This week we have a guest blog post from Burc Tanir, the CEO of Prisync. Burc covers the importance of Smart Price Competition especially for Ecommerce providers and highlights different aspects of this competition with automated solutions. This detailed post would help you to get insights on gaining a new tool for conversion optimization by understanding the pricing wars.
The Ecommerce Jungle
We all eat and breath it,so it’s not weird to say that, our market, e-commerce, is wildly competitive. Also, when we take the emerging markets into the perspective, the growth rate and investments are also raising the bars of competition. Consumers now have access to many options thanks to price comparison engines or other likes of e-commerce aggregators. However, companies are fighting for the supply side and the demand side too.
Pricing is the melting pot of e-commerce competition
Online shoppers are deal hunters all around the world. Because, they are in very easy access to so many offers of options online, so betting on the best value is actually just following a few simple clicks.
As the consumer base proves itself to be like this, surely e-commerce companies need to react with a relevant positioning. Due to this fact, e-commerce companies’ taglines often contain phrases like ‘best price’, ‘best value’ etc.
However, also it’s nice to propose such a value through marketing, it’s not that easy to achieve Smart Price Competition in such a digital and therefore dynamic market. Claiming the best price needs almost science backed studies in pricing and continuous flow of competition data.
that’s why the value of competitive intelligence is so apparent in the e-commerce market that each and every company in this market has its own way of handling this duty. The most common practice is gathering a few employees around this task and running completely repetitive manual data gathering/entry tasks. However, if we consider that there are nearly a million active e-commerce companies worldwide, there should be a smarter method to fulfill that need other than the conventional way of manual data collection. Just tapping that need, now there is new breed of business intelligence tools that offer automated competitor price tracking. As such tools also shape up as SaaS tools, i.e. seamless use for affordable monthly fees, they are gaining more and more interest in the market and diffusing quickly. With such a rapid penetration of these competitive intelligence tools, the companies lacking them already started to feel the fear of missing out.
As it is the case in many business intelligence applications, competitive intelligence also requires inputs or let’s say guidance from its users. The most crucial ones here are;
- Who are my competitors?
- What are my most important / price competitive products?
The Smart Price Competition automation would yield the best outcome as a result of the pick of the correct answers for these questions.
In some cases, e-commerce companies know their major rivals, but may fail to identify each and every web shop retailing the similar products. A very quick Google search for various products from different categories and brands can list down the real rivals in the first couple of result pages. Companies can go even a little further and may run a more straight analysis on consumer-facing price comparison engines like Google Shopping, and can find the web shops that they mostly compete for particular SKUs.
Prioritization is a crucial step in any analysis attempt, and competitive analysis is no exception to that. Following the listing of competing for web shops, e-commerce owners/managers can conduct a rule of thumb analysis by comparing the Alexa or SimilarWeb rankings of those competitors to see their effectiveness in the market. The revenue side of the e-commerce performance can even be estimated from such rankings to better compare apples to apples, or oranges to oranges.
The next step following the competitor selection is the products that are the most important and most competitive or more theoretically price-elastic in the market. As it is the case for competitor listing, the companies can – or actually must – pick their product assortments to be benchmarked vs. their competitors again through a prioritization process. Here, filtering the Top 1000 or 5000 SKUs with highest sales volumes might give an edge or a simple Pareto rule of 80-20 can also be applied on the full assortment. As a result of many cases conducted with e-commerce companies using such automated competitor tracking, drilling down the top products rather than getting lost in a portfolio of 10Ks of SKUs yielded a quick gain.
With the list of competitors and products to be benchmarked, the next step is to get the list of product links to be fed into the automated solution, which will be scraping the pricing and stock availability information from no matter link you give in a fully automated manner without requiring any human touch ever again. This step of gathering competitor links is a once-off bulk operation – and can even be outsourced to the service providers in some cases and can be handled in a semi-automated way depending on the technological stack of the vendor – and later on may be repeated only when new SKUs are introduced into the competitive portfolio of products.
The power of automation in Smart Price Competition
The beauty in this automation is that after all the URLs have been inputted into the tool, it almost magically gathers updated data automatically from the web shops that have been identified as competitors. This automation dramatically decreases the competitor monitoring time spent in companies on a regular basis and also leverages the time spent on such analysis thanks to its further actionable reports. Very basically, Smart Price Competition tools let companies check for competitor products only for once – at the beginning – instead of repeating it every single day or week depending on the competitive strategy of the company.
An automated solution for tracking competitor prices leaves all the hassle of repeatedly checking the competitor product links that we mentioned just above, but instead just let e-commerce companies to focus on the results/analysis yielded by the tool. Here, the effectiveness of the tool relies on the following criteria:
- Frequency of updates
- Market coverage
- Big-Picture Reporting
- Further integrations
In such a dynamic environment, one cannot be satisfied with weekly/monthly reports or updates about the competitive landscape. In a market where about %2 of products change prices on a daily basis, one should not expect something less than daily updates if not multiple times a day.
Even though technology lets companies re-imagine the possibilities of their market once again, it still may come with limitations. Here, the market coverage of such tools might be a limitation. There are some tools that solely rely on the competitive landscape of Amazon or Google Shopping. However, there are also tools that can cover any market vertical from any country, i.e. you just name the competitors you picked, and the rest is taken care of.
Actionability is a crucial element of all sorts of business intelligence tools, and in competitor price trackers, such action comes from the instant reporting of competitor’s price changes. Such changes can be alerted through special notifications which can be configured from the admin panel of such tools and may allow role-sharing in a team to let different members focus on the control of different brands/categories.
A competitive intelligence tool surely leverages the effectiveness of action-takers within the company at the price level, but it also offers crucial insights for higher level executives to observe the retrospective performance of the company in their landscape. Historical trends which can be broken-down at category or brand level can show how the company had been performing relatively for each of those product groups. This may even be extended to set KPIs derived from the tool to monitor the performance of price managers. – or other employees responsible for pricing decisions.
In some cases, a tool, packaged in a generic product format may not cover all needs of an e-commerce company and leaves them in thoughts or dreams of further integrating the data available with several other internal applications. Here, the tools offer automated feeds or even restful APIs, which can be very simply integrated with any solution that the e-commerce company likes.
The expected outcome from Smart Price Competition automation is actually a no-brainer, as many companies already handle such a competitor price tracking operation by hand and even see positive outcomes on their sales figures or profit margins. However, it’s impossible to scale this effort towards the bigger chunk of their portfolio and there, automation becomes a must.
Thanks to the fully automated, cloud-based solutions in this space, it is also possible for e-commerce SMBs to utilize such tools thanks to their very affordable monthly fees. As it is the case in the digital disruption of retail through e-commerce, market research or more specifically, competitive intelligence is also facing a disruption and it’s also starting to be packaged as a SaaS solution instead of an expensive conventional market research service.
The best way to feel it is to test Smart Price Competition solutions out, and the best part of all, it’s totally free to test it out.