Survival of the fittest: Competitive pricing for eCommerce sites
The eCommerce Jungle
The competitive world of eCommerce remains a staunch reality for online retailers. When you consider the growth rate of emerging markets, it’s not difficult to understand just how much global competition there is for the fickle and price-conscious online customer. Thanks to price comparison engines and other price aggregators, today’s consumers have access to international options, which means online retailers across the globe must fight tooth and nail to be the ones to satisfy their demand.
Pricing in eCommerce competition
With easy access to what feels like an infinite amount of eCommerce sites offering a variety in pricing, online shoppers are able to track down the best deals on a global scale. Finding the best value for any item is just a matter of perseverance and a few simple clicks.
How can retailers handle such far-reaching price awareness?
The natural response of eCommerce retailers is to position themselves with taglines such as ‘best price’ or ‘best value’. In a digital and dynamic market, however, delivering on the ‘best price’ requires ongoing re-evaluation of your offering and a continuous flow of competitor data.
The value of competitive intelligence is so apparent in eCommerce that every company develops their own ways of acquiring it. Whether assigning employees the tedious task of gathering manual data or employing more advanced and efficient methods, there is no shortage of practices available to those seeking to get a leg up on the competition.
Tapping into this need, a new breed of business intelligence tools that offer automated competitor price tracking have entered the market and are garnering more and more interest. These tools help retailers save time and money on competitive analysis, which explains their rapid rise in popularity. Those companies not using them may have already started to feel the fear of missing out.
In order to use any business intelligence tool and yield the most accurate results, the user needs to identify and input a few key pieces of information:
- Who are my competitors?
- What are my most important products?
- What are my most competitively priced products?
In some cases, eCommerce companies know their major competitors (and a quick Google search will list them on the first two pages), but identifying each and every online store selling similar products is difficult. Running an analysis on consumer-facing price comparison engines like Google Shopping can find the online stores with whom competition is more direct for particular SKUs.
The next step involves comparing the Alexa or SimilarWeb rankings of those competitors. This information will not only give you an idea of their effectiveness in the market, but may even offer an idea of their eCommerce revenue performance.
Following the competitor selection process, you should identify which of your products are most competitive and price-elastic in the market. Retailers must benchmark their product assortment against the competition through a prioritization process. By filtering the top 1000 or 5000 SKUs with the highest sales volumes, retailers can drill down to their top products rather than getting lost in a portfolio of thousands of SKUs.
The next thing the automation platform requires is a list of product links. With these links, the system will find pricing and stock availability information of the item in question. Adding links is a one-off bulk operation to be repeated only when new SKUs are introduced into the competitive portfolio of products.
From here, retailers are ready to move forward with analysis.
Using the system effectively
Inputting all of the URLs into the tool allows the system to automatically gather the latest data from the online stores that have been identified as competitors. This dramatically speeds up the process of gathering competitor information and allows for faster and more in-depth analysis based on reports generated by the tool. The effectiveness of this automated process l depends on the following elements:
- Frequency of website updates
- Market coverage
- Big picture reporting
- Further integrations
How retailers use these features will affect how much value they are able to derive from the system.
Deriving actionable insights
To truly be effective, a business intelligence tool must be able to provide its user with actionable results and insights by instantly reporting competitors’ price changes. Things change quickly online — about 2% of online prices are altered on a daily basis. Retailers can set up alerts within their tools to notify them of changes to products within different brands and categories on competitor sites. Historical pricing trends are also tracked and can then be broken down at category or brand level, demonstrating how different retailers have been performing relative to various product groups and KPIs can be built out for the future.
For those organizations looking for more, a tool offering automated feeds and APIs, which can be very simply integrated with any solution that the eCommerce company likes, are key!
Considering the number of retailers already using such automation software within their companies, there is little doubt that much can be gained from access to this kind of information. For a retailer looking to expand, automation is a must. Many cloud-based automation tools are available for affordable monthly fees sold on the SaaS model rather than as traditional, expensive market research services.
The best way to identify the best business intelligence tools for your business is to test such solutions out. Try prisync for free and see how it can change your business!