In the booming e-commerce era, price intelligence has become crucial for businesses to succeed. So why does it matter for your e-business, and how can you implement it successfully? Let’s take a look.
What is price intelligence?
Price intelligence is a process for tracking, monitoring, and analyzing competitor pricing and market trends to make well-informed pricing decisions.
Why is price intelligence important for e-commerce?
According to Shopify’s Future of Commerce Report 2022, price is a crucial factor influencing 74% of consumers. On average, a potential customer will visit at least three different websites before making their purchase. This explains why e-commerce giants like Amazon change prices around 10-12 times daily. That is why many companies, especially e-retailers, rely on price intelligence for their pricing decisions to stay competitive in the marketplace.
What are the benefits of price intelligence for e-commerce?
Setting up a price intelligence system has many benefits. Let us introduce a few of those below.
With an active price intelligence system, you can track your competitor’s price changes and create better pricing strategies to attract customers. By making them more appealing, your offers will rank at the top on the “Comparison shopping engines,” which are websites that consumers use to find multiple retailers offering the product they are searching for. Google Shopping, Pricegrabber, and Shopping.com are examples of such websites. A good ranking on these websites will significantly increase your visibility, boost your organic website traffic and attract many new customers. Thus, it is a great way to boost sales.
Gone are the days when companies had a plan for all products at a simplified and fixed margin target. No matter how extensive your product portfolio is or how often your competitors revise their pricing, a powerful price intelligence software is a game changer. It enables you to monitor competitive prices across all relevant SKUs in real-time and vary your offers to obtain the maximum margins.
Target many different customer segments
A price intelligence tool tells you the maximum price customers are willing to pay for your products and the median point where most competitors price it. By combining price intelligence knowledge with a dynamic pricing strategy, you can target many customer segments with different optimal price points.
Get rid of old stock at a low cost
Every product has a trend and an expiration date. Once the trend slows down, customers are not interested in buying the products. Price intelligence tools help you identify these trends early on, allowing you to apply attractive discounts to maximize sales before it is too late. This way, you can get rid of the old stock at a low cost rather than throw away the entire product stock.
How can businesses implement price intelligence effectively for long-term growth?
What should be asked is, “How can businesses implement price intelligence effectively to gain long-term growth instead of entering a price war.” Following our three-step guide will help you achieve that goal effortlessly.
Step 1: Choose a good price intelligence tool
Keeping track of competitors’ pricing can be time-consuming and inaccurate with the traditional price intelligence methods, such as manually filling information on excel sheets. These shortcomings can be fixed using modern price intelligence solutions that utilize AI-based technology. With the Sniffie tool, you can update real-time competitor product pricing data with a 99,9% accuracy. This information can be used to offer attractive deals to customers. By leaving the tedious task of price intelligence to the software, you gain more time to focus on your business growth.
Step 2: Develop a dynamic pricing strategy
In the e-commerce world, the pricing of competitive products changes in the blink of an eye. Many pricing strategies are at your disposal, such as cost-plus pricing, value-based pricing, economy pricing, etc. However, choosing dynamic pricing strategies enables you to react accurately to demand and generate better profits automatically through different product pricing workflows. As a result, staying competitive and profitable 24/7 will no longer be just a wish.
Step 3: Monitor the results and make adjustments
No pricing strategy works forever. The market conditions and consumption trends keep changing every day. Therefore, after setting up an automated dynamic pricing system for your store, you should keep an eye on monitoring and evaluating the sales. If you do not see the desired results in the long term, you should check the report and suggestions from the price monitoring company to revise your pricing strategies accordingly.
In short, price intelligence is indispensable for businesses to survive in the fierce e-commerce environment. However, doing price intelligence alone can’t bring success to your business. Combining price intelligence data with proper pricing strategies helps grow your business in the long run. Sniffie’s AI-powered price optimization tool helps e-commerce and retail companies increase their profit margins by 5% during the first 90 days of use and on average 10% more than the traditional methods of calculating price elasticity. Want to see how it works? Book a demo with us here.