Are you leveraging a solid repricing strategy for your e-commerce business? If not, you may be missing out on a few great sale opportunities!

When online shopping is increasing in popularity, we’re all too familiar with the marketplace experience. Every minute, sellers on giant marketplaces like Amazon and AliExpress switch their prices to fit the market conditions. This can be due to a new wave of product demand, more competitors, or simply in response to a competitor’s price adjustments. 

A repricing model has become imperative to e-commerce success. It enables businesses to optimize their prices to cater to the market while still generating profit.

The importance of a repricing strategy on e-commerce marketplaces

Following the principles of Economics, prices are adjusted to an optimal level based on the supply and demand of goods. This is called an equilibrium price. While it is not possible for all products in the market to be set at a fixed price, this gives a bit of leeway for e-sellers to set their prices at a market floor and ceiling.

Market floors are essentially the lowest price retailers can set, using price slashes as a product differentiator while still reaping profits. On the other hand, the market ceiling is the maximum feasible amount you can sell your merchandise for. 

As you can see, the price of goods isn’t a fixed amount, but subject to changes due to fluctuations in the market. This is especially important for online retailers since the e-commerce industry is constantly changing and welcoming new competition. 

Before getting into building a solid repricing model for your e-commerce business, however, it is worth noting that price isn’t everything. Achieving business success isn’t always about setting the lowest price to beat out the competition. When it comes to the modern consumer landscape, your customers are demanding more than cheap goods. Shoppers nowadays prefer a multitude of benefits from their e-commerce retailers, such as fast or affordable shipping. It is revealed that 26% of consumers will purchase from a store that offers free shipping, even if it means paying more. [1] 

Another critical aspect of a great business model is customer experience. 86% of customers are willing to pay more if they had a good experience with the brand. [2] Sellers can charge price premiums if other great aspects of the product back them. Still, it’s crucial to bear in mind that it can be a challenge to differentiate your product from the rest in the saturated marketplace. Often, one of the first things that customers look at for their purchase choice is the price. This is often where your repricing strategy comes in.

Getting the repricer right

Repricing is complicated. There is a myriad of factors that merchants have to take into consideration. However, it starts off with the constant struggle to offer greater savings through the lowest-priced products. 

However, as mentioned, dirt cheap products may not always be the smartest strategy to gun for in a time of growing consumer expectations. Moreover, on the off-chance that you’re able to sell your merchandise at the lowest market price, it may raise a certain ambiguity and put off potential customers.

There is also a need to oversee all market conditions, such as competitors, competitors’ pricing, product demand, product rarity, and more. Then, there are also other factors like order fulfillment rates, shipping time, and store ratings. A product’s value is constantly changing in dynamic marketplaces, where pricing isn’t a monthly or quarterly review but can take place within the minute. 

Here’s the problem: especially if you’re a small business owner or just starting, repricing is, well, a challenging task. That is when done manually. While it is undoubtedly an option, it may not be the most innovative way to go about your e-commerce selling strategy. You have to tediously account for market fluctuations every minute, monitor the marketplace, and calculate the optimal price that is still profitable for your brand. It can get particularly overwhelming, especially in busy periods. 

Considering that there are many other tasks that retailers have to tend to, such as promotional activities, it’s not feasible in the long run. This process also puts you at risk of human error or a lack of knowledge that can be detrimental for many sellers. 

Luckily, e-commerce solutions have come a long way since the e-commerce boom, providing retailers with a robust set of tools to automate the repricing process. 

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E-commerce tools to automate repricing

As online businesses continue for customers’ attention on the marketplace, e-commerce tools have moved to the forefront of the digital shopping experience. Repricer tools can empower e-sellers by simplifying the repricing process and maximizing the profit margin in real-time.

Here are some of the ways that repricing tools can benefit your business.

Receive data and makes adjustments instantly 

With the increase in mobile shopping, 95% of this generation currently own a smartphone. [3] They’re also spending more hours on their phones. For retailers, this means that consumers are shopping from their devices at any given moment. It’s crucial to be where your customers are to deliver value to them at the right time and right place. However, given the geographical audience of a marketplace, it poses a massive challenge to time resources. Fortunately, repricer tools can capture price data in real-time and send out alerts for new price adjustments to multiple sale channels, even outside of office hours. Price updates are made instantly to reflect the best prices for your business, even when you may not be aware of it. 

Capturing the buy box

Traditional repricing takes on a rather one-dimensional approach, possibly only taking into account competitors’ prices. However, today’s consumer landscape requires more than competitive pricing to succeed. As a result, many marketplaces utilize a buy box, which is essentially a gold mine for sellers to bring in an astronomical amount of sales and visibility. 

To qualify for the buy box, sellers have to keep a stellar track record of order fulfillment and ratings, in addition to offering fast shipping tags and more. Repricer tools can capture these aspects to offer competitive pricing that considers all micro and macro market factors, essentially gunning for top-drawer marketplace features like the buy box.

Recommend best-fit prices based on market conditions

With the help of technology, repricing software can configure prices based on best practices and seller input. Repricing strategies can differ across businesses based on their short-term and long-term objectives. For instance, some sellers may opt to differentiate their products by setting the lowest price. Others may choose to mirror the competition. Alternatively, the seller can make pre-set rules that can trigger a price adjustment on the software.
 

Cuts down on time and cost through automation

Businesses today need more than just hitting quarterly KPIs – they need scalability and sustainable solutions. Scalability is one of the focal points in today’s dynamic marketplace for retailers to win in the long term. One of the biggest challenges retailers face is finding the right strategy and constantly refining it to reflect their core capabilities. Repricing automation helps cut down on time-consuming manual processes. With the right tools, retailers can expend more energy on other business activities while still having confidence in their pricing strategy.

Types of repricing strategies (and how they impact your business)

Ultimately, repricing on every business model takes on a unique definition. Traditionally, most businesses followed a cost-based pricing strategy. However, this is a stunted approach as it takes on a business focus more than a customer priority. Sellers who use cost-based pricing will set a fixed price based on their desired profit margin. However, this may not be feasible when e-retailers are trying to beat out thousands of competitors in the marketplace. 

Rather, there are a few repricing strategies that automation tools leverage for a more dynamic approach.

Algorithmic repricing strategy

A popular approach that top sellers have embraced on marketplaces is algorithmic repricing. Repricer tools utilize an algorithm that depicts logical rules to determine future price behavior and calculations. This is an approach that top online sellers vouch for all the time due to its multidimensional capabilities and machine learning to ensure that sellers always offer the optimal price for their products. It’s a step up from rule-based repricing, where users can adjust the configuration based on their risk appetite and business goals. Then, the algorithm considers factors like different competitive situations, historical data, and future predictions to make price adjustments.

Price mirroring repricing strategy

E-retailers aren’t just competing within their marketplace. This competition extends across all e-commerce marketplaces and their sellers. Price mirroring is the act of duplicating price data across multiple marketplaces to create a consistent price across all sale channels. This is especially important in the e-commerce sphere since most marketplaces have a price parity rule. As a result, third-party sellers cannot offer cheaper options in other marketplaces for the same products. Automated price mirroring takes a look at the environment in the primary marketplace to determine an optimized price before reflecting this across all other marketplaces. 

The caveat is: while this is a beneficial strategy in creating synergy across the sale channels, marketplace conditions can differ across each provider. Therefore, price adjustments on a specific platform may not be practical from the next.

Velocity repricing strategy

Velocity-based repricing refers to when a seller sets a desired price based on the objective of selling a specific volume of goods in a given period. This method is most commonly used to extract a maximized profit margin on fast-moving goods or push for sales on slow-moving items.

Rather than using competitor data, velocity repricing prioritizes a seller’s sales volume goals. However, as mentioned above, competitive pricing is especially relevant in dynamic marketplaces where there is a lot of competition. Often, marketplace sellers are selling goods that are similar to thousands of other listings. Still, velocity repricing can be a great way for brands that sell unique merchandise or those looking to push certain sales targets as a short-term plan. This can be particularly useful to capture sale opportunities in holiday periods or shopping seasons.

Mastering the repricer with e-tailize

Product repricing is an essential strategy for every modern business, but it can get complex. At e-tailize, our goal is to simplify the digital retail process for e-commerce business owners. Driven by research and information-backed approaches, we tailor our repricing solutions based on each businesses’ long-term objectives, ultimately achieving success and finding new areas for growth.

Sources

1. https://supplychaindigital.com/sustainability/consumers-want-their-deliveries-be-free-and-fast
2. https://www.superoffice.com/blog/customer-experience-statistics/
3. https://optinmonster.com/online-shopping-statistics/