A Customized and Automated Repricing Solution — Why do you need it?

Did you know the secret behind Walmart’s 30% boost in sales in 2018 is that they repriced their products 50,000 times per month since 2013? Do you know why 44% of buyers look for products on Amazon first and then on the other platforms? 98% of online buyers compare the prices of a product and buy it from the site that offers it at the lowest price. At the same time, the sellers also wish to achieve an increased bottom line. What is the solution here? The solution is an optimized pricing strategy- a price that’s set neither high enough to lose a customer nor too low to run into a loss! And a customized repricer can help you achieve that perfectly optimized pricing strategy.

This blog will help you understand the need for a repricing solution, how the industry has evolved to adopt a customized repricing-based optimized pricing strategy, and connect you to the right people who can build a repricer for you.

Pricing Model Evolution

Let’s start by looking at the traditional pricing model, which was initially designed to help you prepare a pricing strategy for a static product for a period of time. Of course, negotiations happened over the counter on the price of the product, but the entire process became obsolete with the emergence of e-commerce platforms. This model is mainly useful for deciding dynamic pricing and how you can make dynamic pricing efficient.

Generically found information would tell you that pricing or rather “sales price” of your product should depend on two factors-

1. The actual cost of the product, and
2. Its demand in the market, both being in a linear regression equation with the actual sales price.

If we were to consider the example of the fashion industry, this pricing would stay consistent over the period of a season. This logically means we are also looking at the demand for the product during that season.

Enter Dynamic Pricing

Taking the traditional pricing model ahead, how amazing would it be if you could forecast demand for a shorter period? Many e-commerce platforms are doing this. Myntra, an e-commerce platform in India, has brands for which a season is as short as a fortnight. Thus they forecast demand only for a fortnight.

Let’s move further ahead- if you could forecast demand for every hour of the day, wouldn’t you be interested in pricing your product accordingly? This phenomenon is referred to as dynamic pricing.

Dynamic pricing is nothing but analyzing the traditional pricing mechanism over a very short period of time and repricing your product accordingly. Adjusting dynamic pricing manually is one of the toughest tasks out there, hence automated repricing came into the picture.

But there was still a flaw. This dynamic model did not take into consideration the following factors:

1. Inventory and supply chain constraints
2. Cross-item demand cannibalization
3. Competitor pricing strategies
4. Promotional activities

Thus to rectify this flaw, more customized dynamic pricing solutions were introduced. The dynamic pricing solutions were upgraded continuously to enable them to learn all these parameters better. The SaaS software had to be repackaged accordingly as sellers began considering all of the above-listed factors.

But where was this software collecting its data from? Did it really gather the most accurate data for categories that you, as a seller, would want it to? And could there be a common strategy for you and/or your competitor?

Enter customized dynamic pricing solutions

This is when people began recognizing the importance of customizing the solutions for dynamic pricing. These solutions help retail organizations build a dynamic pricing solution from scratch. Would you like to get one built too? Talk to us.

There was still scope for improvement. The data science fraternity started coming up with questions around “Price elasticity of demand”.

In simpler terms, it meant measuring the responsiveness of customers to a change in price. Now the companies started thinking not of a price at a single point but an entire pricing strategy. E.g., the price of Air Conditioner (AC) is set on the higher side during summers owing to high demand and on the lower side during winters to achieve maximum profit. The customized software then started helping retailers define these ranges within which their pricing should be set during different periods of demand. This was termed as Price optimization.

Machines began storing these data in databases and as a long term solution started predicting the prices based on the historical data.

Enter Machine learning and Artificial intelligence.

Companies such as Clairvoyant can help you prepare a long term solution that takes care of multiple factors-

1. Recording data from both offline and online data sources on how prices are being optimized across the industry and by your competitors
2. These include internal data sources, such as historical pricing strategies of your product, or effects of promotions on the demand-supply matrix for the products
3. And external sources include similar data of competitors as well as that of the industry
4. These solutions can help you identify the impact of changes in any of the parameters as a factor of pricing and its impact on revenue
5. They can help you structure your information on the cloud in such a manner that your system can keep track of all the data for a long period of time allowing easy access in the future
6. They can help you operationalize AI to such an extent that you start predicting your pricing. This can be termed as an automated repricing strategy or even a price optimization strategy in accordance with future trends

Our AI solutions can take into account a tremendous amount of data to predict repricing strategies for the following situations: 

1. Strategy to win a price war against your competitor. Deciding a stop-loss situation when entering a price war
2. Pricing strategies during the era of pandemic
3. Understanding pricing in a situation of cross item demand cannibalization
4. Or impact on repricing when there are inventory or supply chain constraints

Managing your Repricing Strategies Manually

Having a manual repricing strategy is like having a rule-based strategy; you really cannot play around much given the huge amount of data. Studying that data is a tedious task and it is humanly impossible to come up with the right numbers. Sure, you can change your repricing strategies with a manually functioning repricing strategy but have you ever thought of how ineffective and time-consuming it would be? Why spend a lot of time on a task which can be performed in minutes when you’ve other business operations that need your attention?

1. The BIGGEST challenge with manual repricing strategy is that you have to go through:

• Your competitor’s listings and look for their prices
• Go through all of your listings and make changes
• Go through listings category-wise to improve your strategy

The whole idea of selling the maximum amount of your goods at a profit at the right time is lost in the manual repricing process (unless you are okay with the no-profit, no-loss situation!).

2. The second biggest challenge with manual repricing strategies is a high probability of calculation and human errors, like misplacing the decimal point in the amount.

E.g., If you want to sell your product at $50 and you forgettably feed $5 in your system, you will face a huge loss. At times you may think you’re selling your product at a profit while you actually might be selling it at a LOSS

Amazon, the biggest e-giant, also faced a huge loss because of a repricing glitch. They have the biggest sales of the year on “Prime days”; however, the best deal that day was on top-end cameras. Originally, the camera was priced at USD 13,000 (INR 900,000/-) but owing to the repricing glitch; the camera was priced at a mere USD 95 (INR 6500/-). Amazon took a while to resolve the issue but the damage was already done.

Managing your Repricing Strategies with Automation

Most of us in the industry follow the ‘WORK SMARTER, NOT HARDER’ rule, and at times it’s difficult to implement that, but with the right repricing strategy tool, we can actually work smarter.

There are so many business advantages of using an automated repricer- it’s like a gold mine for sellers! Nowadays, buyers can look for any product online and compare its quality, size, quantity, and, most importantly, its price (including shipping charges). For a seller to become their first choice, the product must be cost-effective. The top sellers have long occupied their positions because they update their prices using an effective customized and automated repricing strategy in a timely manner.

Automated repricing model technology conducts an in-depth analysis of your competitor’s pricing strategy, product details, along with category listing. It also studies customers’ purchasing behavior towards the product. This gives the tool an idea about the time of the day when the product is purchased the most, and based on such aspects; it sets the best repricing strategy for the product. This is ‘Intelligent Repricing,’ allowing a hike or decrease in prices depending on the situation to generate maximum profits. Owning a customized repricing tool gives the seller the freedom to apply arbitrary and complex pricing strategies.

How does a Repricing Strategy help the Seller?

1. Helps in clearing old stock and pushing slow-moving products

When the seller owns a customized automated repricing tool, he gets his hands on the most effective selling techniques. These techniques are an outcome of the automated tool making a thorough analysis of the gathered data. It cleverly manages to come up with offers that are likely to be noticed and opted for by the buyers. Some of the repricing strategies that it may follow help provide profitable discounts to buyers, perform product bundling, etc. These repricing strategies increase the average order value of the stock by increasing the customer’s value perception.

Repricing tools help attract customers and push the stocks out of your inventory by setting a lower price for your slow-moving stocks.

For example, your stock of woolen pullovers could be sitting in your warehouse occupying space during the summers, making them a slow-moving good. An automatic repricer can push such slow-moving items by lowering their prices or offering discounts at par or higher than what your competitor is offering, thus converting your static inventory into a profitable one. Customers who do not prefer waiting until winters to stock on their winter clothing may take advantage of lower prices during the off-season.

2. Helps in increasing profits

There are a lot of online sellers selling similar products on the same platform but at different prices. The prices defer because they are set -

• above competition
• matching competition
• below competition

The ultimate goal of the sellers is to make profits by increasing the sales velocity. That is made possible by implementing the right strategy at the right time. Repricing solutions give the seller a perfect short-term pricing strategy to increase profits by analyzing the competition.

For example, below is a snapshot of similar fruit juicers sold by different retailers on the same eCommerce platform. The first, second, and fourth sellers have priced their items at $313.72, $321.08, and $290, respectively. The third seller is the most competitive one, selling the item at $145.99.

In this scenario, the third seller could detect the opportunity through an automated and customized repricing tool and increase the price below the other three sellers. This would increase his profit margins and help the retailer remain the most competitive player in the market.

Let’s understand what exactly is a Customized Automated Repricer tool

A repricer has a fixed template or a framework and is mostly used by retailers or sellers to set or update the price of their goods at the online marketplaces. Whereas a ‘customized repricing tool’ is designed as per your requirements. This increases the chances of attracting more buyers and competing with the other sellers.

The customized automated repricing tool updates the product price by increasing it or offering discounts based on a set of calculations and algorithms. It sets the best bid for your product after studying the buying patterns of buyers and your competitor’s prices. This can have a huge impact on your sales.

This tool is designed to align your prices to fit real-time market conditions and simultaneously reduce manpower, manual efforts, and errors.

How does Customized Repricing Work?

1. The repricing tool gathers and collects real-time data from all the platforms that you are listed on (eBay, Alibaba, Amazon, etc.) i.e., it has multi-channel data tracking capability. This data helps in:

• Strategic analysis
• Strategy formulation

2. This tool compares your prices with your competitors who change their prices hourly and continuously monitors the data to give you the best results.

3. It reads the entire data with its unique algorithms and makes calculations. It considers the product cost and the expected revenue for its calculations and updates the product price automatically.

4. You can pick the parameters you want to feed the tool, such as minimum and maximum price for your product, based on its category and the product.

How does this help the seller?

1. It continuously monitors the repricing patterns online and gives you an effective pricing strategy. Even if you’re asleep, your product won’t ever sell at a loss.
2. Every time your competitor changes his product’s price or alters details in his listings, the repricer tool captures it and adjusts your price automatically to keep you in the game all the time.
3. Repricers have the ability to ignore the stock that you’ve kept on hold, or the ones that have fixed selling prices, or the products that are out of stock so you never have to worry about such products.

How does this help the seller?

1. It continuously monitors the repricing patterns online and gives you an effective pricing strategy. Even if you’re asleep, your product won’t ever sell at a loss.
2. Every time your competitor changes his product’s price or alters details in his listings, the repricer tool captures it and adjusts your price automatically to keep you in the game all the time.
3. Repricers can ignore the stock you’ve kept on hold, the ones that have fixed selling prices, or the products that are out of stock, so you never have to worry about such products.

Where can you get your customized Repricing tool?

RIGHT HERE! Clairvoyant possesses advanced capabilities to engineer unique customized repricing solutions. There are readymade solutions available in the market but

• you may end up paying extra for the features that you don’t need
• they may follow the same repricing strategy as that of their competitors

Based on your products, competitors, and categories, we can build a customized, user-friendly platform that can give you your very own repricing tool. Let’s build your solution, shall we?

Conclusion

1. Consumes less time for complex and heavy calculations (can perform them in seconds)
2. Generates more efficient and reliable outputs
3. Performs dynamic repricing strategically according to real-time market situations to increase the sales velocity target
4. It gives out the most accurate information regarding your categories, products, and the platforms that you’re listed on