Flexible Pricing Is The Key To New Year Discount Success
The Black Friday shopping spree, extending into what is now known as Cyber Monday, saw $6.79 million pumped into the retail market and the retailers that won out where the ones that got their pricing strategy right.
Consumers were using mobile devices to shop more than ever before. Sales on mobile devices, including smartphones and tablets, represented a staggering 31 percent of sales on Cyber Monday, according to Adobe Digital Insights. Black Friday made history with mobile revenue breaking the $1 billion mark. Online sales for the same day hit $3.34 billion.
The brands that knew how to entice customers in with the right deals are always the ones who grab the biggest revenue at this time of year — so with the traditional New Year sales kicking off, smart brand managers will be taking note.
Pricing is paramount
Pricing is a bigger issue in U.S. retail than you may think. The problem is it takes too long for many online retailers to react to competitors’ price changes and a variation in consumers’ buying patterns.
We track a large number of brands and we know exactly how long it takes to change pricing on a product, both on and offline. Our insights into the U.S. retail market, based on real-time, comprehensive data feeds, shows that the majority of ecommerce sites are extremely slow at refreshing online prices against the competition.
This is where the likes of big names like Amazon win. The retail giant can update its pricing structures in two minutes, while the average ecommerce site takes approximately 30 days.
Black Friday and Cyber Monday were golden opportunities for retailers in the run up to the holidays. But consumers will shop around for the best deals, and if retailers take a long time to change prices accordingly, they inevitably miss the sale.
It doesn’t matter how fast you can offer a product for sale, or keeping stocking the virtual shelves; if you can’t meet customer expectations on price you are losing the sales race.
Consumers today place real value on product availability and price comparison. They are aware of exactly what is on offer and what the price tag is and they are more than prepared to do their homework. This is why companies like Amazon have invested in technology to become extremely responsive to price fluctuation.
If using technology can make you, as a retailer, competitive and able to draw in consumers faster than anyone else in the market, it will help you meet your sales goals, efficiently and accurately handle your inventory and build up a sustainable portfolio of satisfied customers, while attracting new ones.
As well as using the power of technology to better manage price fluctuations, another bottleneck preventing many retailers from reaching the heights of Amazon is the lack of a proper handle on inventory.
The issue here is that the fashion world hasn’t been serviced well to date by price optimization and retail analytics software. Data analytics is weaker than in other sectors, due often to a lack of standardized product taxonomy for SKUs — making it almost impossible to completely classify and sort items across sizes, colors and design across the fields that customers understand.
Worse, when the same product — say, a red coat — has different product IDs, brands, shades of color, size etc. in the system — or there are retailer-specific Unique Product Codes instead of brand SKU ID, then this becomes even more complicated.
Take the color of the holiday season, red. There are no less than 20 names in supplier systems for variants on red, from wine, claret, scarlet, poppy, crimson, burgundy, rouge, maroon, ruby, to cherry — the list goes on. Your system needs to be granular enough to be able to work with this complexity, but in ways that make it very simple to manipulate the data to get the results you want.
To sum up, commerce sites need a sharper way of understanding their data if they are going to work at the pricing change speeds consumers are demanding. A final obstacle to retail agility is the lack of a single view of inventory so that they can make pricing decisions based on real-time data analysis.
This is especially true if we are serious about delivering omnichannel, as a single view of inventory is also essential if retailers are to serve the same customer across a variety of channels, giving them the same consistency of choice and pricing structure.
Avoiding the price war net
No retailer wants to get caught up in an online price war. This is where the value of data and a price optimization strategy comes in. You can test the elasticity of pricing on products as you launch them into the marketplace, so you understand your pricing power and how much you can manipulate it.
At the same time, as we have said, pricing response times are key to success online. Automated pricing keeps retailers optimized 24/7, so that pricing can change as quickly as customer behavior.
Pricing intelligence is the future
Shopping days such as Black Friday and the New Year sales are huge commercial opportunities for retailers. But online, every day is a shopping day — and retailers that can offer their customers the service, and prices via price optimization, will maximize their sales and profit.
Sanjeev Sularia is founder and CEO of Intelligence Node, a New York- and Mumbai-based retail analytics leader.
Source : https://apparelmag.com/flexible-pricing-key-new-year-discount-success
