Christmas is here! It’s the busiest time of the year, but also the most important and stressful for the e-commerce market. Sales figures increase dramatically as people buy gifts, decorations, cards, food, and more. For example, in the U.S., about 25% of all personal spending occurs in the holiday shopping season starting in October and lift up significantly on Black Friday and Cyber Monday in November. Then, it continues with last-minute sales just before Christmas in December. So start with your e-commerce holiday planning to get the advantages of this special period!
In this article, we are not going to bombard you with conventional marketing tips. Instead, from a pricing expert perspective , we are going to cover this niche topic and give you some proven pricing tips for e-commerce holiday planning to boost your sales and increase the margins.
Before going into the pricing strategies, let’s highlight the impact of pricing on online consumers with some proven data.
Research driven by Deloitte claims 56% of US shoppers spend minimum of 2 hours to search for holiday shopping deals.
Deloitte. (n.d.). How much time would you say you spend researching holiday shopping deals?. In Statista - The Statistics Portal. Retrieved December 20, 2017, from https://www.statista.com/statistics/209668/time-of-year-when-us-consumers-start-their-holiday-shopping/
The statistic below displays reasons why UK consumers plan to shop online during the Christmas period as of 2017. Among those surveyed, 50% said they prefer to shop online to compare prices and reviews easily. Also, it is pretty interesting that 23% of participants do not want to listen to Christmas songs. 🙂
Deloitte. (n.d.). How much time would you say you spend researching holiday shopping deals?. In Statista - The Statistics Portal. Retrieved December 20, 2017.
These statistics below provide insights about how U.S online shoppers are likely to use or research coupons or deals during the holiday season. According to the survey, 70% of participants stated they did price comparison online.
eMarketer. (n.d.). Ways in which internet users in the United States are likely to use or research coupons or deals during the holiday season as of June 2015. In Statista - The Statistics Portal. Retrieved December 20, 2017.
According to BDO’s analysis from the perspective of retailers, the most effective promotion for holiday season success is applying discounts. On the other hand, 54% of consumers stated that sales&discounts will be the major factor affecting their purchasing decision. Another finding from that analysis shows us that C-level retailers are perceiving price competition as the greatest challenge in the holiday season.
Let’s expand these findings and enrich them with some tips based on the statistics. The chart below represents the best source of online shopping deals and bargains during the holidays. According to the research, the most popular channel to announce the deals is the “e-mails sent from retailers – 22%”. You may consider using one of these channels to increase the visibility of your holiday deals.
Adobe Systems. (n.d.). Best source of online shopping deals and bargains during the holidays according to online consumers in the United States as of October 2016. In Statista - The Statistics Portal. Retrieved December 20, 2017.
So, the importance of pricing for online shoppers is approved by all this statistical pricing data that we have just presented above. Well, if you are not sure where to begin with your pricing moves for the e-commerce holiday planning. we’ve got you covered!
Now, it is the best time to highlight the pricing strategies to maximize your sales and increase your profits. Let’s dive into these tips to make a difference among your competitors!
Set Your Prices Dynamically and Smartly
According to our recent analysis of comparative price dynamism, Amazon changes 16% of prices on a daily basis. Rueducommerce.fr changes 30% of the products within full assortment and Dutch e-commerce giant bol.com changes 10,7% of the product prices on a daily basis during the regular season. These percentages are reaching at a peak during the holiday season as online shoppers are much more enthusiastic to shop, willing to pay more and allocate more time while hunting for the best deals. Of course, e-commerce retailers are aware of this opportunity and embrace online pricing as their prominent job in order to attract customers. In short-term, dynamic pricing leads you to win the price wars during the holiday season and help you to respond to every single of pricing move of your competitor.
So, how do you get smart about applying dynamic pricing to e-commerce holiday planning?
Your costs and your competitors’ pricing should be the key factors while deciding for the online prices. Dropping your prices under your costs will harm your profitability so you have to set your strategy according to the price competition in the market. In this case, melting these two variants in the same pot and generating a new smart price towards different scenarios (in case a competitor changes its price just below your product or you manage to diminish the cost) would be a useful and smart move.
A sustainable way to enrich your pricing strategy is setting smart prices by defining repricing rules through competitor pricing intelligence software. With these kind of tools, you’re able to set e-commerce pricing rules by targeting certain profit margins and competitive pricing positions and receive smart price recommendations as an outcome. This type of intelligence, you are able to take the initial steps to adapt your pricing strategy to dynamic pricing and thus, you can better compete with e-commerce giants like Amazon.
The main goal here is; if retailers want to have effectively working product turnover, they need to use different scenarios (algorithms, rules) for repricing that supports dynamic pricing.
So let’s demonstrate this with a real example!
Think about a scenario that, you aim to be the most competitive in the market but not go below your costs.
Here is the pricing rules that you will be setting;
Here comes the quick tip before e-commerce holiday planning;
- Know your costs very well.
- Decide a competitive pricing strategy. For example; price match with the lowest, always be 5% cheaper than the minimum or be $50 higher than the average of the market.
- Start setting rules according to the first two points above on different brands or categories.
- Generate smart prices through pricing intelligence and apply them to your products.
- Sit back and watch your success during the holiday season.
Detect the price increase opportunities!
Sometimes, your prices may be too competitive when compared to other players in the market, so even increasing the price by 5% or 10% isn’t really likely to impact the performance of your competitive position. This is an opportunity to test a price increase, improving your profit margins and still be the best deal in the market.
The best way to detect that opportunity is by using an automated competitor price tracking software. By gathering price intelligence data from the market, you’ll have a clear view of your price positioning among your competitors and detecting the price differences won’t be a hassle for you.
Let’s analyze that scenario through a real example.
A great holiday product both for self-gift or for your friends and family. Below you can see two different e-commerce retailers selling the same Nike Air Max. The first one is the most competitive one in terms of price, selling it at 59.90€. The second retailer sells the Nİke Air Max at 99.90€. In that scenario, the first e-commerce retailer can raise the price just below its competitor by setting it at 90€. This move will bring increased profit margins that lift up the balance sheet and still let the product be the most competitive one in the market.
Analyze your competitors’ past holiday price trends
The best way to prepare for e-commerce holiday planning is to analyze trends and fluctuations from the previous year to make predictions and create strategies for the new year based on those analyses . That’s exactly what a competitor price tracking software provides, as well as describing the best way to connect with consumers based on their pre-holiday habits.
Some start setting special prices just before the holiday week and some change their prices instantly during the holiday week, and the rest target for last minute shoppers or post-holiday shoppers by offering promotions just after the holiday week.
To win this price battle and be competitive according to your competitors, you should be aware of the market and price trends at the product level.
Do not forget a price tracking software is not only about knowing the current prices! After using it for a time, you will be able to generate historical graphics to analyze the price trends throughout the year. Therefore, monitoring and analyzing the historical pricing trends of their competitors is a necessity for e-commerce companies.
If you can figure out the price moves of your competitors during the holiday season on previous years, you can clearly decide the product range to focus on at the right time.
Seek for competitor’s stock-out products and get advantage!
Think about a scenario; if a holiday shopper wants to purchase a Nike Air Max and can’t find many options, he or she perceives the product more valuable. Therefore, the willingness to pay more for that product increases significantly. That’s the consumer psychology!
Another common scenario; a holiday shopper search for a Nike Air Max for her sister and detect that it is out of stock on one of your competitor. Are you guessing who’s next?
Yes! You’ll be the next door for that online shopper.
What if you detect that your competitor’s product is out of stock in advance? There are plenty of options. So, if you can detect the stock-out product of your competitor, the chance of selling it will increase immediately. With the confidence of that intelligence, you can set higher prices which help you to fatten your profit margin.
Thus, the e-commerce retailer with the competitive intelligence advantage and stock availability get the advantage in pricing. With the competitor intelligence software, e-commerce retailers can gain insights on their competitors’ stock availabilities, and if you detect that opportunity increase your prices and start investing on the promotion of that product in different channels like social media, Google Adwords, price comparison sites…
A view of Prisync dashboard showing the stock-out product of a competitor.
Keep in mind that the more customers you successfully attract and satisfy for the upcoming holiday season, the more likely they will be back to shop from you during the regular season. So, regardless the special days or seasons, such as Back to School, Haloween, Christmas or Black Friday and Cyber Monday, you can always use these pricing strategies for e-commerce holiday planning and for the regular season!