Changing the price of a product is a standard business practice. What would happen if you changed the price multiple times a day?
It could mean an increase in sales. That is where dynamic repricing becomes a necessary strategy.
Dynamic repricing is a strategy where product prices are continuously adjusted to respond to real-time supply and demand. A product’s price can change in a matter of minutes, with the goal of price optimization.
For example, Amazon heavily relies on this strategy. If you look through their website, you will notice their product prices are updated every 10 minutes. This lets Amazon offer the best bargains as they can discount products as soon as they become popular or receive good reviews.
Dynamic repricing has resulted in increased sales for many well-known eCommerce companies. Let’s take a look at Walmart. Since 2013, the retail giant has changed its product prices 50,000 times a month. As a result, it has enjoyed a 30% increase in sales. This is the kind of difference dynamic repricing can make.
By using dynamic repricing, you will have access to real time price trends. Also, you can observe price changes made by your competitors. The result is a clear understanding of your market. With your detailed pricing information, you can optimize your pricing strategy.
Dynamic pricing allows companies to fine tune their production as it provides an early warning signal for falling demand. As a result, reducing the likelihood of unsold inventory.
Dynamic repricing has the potential to hurt a company’s brand. Visitors to your website may become frustrated if prices are always different. This is most commonly experienced by airline passengers. Airlines can change their prices two to three times in a single day to maximize the total revenue for each flight.
On the other hand, dynamic repricing can be used as a tool to launch seasonal and promotional offers, which can enhance brand value. This can also increase sales, providing promotions and incentives to buy.
There are both positive and potentially negative effects of dynamic repricing.
eCommerce has the benefit of software. It eliminates manual labor and saves precious work hours spent calculating price estimations. With dynamic repricing software, the software will monitor your chosen platform, such as Amazon Marketplace, to help you stay competitive. With price sensitive shoppers, it is important not to let competitors undercut you on price.
The dynamic repricing software will allow you to monitor competitor’s prices. Then, adjust your price when changes occur. This keeps pricing competitive, while prices fluctuate throughout the day.
Installing the right dynamic pricing software can be a competitive advantage for your eCommerce company. Different software will perform these updates differently.
Dynamic repricing bridges the gap between the buyer and seller. By providing an accurate picture of consumer demand, dynamic repricing can provide added value to your business.
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