Almost every e-commerce retailer have their eyes on Black Friday and Cyber Monday all year around and they have finally arrived!
By filling up their online stores with best deals and huge discounts, online retailers aim to get a portion of the cake. Last year they spent $3.45 billion online on Cyber Monday and it became the biggest day in the history of U.S. e-commerce. Also, Black Friday sales reached $3.34 billion (very close to Cyber Monday) with a 17.7% increase in sales of 2015. Another significant outcome is increasing the number of purchases through mobile by driving over $1 billion in mobile revenue.
Even though, this shopping frenzy seems like a huge opportunity, the customers won’t just go to your shop and purchase your products without any hassle so you have to be prepared for Black Friday and Cyber Monday, to not miss out on this huge selling opportunity.
There are many marketing methods to make the most out of these big shopping days, but as pricing experts, we would like to show you the uncovered topic of e-commerce – pricing.
Let’s start by addressing the following question;
How will you use your online pricing as a marketing weapon and convert these undecided visitors to actual customers on Black Friday and Cyber Monday?
Here are a few pricing tips to cover this year’s Black Friday and Cyber Monday for your e-commerce store.
Analyze your costs and set smart prices
There is a misbelief among e-commerce retailers that always racing bottom is the perfect and direct solution to attract floating customers in the online market. Yes, it has an impact! But how can you move forward with always cutting your prices? What if your competitors are responding to your price change by offering the minimum? You can’t gain a competitive advantage by just implementing the lowest prices in the market. If you do, it means you are eating from your margins and profitability. Instead of doing it aggressively, you can gain your competitiveness wisely. Think about your costs and set your prices above of them.
Even Black Friday and Cyber Monday are mostly about deals, there is no reason to make huge sales if you earn less than you spend (costs) and if you lose money with each sale. It is just feeding yourself deceitful lies. Instead of just setting the lowest prices, you have to find your optimal prices to make profits while being competitive during this shopping craziness. Here is the major question. How can you figure out the optimal price range in the environment considering all variables?
Keep these three points in mind and execute!
Analyze your costs, strictly hug your targeted profit margins and be aware of the competitor prices!
It seems hard putting all these variables into the same equation, but it can be possible to find the mixture of them through competitor pricing intelligence software. With these tools, you’re able to set smart pricing rules by putting your costs in the equation, targeting certain profit margins, positioning yourself among competitors to receive smart price recommendations as an outcome. With that, you can enjoy your smart prices created specifically for Black Friday and Cyber Monday.
Here’s a quick example of setting rules through a competitor intelligence software;
As you can see from the screenshot, your competitive status and your costs are customizable upon your strategy for Black Friday and Cyber Monday.
Search for price increase opportunities
As I mentioned above, in Black Friday and Cyber Monday, online shoppers continuously search for the best deals and they can be pretty assertive. So, assuming you found your smart price and you became the most competitive retailer in your market, but you may still exceed the dose of being the lowest. So, even increasing the price by $10, $50 or $100 isn’t likely to impact the performance of your competitive position. This is an opportunity to increase & improve your profit margin and still be the best offer in the market.
Why don’t we go through with a real example?
The Nintendo Switch has become the fastest-selling games console in the market and it is expected to be the one of the most popular products for Black Friday and Cyber Monday; another holiday favorite for kids (and adults who are still kids at heart)!
Below, you can see two different e-commerce retailers selling the Nintendo Switch 32gb. The first one is the most competitive one in terms of price, selling it at $299.99. The second retailer, and which is also the average, sells the same one at $399.00. So, in that scenario, the first e-commerce retailer can raise the price just below its competitor by setting it at $369.99. This move will bring increased profit margins that lifts up the balance sheet and still let the product be the most competitive one in the market.
The most effective way to gather this intelligence from the market is using competitor price tracking software. By using it, you can instantly detect these opportunities and fatten your margins.
Analyze the past years’ trends
First of all, let’s go through with the timeline of these Black Friday and Cyber Monday.
Cyber Monday will be held on the Monday after Black Friday.
Traditionally, Black Friday is the day after Thanksgiving.
In 2017, the event will fall on Friday, November 24 and Cyber Monday will be on Monday, November 27.
So, the majority of online retailers will sustain their sales and discounts throughout the weekend to let consumers purchase on Saturday and Sunday, since 48% of holiday shoppers mentioned that they did the majority of their shopping even on or before crazy shopping days.
As you can see there are many touchpoints to decide. Let’s say you can start offering discounts before Black Friday and target for last minute shoppers or post-holiday shoppers and offer promotions for them.
In that scenario, you can run your sales operations for 5 or 6 days or you may decide to structurize your marketing costs to reach the traffic pike on your online store just for Black Friday and Cyber Monday offering the best deals just for these two days to make the most out of your sales.
Before deciding your winning strategy, you should be aware of the market and price trends at the product level. If you can figure out the price moves of your competitors during Black Friday and Cyber Monday on previous years, you can clearly decide which product to focus and when.
Therefore, e-commerce retailers should also monitor and analyze the historical pricing trends of their competitors for Black Friday and Cyber Monday while closely tracking actual prices. With competitor tracking software you can generate historical data and display it in graphics that will give you a general idea about the market trends and evolution.
Analyze how much your competitors lower their prices the day before Black Friday. Then, see how their product prices have changed until the week after Cyber Monday. Finally, try to understand why your competition made the price changes they did and how it affected consumers.
Did consumers buy a significant amount more when your competition lowered its prices? Or did consumption remain at the same level?
Be available and detect the stock-out products of competition
Remember your stock! If you forecast a high volume of orders (it is expected in BF / CM), you may want to increase the amount of stock to be able to respond quickly during Black Friday and Cyber Monday. Believe me, consumers won’t think a moment to make the purchase elsewhere if they are not able to find it on your site. In other words, from the opportunity perspective, if they can’t find a Nintendo Switch 32gb from the market, they will knock at your door!
Now, let’s talk about the psychology of the consumer! If a consumer really wants to purchase Nintendo and does not have a ton of choices, he/she perceives the product as more valuable and is willing to pay more!
So, if you are able to detect the out-of-stock product of your competitor, the chance of selling it will increase enormously. Moreover, you can set higher prices which will help you to increase the profit margins.
Thus, the e-commerce company with the competitive advantage and stock availability get the potential advantage in pricing. With the competitor intelligence software, companies can gain insights on their competitors’ stock availabilities and prices, then implement this strategy right on the spot.
Place early season discounts
Black Friday Cyber Monday pricing tips continue by referring customer psychology.
If an online shoppers detect an early season sale, then they are more likely to visit a seller’s page as a first choice during the shopping bonanza. The psychology behind this fact is simple: if a seller is offering a sale now, then they must be offering bigger deals when their competitors begin offering standard discounts and I can find better deals from that seller.
Online shoppers are deal hunters and they are ready to spend their money! That’s why you need to be ready for the big day. Load your arsenal with these Black Friday Cyber Monday pricing tips.