How Dynamic Pricing is Key to Retail Technology Solutions
As brands continue to invest in retail technology solutions for increasing their online footprint, dynamic pricing is a key challenge for them to improve their reach, customer experience & profitability. The growing presence of online consumers, who order everything from grocery items, fashion accessories and daily consumables to electronic gadgets, means retailers need stronger online visibility and sales. The brick and mortar needs stronger online sales for meeting its consumer demands.
The shift to online sales for retailers has received a push since the pandemic. The customers have access to all the top ecommerce giants like Amazon, Walmart among others. Here’s a look at how retail brands are using dynamic pricing as a strategic tool for gaining a competitive advantage and serving their customers with the lowest pricing for them :
• Demand Driven Pricing Model
The demand driven pricing model prices items dynamically using online data. Take for e.g. a furniture store looks for similar items in the vicinity, their pricing and availability etc. before coming up with the optimum pricing. The pricing ensures that items for which there is short supply receive a premium. Other goods can be traded with more discounts. The pricing strategy is devised as per the market model. The online stores can choose the type of pricing like demand driven, item pricing in vicinity, least price model etc.
• Consumer Experience
The consumer experience is getting richer using new technologies and innovations. The immersive and advanced technologies make online ordering smooth, seamless and transparent. The consumers can get a feel of the items they are about to purchase. If you order sneakers on Nike online store, you can play around with the shoes as if you were in the store. The consumer experience can be enriched by merging online and physical store expectations using retail technology solutions.
• A/B Testing
The pricing strategy, placement of items, inventory optimization, online sales and promotions are constantly changing. There is no fixed strategy for dealing with these variables, but a data driven approach can be very useful. For e.g. trying out different placement of items on the home page, trying various promotional options as per the location of users etc. might work well .The online store can use variations of strategies and evaluate which works best for their business. The dynamic and data driven feedback can be incorporated on an ongoing basis.
• Geo-fencing with Retail Technology Solutions
The geofencing can also help retailers manage different state regulations. Say, if there is a state where taxes and high, then that the retailer can choose not to sell in that location. The geofencing can help retailers identify their top locations and customer base for high profitability. The technology can be used in identifying value based business model to increase penetration, profitability and reputation of a business.
• Tracking Demand Drivers & Loyality
The profitability for every item can be evaluated with detailed reports across locations, product categories and seasons etc. The most profitable items, product categories and locations can be analyzed for expansion. The cost of item for online and offline can help retailers assess the key metrics with data. For e.g. milk and eggs could be sold profitably using online channels in certain locations, the retailer can choose to deliver only at those locations. The customer loyalty can be tracked using an online store. The pastpurchases, interests, and activity can be used for personalized promotional offers. The loyalty metrics can also help companies serve their high value customers proactively.