We all know that succeeding in this new era of digital commerce depends on various factors, so implementing the right tools is crucial.
Price continues to be a conditioning factor when making a purchase decision. One of the great challenges facing eCommerce businesses nowadays is adapting their prices to match what their customers are looking for at all times. This makes a dynamic pricing tool vital for online stores.
Dynamic pricing strategies, in addition to being an effective way to maintain a competitive presence in the market, help us generate customer interest. That’s why it’s now crucial for any eCommerce business to have a dynamic pricing tool to design its ideal pricing strategy.
The giants of online commerce are already using this type of technology. You can see this with Amazon, which can change the price of its products hundreds of times a day. The algorithm that Amazon uses remains a mystery to the retailers that strive to follow the tendencies of this internet giant.
Amazon’s price changes mainly affect technological products. Thanks to the constant price war, this sector is one of the most changeable. However, prices changes do occur in all kinds of products offered by Amazon.
What are the advantages of having a dynamic pricing strategy?
- It allows you to control the profit margin for each product at all times to maintain competitiveness in the market.
- It lets you take advantage of market opportunities. If the competition runs out of stock, the demand is higher and the supply is lower. This means you can set higher prices, which will increase your profits.
- It helps you remain competitive and compete on equal terms. One clear example is Amazon, which, since the beginning, has taken its dynamic pricing strategies to the max, which has been an indisputable key to its success. Now you can monitor Amazon’s prices and determine what your pricing strategy will be.
- It allows you to police your prices, avoiding offering products that are priced out of the market, which can give an erroneous image to your clients about your pricing policy, and preventing them from being perceived as too expensive or too cheap.
What kind of technology allows us to implement this strategy?
Dynamic pricing strategies need a tool to execute them, software specialised in accumulating data, processing it, and executing actions in response to all of the variable included in the algorithm.
Having software in place to execute and automate tasks, such as the analysis of customer behaviour and the prices of other businesses in the sector makes it possible to accelerate the decision-making process and with it, achieve greater profitability.
These tools rely on big data to analyse numerous variables that can condition sales in real time. As does the dynamic pricing tool from Minderest, which allows you to determine what the best price for your products and services is at all times through the analysis of more than 20 KPIs with a powerful artificial intelligence (AI) model. Each retailer obtains the information it needs from its competition and the market. This AI also has machine learning capacity, making it possible for the decisions made in the past to be taken into account in the present. In this way, the pricing strategy will be progressively refined while leading towards business growth.
Automation is key
Dynamic pricing is a technique that begins with process automation. Even though this is an exercise that could be performed manually, the complexity and breadth of the factors involved make it impossible. Imagine for a moment what it would mean to review each product in the catalogue of each of your competitors one by one to extract the tendencies that will govern the prices for your store. Not at all appealing.
It’s at the moment of implementing the dynamic pricing strategy that the automation technology comes into play, making everything possible. It executes the actions defined by the strategy based on the variables that have been given and analysed. Thus, in each case, an answer is given.
The fact that the implementation of dynamic pricing is, in short, an automatic action means that there’s a considerable savings in human cost and time. This allows eCommerce managers and analysts to focus on higher-level tasks, such as studying data, extracting conclusions, and making the best decisions for the business.