You Need a Competitive Pricing Strategy
When it comes to your online retail competition, there are a few things you need to know, according to a recent blog post by Upstream Commerce's Chief Marketing Officer, Gilon Miller. Some of those things include knowing what your competitors are doing, meeting consumer demand for bargain prices, stocking the right inventory and using analytics to adjust your pricing and merchandising strategy to stay on top throughout the year.
In retail intelligence (which includes things like pricing intelligence and product assortment intelligence), automated systems collect data from online retailers and compare it to your own pricing and assortments.
While the intelligence systems handle large, in-depth analytics and comparisons, small businesses can learn a lot from retail intelligence. All the trends -- such as consumers becoming smarter about pricing, and mobile price-comparison shopping -- affect pricing.
That's especially true for industries such as consumer electronics, where prices can change every 30 minutes. "If you don't have visibility into what your competitors are doing, you're out of the game," says Miller.
The value isn't in just collecting your competitor's data, it's in analyzing that data to help you make better business decisions regarding pricing, sales and merchandise. Automated systems can help you adjust prices and order levels on the fly, but many companies still use a manual process to set a competitive pricing strategy.
Online retail business owners who compete with larger retail outfits can benefit from competing on price in Web search and price-comparison shopping engines on specific merchandise. Doing so brings in those budget-minded consumers, and then you can upsell on your higher-profit items and services.
"Retail intelligence is important for online retail businesses," says Miller. While many retail intelligence suites are designed and priced for larger corporations, it's still a worthwhile investment for the lower to mid-market sized businesses (e.g. those that fall under the $5 to $10 million yearly revenues). For small mom-and-pop shops, however, Miller says this type of automated retail intelligence solution might be too costly.
While noting that there are a couple lower-end competitive pricing solutions available for the very small retail businesses, Miller says, "if it's not in your price range today, it's still something that small business retailer should start thinking about."
Offer Competitive Shipping Services and Prices
While branding and packaging are small business marketing trends to know for 2013, Volusion's Winn says that small businesses also need to stay competitive when it comes to setting shipping prices and service levels.
"Amazon is already dabbling in same-day service in major metropolitan areas, but what's really interesting is that some bigger players are trying to follow suit and looking to provide better shipping options for customers," says Winn. "This is putting more pressure on small businesses to compete with better shipping offers."
Winn's advice to small business owners is to "not freak out." He says that right now same-day shipping is still in beta mode and "for right here and now (or at least until the end of the year), consumers will not demand or expect same-day delivery."
One thing that small businesses can do to keep up with the competition is to offer some type of premium shipping. "Everyone should offer 2-3 day shipping," Winn says. "A small business can simply make this shipping option more prominent on their website and continue to charge for it."
If, however, you do feel the pressure is on in your specific industry to offer same-day shipping, Winn says small businesses should simply do the best they can. "Offer it in your own major metropolitan area where possible, and offer it at a premium because it's going to cost you a premium to do," he says.
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