Would you like to develop an eCommerce pricing strategy for your online shop that will secure for you a competitive edge? To be successful as an online retailer in eCommerce, you need to differentiate yourself from other market players through effective price setting.
In the first part of our series, we have already offered you some tips in this aim. You have learned how important knowledge about your customer groups is, that you should always keep an eye on your competitors and what you should be aware of when it comes to price setting in eCommerce.
Even if you offer the best and most ingenious products in your shop, you are still guaranteed no success in eCommerce. You will only secure long-term success with an individual and well thought-out pricing strategy.
With countless online shops and the enormous competition in this ever-growing market, online retailers are trying to differentiate themselves from competitors offering cheaper products, limited discounts or free deliveries. It is critical in price competition, however, that you, the online retailer, think outside the box and develop your entirely own eCommerce pricing strategy that suits your products and goals. With our following tips we offer you some suggestions in the strategic development of your price setting.
#Tip 5: Understand your customers’ wishes and tune your product line to your goals!
To be able to offer a diverse product range, you, the retailer, first have to understand the preferences of your customers. Which products are customers currently interested in? Where are the demands right now? In this respect, you should always remain up to date and regularly attend to the current trends in eCommerce. For this purpose, a thorough perusal of the latest sector media should suffice.
But also by using services such as Google Trends or Think with Google, you will be able to check the popularity of products and better identify current trends in your market. A survey from 2011 shows that the most diverse of Google services are in demand by German companies. As expected, the majority (84%) of German companies responding use the search engine of this American corporation. Three-quarters of those surveyed use the Google AdWords advertising system and well over half of the German companies confirmed using the Google Analytics analytical tool (60%). On the other hand, however, use of the Google Trends tool is so far only reported by 18% of German companies.
For a successful online shop, design of the product range is extremely important. This must be adapted to the needs of the customer and is decisive to the company’s success. Think carefully, therefore, about which products make sense for your shop and what your target groups currently prefer. So much is clear, that a lot is not always the best. The customer here has a wide range of different product groups due to a broad product range and can decide, for example, between textiles, jewellry, cosmetics, toys, electrical items and much more besides. At the same time, however, they could feel overwhelmed by the wide variety of products and ultimately cancel their purchase. If the product range of a supplier is too broad, customers are often distrustful of this and consider that shop less trustworthy.
When, for example, you operate as a specialist or niche shop in eCommerce, then extending this to a broader range would make no sense at all. In this case it is more recommended to expand product depth instead. In other words, offer the customer more products within a product group from different brand manufacturers. To state it clearly, in a retail shop for men’s clothing, customers should only find various garments (tuxedos, shirts or trousers), as well as their matching accessories (belts, neckties or bow ties). In such a shop, however, to offer a wide range of different shoes of the most different brands is not advisable.
Clothing itself is a popular sector for online retailers. This is clearly shown in the Sales Forecast for Apparel in eCommerce by Digital Market Outlook. Turnover in this market is expected to reach about 10.14 billion euros in 2018 and by 2021 even expand to 12.91 billion euros. It is therefore all the more important that you prevail against competitors with a well-thought-out assortment policy and thus ensure long-term success.
#Tip 6: Test your eCommerce pricing strategy!
You have invested a lot of time and energy in the development of your pricing strategy and now wish to implement it. Keep in mind here that measuring the performance of your implemented strategy is hugely important. This should be integrated into your strategy development right from the outset.
Test your eCommerce pricing strategy regularly, monitor any changes, and make suitable adjustments that make the most sense for your online shop.
Using analytics tools, you will find out if your current offerings are in demand as expected or which products are less likely to sell. You can determine whether, for example, your “winter sale” has paid off and if planned sales have actually been achieved. Transfer this knowledge to the continuous evolution of your strategy to bring your products to the customer and to stay one step ahead of the competition.
Be brave in the development of your individual eCommerce pricing strategy. Try different strategies out and then compare the results. Also important is to always check your pricing strategy and make any necessary adjustments.
#Tip 7: Employ pricing tools!
The development of a sophisticated eCommerce pricing strategy would be unthinkable today without the use of software. The core components of so-called pricing tools are algorithms that collect and analyse prices within a defined time interval. The cornerstone for working with algorithm-driven tools is valid and flawless data. The higher the available data quality, the more accurately the tool can determine the optimal price for your goods.
To achieve effective price setting, you, the online retailer, need to keep an eye on your competitors. Mirror the current market trends bycontinuously changing your prices and adapting them to the dynamic market. Otherwise you might lose the profit opportunities or even customers.
Also keep in mind that the right price adjustments are only possible with the help of competitor pricing knowledge.
Developing a perfect pricing strategy is a challenging task for online retailers. Because of constantly changing prices, retailers can no longer handle their price management manually. This is exactly where we support you with our reliable, self-learning software solution, the blackbee Retail Intelligence Suite. This provides individual, accurate results regardless of sector, thus offering you an ideal overview of your competitors. Based on these detailed results, you can then respond rapidly to market changes.
Strengthen your position in the highly competitive online market by using our automated software. Test blackbee today!