Business is fierce in the retail world. Whether it’s apparel, footwear, accessories or beauty; there are more players, more products and a huge amount of price movement. Keeping up with what your competitors are selling and pricing strategies, is a formidable task. But it’s not one that can be done by researching product by product – there is too much information that changes too quickly. Teams are already overwhelmed and busy trying to keep up with shorter production cycles and accelerating trends, trying to manually collect competitor data, going website-to-website and store-to-store, is only going to waste time and produce inaccurate and incomplete data. And it’s not the data you want to be basing million-dollar decisions on.
Read on to learn about the huge benefits pricing intelligence software can lend to brands and retailers today.
What is Pricing Intelligence?
Pricing Intelligence refers to a comparative and predictive software that provides invaluable data for product trends and competitor monitoring. A pricing intelligence tool enables e-commerce retailers to set optimal pricing strategies that convert customers. Knowing how competitors are pricing and discounting, gives insight into how best to price items prior to go-to-market and what your discounting strategy should be.
Why is Pricing Intelligence Important?
Well, let’s start with what happens if you don’t have access to a pricing intelligence tool. You’d essentially be creating your pricing strategy in a vacuum, oblivious to what else is happening in the market. There are a range of scenarios that will not play in your favor:
- You might price too high and lose customers
- Or too low, where you miss out on product margin/revenue opportunity
- Perhaps you discount too soon after bringing products to market, also potentially losing revenues
- Discount too late and lose sales to competitors or are stuck with large amounts of inventory to move
- Or, if you do get your discounting strategy timed right, you might be discounting too much compared to retailers, also eroding profit
There are a multitude of strategies and data points a pricing team must consider.
Utilize Pricing Intelligence to Benchmark Competitors
Knowing what your competitors are doing, and understanding the market are the first steps. By benchmarking against competitors, teams gain valuable pricing insights to help develop the right assortment mix and price optimally before products are brought to retail.
Without visibility into the wider market, your planning and merchandising teams will be creating assortments that perhaps only take your own company data into account or a very limited snapshot of data from a handful of competitors. For example, using historical data to ensure the assortment includes more of the last season’s best sellers is a great start. But there is far more to be taken into consideration – an external dataset. This is especially true when building out the trend side of your assortments. Your staples and core pieces are generally those that do well season after season, perhaps with minor adjustments. However, when developing trend products, the peak opportunity to sell is much shorter, getting these items to market on time is incredibly important as is pricing them right to maximize on the trend window (before they may need to be discounted at the end of the season).
Without the data from an ecommerce pricing intelligence software, how would you know if a competitor was starting to invest their inventories in certain categories, particular trends or specific colors? But with pricing tools, one tell-tale sign would be seeing competitors add products to a particular category or in a particular color that are not being discounted. This is indication of the trends, colors, styles and categories that are growing in your competitor’s assortment. Passing on this information to your own merchandisers means they can develop assortments that truly reflect what is being sold out there beyond the limitations of your own data.
Through a competitive pricing intelligence tool, it’s quick and easy to collect, visualize and analyze real-time market data, so brands and retailers can expand the diversity of their product categories, identify best-sellers in the wider market and the growth opportunities within untapped niches.
For multi-brand retailers it’s especially pertinent to know how competitor retailers are pricing the exact same product SKUs that you also carry so that you can develop your own pricing response. Under-pricing leaves revenues on the table; overpricing risks leading to unsold inventory.
Many pricing intelligence platforms also offer a product matching service and depending on the quality of the platform will depend on how precise its ability is to match overlapping SKUs.
When we talk about pricing optimally, it’s about taking a nuanced approach to your pricing strategy. Of course, factor number one is price to cover your initial costs
When you price a product, of course your starting point is to cover your initial costs. But pricing too high might scare customers away while pricing too low might mean you’re overlooked as low quality or you’re losing too much profit per product.
A healthy pricing strategy is one developed around what a customer is willing to pay which is also dependent on what else is being sold in the market and for what.
Certain products can get away with a premium price tag because of say quality or convenience. If you benchmark against competitors who have priced higher you need to understand why – is it the detailing, the material or the fit. What is driving your competitors to price higher?
Now Leverage This Pricing Intelligence to Create an Effective Pricing Strategy
Historically, retailers have been bad at setting initial prices for all categories of seasonal goods. This has been due to manual efforts and outdated data and a lack of visibility into wider market pricing strategies.
With a pricing intelligence and competitor benchmarking platform like Centric PricingTM, teams can finally:
- Price assortments properly pre-season
- Easily and quickly adjust pricing in-season
Price Properly Pre-Season
Pre-season benchmarking insights derived from a competitive pricing intelligence tool empower teams to strategize pre-season and develop assortments that customers want while rivalling competitors.
Centric’s pricing intelligence platform pulls in information using millions of data points, updated every 24 hours, with industry-specific product attribution to build an accurate view of the wider market landscape. Allow both internal and external data to guide decisions around what to make and how to price so pricing reflects the reality of today’s consumers and retail landscape.
Pinpoint the highest-margin prices consumers are willing to pay for those products. That way you can sell as many products as possible at full price before competitive discounting begins.
You’ve now done your research into how competitors set their pricing strategy and you’ve brought your products to market. Now you’re in-season with your assortment you need to stay reactive, based on how your consumers are reacting to your products and what your competitors are doing in terms of discounting.
It’s challenging to stay reactive if you then have to manage an army of interns or contractors to manually track competitor sites in order to try to discover their discounting strategy.
Pricing intelligence simplifies in-season pricing adjustments whether based on consumer response or competitor execution. Leverage real-time analytics to know when and by how much products are being discounted so you can consider adjusting prices for slow moving goods.
Is It Time to Make the Switch From Spreadsheets to a Pricing Intelligence Software?
One of the biggest pain points of effective pricing stems from manual competitor price tracking. That, and teams are often planning across multiple seasons and assortments at any given time. Because of these factors, it’s simply unrealistic to roll out impactful pricing strategies with precision.
If you’re wondering if your team should make the switch to a pricing intelligence platform, ask yourself this:
- Are you sure you are pricing optimally?
- Do you know what your competitors are selling?
- Do you know how your competitors are pricing and discounting?
- Do you know what trends consumers are looking to buy?
- Do you know what consumers are willing to pay for a given item?
- Are your competitors raising or lowering prices?
- Will consumers pay more for a certain type of item, feature or other product attribute (like a sustainability produced garment)?
- Why are consumers buying from your competitors?
- Do you think there are gaps in your assortment?
- How are you currently monitoring competitor promotion and pricing strategies?
If you can identify at least one manual process in any of these areas, then it’s time.
Pricing intelligence and competitor benchmarking, like Centric Pricing, removes these manual pricing tasks and provides teams with monumental time, resource and budgetary saving – and most importantly – accurate data that is easily sliced and diced for analysis & insight.
It’s crucial your business is working with data you can trust, because this data will drive decisions that impact sales and revenues. Set your teams up for success giving them fast, powerful data to drive decisions. Learn more about our eCommerce Pricing Intelligence platform.