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2018: The year dynamic pricing has become the norm in eCommerce

A few years back, a small online retailer based in Indonesia, selling mother and baby products would only have been inspired by Amazon-grade dynamic pricing (that required solid competitive pricing intelligence muscle, manpower and in-house technology) by reading some articles praising the pricing power of the retail giant.

Today, that very same retailer is able to apply a similar dynamic pricing strategy thanks to the self-service competitive pricing intelligence & dynamic pricing software Prisync, which is currently serving all sizes of e-commerce companies from various industries in more than 50 countries.

Why 2018 and not before?

Applying an efficient and effective dynamic pricing strategy comes with some prerequisite tasks. In the last few years, those tasks, and the potential burden of handling them, caused online retailers to shy away from applying a fully automated dynamic pricing strategy and instead, directed them into more fragmented processes where those steps were followed manually and somewhat independent from each other.

Also, there were a few pricing intelligence service providers dealing with the problem from a professional services point of view, and offered solutions which required a lot of customisation and manual work for each potential client. This created enterprise-grade offerings that were no way accessible and affordable for online retailers other than the large players. 

This needed to change.

Full automation for eCommerce dynamic pricing – one step at a time

As stated above, dynamic pricing is actually a complex decision making process which can be broken down into two main sub tasks: the first task is populating fresh competitor pricing information from the market – and by fresh, we don’t mean monthly, weekly or even daily, but a few times a day.

A quick job description search on LinkedIn profiles in the retail industry offers some phrases like “competitor price checks” or “tracking competitor prices”. This clearly demonstrates that there are many online retailers, and therefore their employees who use (i.e. waste) their resources on super inefficient and ineffective task of manual competitor price tracking.

In today’s online retail market, this should simply change, because firstly, this process does not fulfil the need for dynamic pricing due to the limited amount of data and its freshness.

Secondly, it no longer makes sense not to fully automate competitor price tracking and monitoring. With a tool like Prisync, an online retailer active in any country or industry can fully automate tracking of unlimited number of competitor prices for hundreds or thousands of their SKUs, multiple times a day in a quite cost-efficient way. 

This lets them put a huge check mark for the first prerequisite task of dynamic pricing, i.e. gathering competitor pricing information.

The next step is simply utilising that comprehensive and fresh data set signalling all the competitor price movements hour by hour or day by day. With varying unit costs for each SKU, and varying target profit margins for various brands and categories in their assortment, setting profitable price points while still remaining competitive in the market is also a huge task to handle and this challenge certainly keeps online retailers distant from applying dynamic pricing.

However, those hesitations are no longer relevant today, because all those pricing calculations can now be done by smart pricing algorithms of a dynamic pricing software, where the user only inputs the smart price rules which considers all the unit costs of each SKU and the target profit margins for all the brands and categories along with the targeted competitive position, like being x% lower than the cheapest competitor. 

That automation checks the only remaining to-do in the list for an efficient and effective dynamic pricing strategy.

Fear of missing out? Act on it.

Even though the paradigm shift is clearly visible, it’s still hard to say that dynamic pricing has been adopted by all sizes of eCommerce companies worldwide – 2018 is going to be a different year though – so the results being gained by early adopting businesses are quite dramatic in terms of ROI. 

So, you better be the one adopting it early on, and turn that fear of missing out into action and enjoy the gains of dynamic pricing. 

It’s time, the game is on.

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