We all know that succeeding in this new era of digital commerce depends on several factors. One of these factors is to implement the right tools for the job.
Price continues to be a conditioning factor when making any purchase decision, so one of the big challenges facing eCommerce today is to adapt prices at all times to fit what your customers are looking for, this makes a Dynamic Pricing tool vital for online stores.
Dynamic pricing strategies, in addition to being an effective way to keep products competitive in the market, helps us to generate interest in potential customers. This means that in the digital market it is crucial for any online seller to have an effective Dynamic Pricing tool to implement your ideal pricing strategy.
The use of this type of technology can be seen continuously in online giants such as Amazon, they can go on and make price changes of their products hundreds of times a day. The algorithms used by Amazon is a mystery to retailers, who are determined to follow the trends of the same. The price changes made by Amazon mainly affect technological products as this sector is one of the most changeable in terms of prices since the competition is constant. However, Amazon’s price changes occur across all types of products.
What are the advantages of a dynamic pricing strategy?
- It allows you to control, at all times, the profit margin obtained from each individual product, thus managing to maintain competitiveness in the market. Especially useful for businesses with large product assortments.
- Allows you to take advantage of changing market opportunities. If the competition depletes their stock, demand is higher and supply lower, therefore we will be able to set higher prices which will increase our operating profits.
- It allows you to stay competitive, a clear example here is Amazon, which from the outset have used dynamic pricing strategies to their fullest advantage and has been one of the undisputed keys to their success. Currently, it is possible to monitor the prices of this e-Commerce giant, allowing us to develop competitive pricing strategies against this large multinational.
- Allows prices to be controlled at all times, thus avoiding having products with off-market prices that give our customers a misinterpretation of our pricing policy, which then prevents them from being perceived as too expensive or cheap.
What technology allows us to carry out this strategy?
Dynamic pricing strategies require a tool to execute them, a software which is efficient in accumulating and processing data and then executes actions in response to all the variables addressed by the algorithm.
Having software for executing and automating tasks, such as the analysis of customer behaviour and comparing prices with other companies in our sector, allows us to accelerate decision-making and thereby increase profitability.
These tools rely on Big Data to analyse in real time numerous variables that can condition sales. As Minderest’s Dynamic Pricing Tool does, it allows you to determine at any time what is the best price for products and services through the analysis of more than 20 KPIs with a powerful AI model. Every retailer gets the information it needs from its competition and the market, there is also AI has machine learning capability, making it possible for past decisions to be taken into account in the present. In this way, the pricing strategy will be progressively refined as it leads to the growth of the business.
The key is automation
Dynamic pricing is a technique that stems from process automation, although it is an exercise that could be performed manually, the complexity and breadth of factors involved in the tasks make it almost impossible. Imagine for a moment what it would mean to review each product from each of your competitors, one by one, and extract the trend which you should use to govern prices of your online store… something not at all appetising.
The fact that dynamic pricing is ultimately an automatic action, also means considerable savings in human costs and time. All this allows eCommerce Managers and Analysts to focus on higher level tasks, such as studying the data, drawing conclusions from the results and making the best possible decisions for the business.