fight for every inch of territory when it comes to brand awareness. These days, to increase and enhance brand awareness among your target audience you need to be able to control your online presence, and online presence means content. There are many shapes and forms to current content and the crux of it lies in distribution. If you are not sure what is digital content distribution, check this eTraffic article.
The other not-so-secret weapon in this fight is being able to effectively price your goods either lower or on par with your competitors.
To maintain a profit while pushing this competitive edge, you need to know when demand has risen or consumers are willing to pay more. Utilizing the correct software will help you maintain profits while securing your role as an aggressive price maker. Competitive prices will help you attract customers, and can quickly build loyalty around your brand.
Looking into pricing optimization software that can help your business keep up with the top competitors, and outpace the ones who are slower to adapt. The increase in profits will quickly payback for the software entrance price, and the boost your brand will get is an investment in the future viability of your company.