Google Retail’s 2011 Holiday Shopping Report (Free Resource)

February 13, 2012
Free Resource, Pricing Strategy
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Many thanks to Google Retail for their just released Post Holiday Learnings for 2012, a free report available to you.

The study covers how shoppers interacted with their smartphones, tablets and computers during the 2011 Holiday Shopping Season. The study also covers the rise of eCommerce, the calendar and the total eCommerce and total in-store sales. There are key recommendations for your 2012 planning at the end.

Most intriguing:

76% of Consumers Researched Online Prior to Purchase During the Holiday Season

We’re especially interested in Slide #22, which suggests that price transparency isn’t limited to mobile devices. In fact, it suggests that the majority of price comparison shopping takes place on computers.

79% of consumers used a computer to compare prices, 63% used tablets and 61% used smart phones.

Download the full report here: 2012_Post_Holiday_Shopper_Insights

Oracle Retail’s Cross Channel Commerce 2011 Study (Free Resource)

February 7, 2012
Pricing Strategy
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Many thanks to Oracle Retail for releasing the Cross Channel Commerce 2011: The Consumer View, a free PDF available to you.

The study covers the consumer’s perceptions of their experience when they shop across different retail channels like: computers, mobile devices, brick and mortar stores, social media, catalogs and customer service representatives.

What we found most interesting?

The stakes are high for retailers to have the right product when customers walk in the door, with pricing and promotions that are the same or better than what shoppers found online.

Now more than ever, retailers (both online and offline), need a deep and comprehensive understanding of the competitive landscape. While gross margins remain a key performance indicator, they are built product by product. The opportunity lies at the product level. It’s time to get granular.

When asked what they expect when they shop online and in stores with the same retailer, 73% said they expect online pricing to be the same as or lower than stores.

Could it be that lower in-store prices could attract – and convert – the foot traffic, thereby changing the current reality that stores are simply “showrooms for online merchants?” Certainly a pricing strategy worth testing.  If nothing more, knowing the comprehensive online competitive landscape is a weighty variable in pricing goods to meet consumer expectations, both in store and online.

Download your copy of Oracle Retail’s Cross-Channel Commerce 2011: The Consumer View now.

Request a demo of the BlackLocus.com Pricing Engine and get a free competitive price analysis and consultation.  See how you can quickly and easily see and monitor your entire online competitive landscape and make educated pricing strategy decisions.

In-Store Mobile eCommerce – An Oxymoron?

February 4, 2012
Pricing Strategy
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Mobile Commerce & Price Comparison Shopping

With the 2011 holiday season forever changed by the rise of mobile and couch commerce, retailers are searching for a way to compete with mobile price comparison shopping, often taking place in a brick and mortar location.

A recently released study on In-Store Mobile Commerce found that during the 2011 holiday shopping season, more than half of adult cell phone owners used their phone in store to help with purchasing decisions. With phone in hand, consumers were often looking for reviews or advice from friends. But 25% of adult cell phone users were looking up prices to see if they could get a better price elsewhere.  Internet Retailer recently reported that bar code scanning was up 297% in 2011.

Retailers are worried about this new price transparency phenomenon. It’s got the attention of retailers like Target, who issued a letter to their suppliers, asking for suppliers’ help in matching rivals’ prices and for merchandise unique to Target. On the other hand, retail giant Amazon, is encouraging the price transparency market and in-store price comparisons.

Amazon.com and Target.com are among the 25 biggest online retailers that are said to receive 70% of all eCommerce dollars.

What are all the other retailers to do?

(1)    Knowing each product’s comprehensive online competitive landscape is critical to succeeding in this market.  It’s not enough to say “I think these 5 sites are my top competitors, company to company.” Online retailers need to get really granular with each product in their product lines, and be able to find all online competitors for each one. Knowing this information means the difference between pricing yourself out of a sale, pricing too low and leaving money on the table, or pricing competitively – for each and every product, category and line of business.

(2)    Rule out irrelevant competitors.  If another retailer is selling the same product 40% lower than you, but gets only a fraction of the web traffic you get, you might consider ruling them out as irrelevant. But maybe the overlap in the products you both offer is greater than 40%?  Being able to decipher competitors on pricing, popularity and product offerings offers greater intelligence to compete in a price transparent market.

(3)    Put your best price forward. 58% of small and mid-size retailers see the opportunity to nudge gross margins up and improve top line sales through savvy pricing strategies. Understanding the weighted average price of only your most relevant competitors for each product is a powerful way to compete in this competitive price transparent market.

(4)    Now that you know your pricing, don’t compete on price alone. Pricing competitively isn’t the only variable to success in a price transparent market. Many retailers are fighting back, leveraging customer relationships, offering freebies big sites can’t, and launching campaigns like “shop local” and “buy where you try.”

eCommerce Competitive Price Analysis is now powerful, affordable and easy with BlackLocus.com.  This pricing SaaS solution doesn’t require expensive analysts, complex engagements, or long processes. It offers instant, actionable data right to your desktop. Request a demo of the BlackLocus Pricing Engine for eTailers to see how easily you can make intelligent pricing strategy decisions in minutes, not hours.

All Hail Price Transparency

January 31, 2012
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If you’re an online consumer, you know how hard it is to perform even the simplest of price comparisons for many services online. Cell phone services, cable, rental cars and airlines are notorious for adding on indiscernible fees to the originally quoted price.  The airline business may soon be struck from that list of notorious offenders. Last week a new Department of Transportation rule requiring airlines to quote prices including all required fees (as reported by Bob Sullivan on The Red Tape Chronicles on MSNBC here). All hail price transparency.

This is a huge win for consumers and the economy. Having greater price transparency helps consumers feel confident. And confidence leads to more purchases. And more purchases leads to an expanding economy.

This is also a huge win for ethically minded retailers and service providers.  Retailers who are trying to set an honest price for their consumers intimately know the pain of trying to understand competitor shipping costs in order to see what their true competitive landscape looks like. This manual process not only costs man hours and overhead, but it is rarely transparent or accurate. For those markets where these additional fees are rampant, guilt by association is tarnishing all reputations. (See airfarewatchdog’s Top Ten Most Obnoxious Hidden Airline Fees)

Now that those hidden fees found in airlines are being wrestled to the ground, it’s a good time for other industries to follow suit.

As a retail insider, how do you think this applies to the retail industry, if at all?

eCommerce Pricing Engine

January 27, 2012
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Don’t Know What an eCommerce Pricing Engine is? 

Our software as a service offers the ability to find your comprehensive competitive landscapes for each of your products, and the provides intelligence to make smart pricing decisions in seconds, not hours.

Watch this quick video.

 

Kudos to BlackLocus team members Hajin, Lukas and Matt for this wicked awesome video!

VIDEO TRANSCRIPT

BlackLocus is a powerful and affordable e-commerce competitive pricing engine for eTailers large and small. BlackLocus can scale from one product to millions of products and find unlimited competitors for each one. Best yet the actual data empowers you to put your best price forward.

Say I’m an online electronics retailer. This is my BlackLocus dashboard. Let’s start with the top competitors report. Here I can see my top competitors, their online popularity and the number of products we have in common. Better yet, I can see a snapshot of how our prices compare. I want to see more about this competitor. They have slightly more traffic than I do. Over forty percent product overlap and I’m pressed below them seventy nine percent of the time.  I could be leaving money on the table. Let’s star this competitor as a favorite and create an alert.

I want to be alerted whenever my price falls below the lowest price of my starred competitors by five percent or more. So now that the alert rule has been created I’ll be notified by email whenever my prices fall below my starred competitors.

Now let’s click into this alert. This is a list of all the products that match my alert settings. Let’s drill down into this product.

This page shows me the comprehensive competitive landscape for this particular product. Looks like I’m sixty four dollars below my nearest competitor.  Over here I can see historical pricing data. I’m the blue line. The price trends on this product are going back up.

It’s definitely time for me to increase my price. To do that I’ll export this data into a csv file. Now I can upload these price changes into my shopping cart, my marketplaces and other price comparison engines. Competitive pricing analysis is now quick, powerful, and affordable with BlackLocus. Schedule your demo today.

New Kid on the Block: 5 Tips for What to Do When a New Competitor Shows Its Ugly Mug

January 24, 2012
Pricing Strategy
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Your e-commerce pricing strategy may be working quite nicely for you, until suddenly a brand-new competitor shows up, and suddenly a good number of your customers are flocking to that eTailer.

Your first reaction might be to restructure your own pricing strategy and undercut this new kid on the block, an impulsive move that could end up costing YOU rather than the new kid.

But before you jump off the deep end of the competitive landscape, unleash your inner Sherlock Holmes and sleuth out this new competitor. Learning everything you can about what the new kid is up to is referred to in e-commerce as “competitive intelligence,” and it could really pay off for you in the long run.

Navdeep Sodhi, the author of Six Sigma Pricing and its companion blog, cautions, “Intelligence gathering should be pragmatic rather than a wasteful collection of data” in this blog post. He then poses some thoughtful questions you can explore:

  • Is the competitor a wild card across the country, or can we spot consistent patterns?
  • Do they price aggressively everywhere or only in specific sales regions or for certain customers or products?
  • How does the competitive offering compare with our product features?
  • Is the competitor irrational [or] just reacting to our aggressive behavior?

Another handy tool for sussing out your competitor is this handy-dandy competitive pricing analysis checklist from FastTrac® GrowthVenture™. It walks you through figuring out where your new competitor fits in these three broad pricing strategies:

  • Lower pricing
  • Higher pricing
  • Parity pricing

Once you’ve pegged your competitor, it’s also a good idea to find where your own pricing strategy fits on the checklist.

As you’re doing your detective work, keep this tip in mind regarding e-Commerce competitive intelligence: in today’s real-time, data driven, automated-technology world, it’s an ever changing landscape. In order to appropriately respond to today’s price transparent market, you need a stream of fresh data and the ability to act quickly.

Here’s where BlackLocus.com can serve as your Watson. Oh, sure, you could noodle around yourself and collect a bunch of information by spending hours and hours of Googling, manually spot checking prices, reading corporate reports, etc. But why expend all of that valuable time when BlackLocus.com can give you the data on your competition?

Once you’ve completed your investigation, you will have enough data to make an informed decision on how –– or even if ––– you’ll respond. And remember, look out for your own best interests above all else, and before you know it, that new kid on the block will just be another irrelevant eTailer.

Case closed!

Request a demo of the BlackLocus Pricing Engine and get a free competitive price analysis and consultation to see how you can quickly and easily see and monitor your entire competitive landscape and make educated pricing strategy decisions.

10 Most Popular Pricing Strategies

January 4, 2012
Pricing Strategy
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You have a product. You need to sell it. But for how much?

It’s one of the 4 Ps of Marketing: Product, Promotion, Place and Price. Within price setting, there are countless variables. A comprehensive understanding of your company’s objectives, costs and available pricing strategies will help you set competitive prices across your entire product suite.

Here are the 10 most popular pricing strategies.

1. No pricing strategy. Sadly, this is one of the most common pricing strategies. Many retailers just wing it.

2. Cost Plus or Absorption Pricing. The simplest of all pricing strategies. Add the cost of production to a percentage markup and you get your price. This is the easiest pricing strategy to use, and can be used in tandem with other pricing strategies.

3. Competition Based Pricing. Conducting a thorough pricing analysis on the entire competitive landscape of each product in the product line and making sure you are within reach of your competitors is difficult, time-consuming and often requires a dedicated research team. Unless you employ price management software to make that job simple and easy.

4. Freemium. It’s more than a business model; it’s also a pricing strategy. Offering a free product, and tacking on a set of ‘pay to upgrade’ features to that freebie and you have a Freemium Strategy.

5. Dynamic Pricing. Fancy, and used almost exclusively as an online pricing strategy, Dynamic Pricing takes into consideration multiple data points in setting a consumer’s individual price and sets the price automatically and dynamically online. Have you ever bought an airline ticket? The airline industry has had this pricing strategy nailed for years, considering factors such as flight demand, your purchase history, and the geographical location of your internet address.

6. Skimming. Is your product something people have been waiting anxiously for? You could consider setting your price sky high at product launch. This pricing strategy is named ‘skimming the market’ by seeking less sales with a higher profit. The price can‘t maintain forever, but could be a valuable revenue increasing strategy for hot new merchandise. This pricing strategy if often used on technology products. Think about how the price drops on technology products as time goes by.

7. Loss Leading (or High-Low) Pricing. Have you ever thought about losing money on a product? It might sound crazy, but it is a common revenue generating price strategy. The end goal is to draw customers in with a high demand product at the low price. Retailers will often encourage customers to buy more at checkout/point of sale, thus increasing the units per transaction and making up some lost margin. The loss leader product is generally set at an intentionally low price, or priced normally with an aggressive discount or sale. Grocery stores are masters of this pricing strategy.

8. Penetration Pricing. Is your product new to the market or new to your company? You might try another low ball price strategy called Penetration Pricing. By setting the price drastically lower than your competitors, you are likely to woo over customers quickly and gain a share of the marketplace. Just like skimming, that price can’t go on forever. Once you’ve reached a predetermined market share goal, you would likely switch pricing strategies to keep the momentum and generate more revenue. Proceed with caution though, as you risk alienating the customer base you have worked so hard to gain!

9. Psychological Pricing. Probably the 2nd most commonly used pricing strategy. Yesterday the product was listed for $10.00. Today it was dropped to $9.99. The difference? 1 cent. The gain? Likely a sale.

10. Premium Pricing. A a consumer, you’re standing in front of the shelves and you’re given the choice of Products A, B and C at prices all relatively the same. Then there is product D. Product D is priced a wee bit higher. Have you ever thought, “Well, this one MUST be better,” grabbing Product D off the shelf? The retailer could be employing a Premium Pricing Strategy where they’re hoping you equate the higher price with the idea that it is a better product.

Not all pricing strategies are viable choices for each company (or even each product). The first step in auditing your pricing is to gather your costs and complete a detailed competitive analysis on each product. These two pieces will help identify which pricing strategies to use successfully.

Request a demo of the BlackLocus Pricing Engine for eTailers to see how you can quickly and easily understand your comprehensive competitive landscape and make educated pricing strategy decisions.