How e-commerce retail can choose the products for dynamic repricing?
First time faced with dynamic repricing retailers increasingly make equal mistakes. Hence, if you sell in online channel and want to succeed in repricing these paragraphs are dedicated to you.
The first and the most common misstep is indiscriminately monitoring and changing price for all products in an assortment. Most often this error is made by small and medium-sized businesses, which don’t use ABC-analysis for the products much less than assortment segmentation as head, core & tail products or XYZ-analysis.
At first sight, what could be easier - make analysis and send the products from categories A and B for monitoring and repricing. It is far more good than adjust the price for the whole product base. However, the repricing should be based on strategic business goals, competitive field and, consequently, a team members’ KPI. If not, a repricing is poorly performing.
Let’s review the process from category manager’s eye. He has certain KPI, quarter or monthly, and per each category manager this indicator is different: revenue, margin, profit (?). Starting out from fixed KPI, category manager chooses the products for repricing.
But if we change the point of view and look at repricing from the perspective of the marketer, we will see that first and foremost products for monitoring are the traffic generators - the products, which get maximum number of views (this does not mean they are sold).
The learning point is marketer and category manager may have absolutely different KPI due to one whole assortment. That is why choosing the products for repricing, you need to consider clearly defined KPI.
Besides that there is yet one product category, which should not be included in a massive for dynamic repricing even if it falls into one of segments due to analysis results. The category consists of products with as low price as consumers are not perceptive to price adjustments. Each region has an own threshold of detection, for example, european retail marks 10 euro.
Summary: choosing the products for monitoring and dynamic pricing you need to combine a product assortment analysis, strategic business goals, and clearly defined KPI for different departments of company in order to monitor as products, which bring profit as well as those, which deliver traffic.
Another key objection faced online retail in dynamic repricing is difficulty with management of product groups especially at setting stages.
One of current clients of Competera, for example, delayed the integration of the product Price Intelligence for a long time notwithstanding that he was aware of it’s value. The reason was the selection of products for monitoring was provided manually.
This is an approach whereby a lot of resources were spent out - time and energies. However, in view of the labour intensity the task have been completing not good enough. An optimal automation of the repricing process approximately looks like that:
- Manual SKUs tagging for the next repricing set by the product managers in ERP and forming an xml-file based on these selectors.
- ERP learning on automatic tagging (selection) the appropriate products under their sales performance.
- Integration with Google Analytics (or other system) for export of data on product card view.
After the implementation of these items, you need to enter the parameters, which will be the basis for displaying or hiding of the goods (for example, to conceal the goods, which have less than a certain number of views).
It should be mentioned, the enterprises more likely oblige own managers to export the xls-tablets weekly than force IT-department to create new functionality (automatic tags adding) in view of high complexity of the process.
Summary: to choose the products for dynamic repricing is a halfway to success. The second part is not less important - automation of the process. After the execution of all mentioned points an online store has a possibility to work at another level integrating with complex solutions on monitoring and dynamic repricing.
The advantages of dynamic pricing platforms and repricing platforms are evident:
- A broad picture of competitive pricing field instead of fragmented data;
- An absence of errors in the product matchings;
- The purity of the data, which is collected directly from the sites of competitors (not aggregators);
- An ongoing support and problem solving.
More info about dynamic repricing here.