How to keep track of E-Commerce competition prices?

Source: Unsplash/ Igor Miske

Price is one of the primary factors for the success of our online business. Approximately 60% of users buy more in specific e-commerce for its prices.

With the onset of the pandemic, the natural movement of business and the economy moved mostly to the web since quarantine restrictions forced us all to stay in our homes. According to Webloyalty studies, the amount of E-Commerce has increased by 24%, and the number of online buyers increased by 63%.

However, lower prices will never be a solution to getting more customers. Instead, this strategy causes a strange opposite effect on your customers, who decide not to buy from you because they think something is wrong with your products; on the other hand, it represents a loss for your business.

Knowing your competition's prices helps you understand where you should place your products and how you should stay out of the way to remain competitive. When you know the prices of your competition, you will begin to notice patterns in their strategy, which will help you surpass them in order to stay at the top of the e-commerce stores.

Seeking to help your business increase profits, today at Codedesign, we'll teach you how to monitor the prices of your competition in e-commerce, what are the manual and automated ways to do it and many interesting topics about prices in e-commerce. 

Let's go right into it!

CodeDesign is a leading digital marketing agency ranked #1 in Lisbon, Portugal. You could work with us to accelerate your business growth.

How to price products for your E-Commerce?

Pricing our services or products can be a confusing task. Knowing how much is too much or too little for what we are investing can raise many doubts. Luckily, there are three factors that can help you get a good price to generate profits and be accessible to your audience.

Profit Margin

Suppose that your business is in charge of selling sports shoes, each of which costs you $11. So, you must get a profit margin from each of these shoes. Therefore, you must sell them more expensive than they cost you, but how much?

You may think that to maintain the balance between an accessible product and the profits, you should only sell it just a little more expensive, say $ 18. But don't you take into consideration all the other expenses you make? What about ads? Pay Per Click strategies? Any banner you can have? All these extra payments go into the product's price, so if you sell it for $ 18, you will not generate much profit.

The idea is to multiply the initial price of your product by 3 or 4 - honestly, there is no indicated number for each case - and then, in a sort of A / B test, you'll see how your users are responding to your prices.

Source: YouTube.

Perceived Value

The perceived value is how much a product is worth in the consumer´s mind. 

If you sell your sports shoes for $ 150, your consumers will probably stop buying them since they do not plan to spend so much on them. However, a separate case is collector's shoes like Air Jordan, which are restricted items linked to a celebrity like Michael Jordan. In this case, the popularity of your brand tends to play a lot, you can buy a white shirt at H&M for $ 20, and the same shirt will cost $ 200 at Gucci.

Source: YouTube.

Brand Value

The value of your brand is like the authority points you have achieved in your niche, and you already have such a large audience willing to pay anything for your products.

This is where we return to the comparison between Gucci and H&M. While H&M is popular for being cheap clothes that look good, Gucci is at the other extreme, being one of the most expensive brands on the market. These two companies probably pay the same to produce your clothes - let's imagine it's $ 15 per shirt - but while one can only sell it for $ 35, Gucci can afford to sell it for $ 200.

Source: YouTube.

Tips to Improve your Pricing Strategy

The .99 Price Strategy

This strategy works quite well with customers who are price sensitive, and although it is somewhat ironic, our consumer mind will always see it as a bargain.

The .99 price strategy consists of this: you sell a TV that costs $100, and after leaving it for a week at that price, no customer has decided to buy it. Next, you read our article and learned this trick, so you price it at $99.99. The next day, as if by magic, you find a buyer who has decided to take it for that price, thinking it was his life's best bargain.

What's going on here?

Well, our brain fooled us with this strategy. When we see that the TV doesn't cost only $100 but $99.99 in the last one, we only perceive the number before the dot, assimilating that it isn't almost 100 dollars but 99, which is why we think it is less. 

This can work better even with lower-priced things. For example, if something costs $5.99 instead of $6, we'll feel that it costs only five, and we'll take it anyway, thinking it is a bargain. This type of strategy can also be applied in comparison, where you make a product look cheaper by placing one next to it that is much more expensive. For example, if you sell cell phones, you can set the latest model in the first image and the previous model to the side, making the user think that this is much cheaper and a better bargain.

E-commerce pricing.

Price Sorting Order

Usually, when a user clicks on a product category or site search result, you have the chance to build the order in which you show your inventory.

Regularly, when you price from high to low, it could increase your average order but also reduce revenue.

Nevertheless, when clients are likely to buy, using this strategy to price from high to low can do wonders for your digital store. Restaurants and property websites use this type of pricing method.

When customers read from top to bottom these sorting lists, they regularly find a product that likes they more at a higher price first. If your customers are motivated, it is an excellent move for your e-commerce.

Pricing Up.

There are specific audiences or times of the year when your best strategy is to raise prices. Let us explain.

First, there is the phenomenon of Veblen Goods, products that, contrary to others, increase their demand when they increase their price.

These products can work well because the high class wants to be perceived as luxury, and the middle class wants to reach this level.

On the one hand, the upper class sometimes wants to break away from the common denominator; therefore, they will be willing to pay much more for certain brands of clothing or accessories. This is where sellers get sneaky and give their audience just what they want, bags or shoes at a much higher price to make them feel more "exclusive."

In the same way, when middle-class people who have managed to increase their income want to see themselves with more cache, they will be willing to pay much more for something that gives them that prestige they want, and they will pay absurd amounts for your products.

The other case in which raising prices usually works is during the holidays—for example, Mother's Day.

When buying a gift for your mom, you will not pay little for the person who gave you life, and instead, when looking to do something symbolic, you will want to buy something of a higher category to give her what she deserves.

Although pricing up could reduce sales volumes, this strategy's idea is to increase your profit margins more than order numbers.

Pricing Up.

Manual VS Automated competitor price tracking

Maintaining a detailed study of your competition allows you to continue in the market competition. Therefore it is always important to use any tool to study our online business environment in more depth.

Like SEO and PPC, digital marketing allows us to use free or paid strategies in our marketing plan, so we will compare which form of price tracking can be more effective for your business.

Manual

Every price manager knows that if you want to track competitors' prices, it is crucial to make analytics on the datasets acquired. This is usually done by a team that covers characteristics of the competitor´s pricing, and the best tool to do this is Excel spreadsheets that keep all of the information in just one document. The downside of this method is that it can take a lot of time.

The huge amount of requirements and resources that this method needs can limit the effectiveness of manual price tracking. Let´s make an example.

Imagine that your competition offers a variety of 200 products, so once you have detected it, you open your excel sheet and place all the products. Completed work? We don't think so.

If, for some reason, your competition uses tools to keep track of their competitors, prices will keep changing constantly, and updating every moment of those changes is exhausting, even for a large team.

Manual tracking may work for smaller niches or competitions where there is no demand but is otherwise very outdated.

Source: Unsplash / Mika Baumeister

Automated

Automated price tracking solutions are evolving quickly, being the most preferred among e-commerce and retailers. While manual efforts are ineffective for gathering competitive intelligence, automated price monitoring solutions have no limitation in managing this information. Using these tools can help you reduce the time a team spends tracking all your competitors' prices. 

Today online buyers are bargain hunters; if your price doesn't please them, they will immediately go to look for the same product on another website. This is done by 94% of consumers, according to Intelligence Node studies. Then, the competition becomes impossible for those who want to do precise tracking manually since there are too many prices and competitors to have accurate data. 

Fortunately, we'll share three of the most efficient software to inform you of your competition's prices. Take a look!

Minderest

If you want to do competitive analysis, like studying or comparing items to those on platforms like eBay, Google Shopping or Amazon, then Miderest is the right option. This tool will allow you to assess your competitors' prices and keep information on their offers, pricing and products. The application comes with:

• Monitoring tools for promotions and different prices.
• Profit analysis with optimization pricing strategies.
• Extensive pricing research.
• Examining competitive items.

The best part of this software is that it comes with a free trial to let you decide if Minderest suits your commercial needs or not.

Prisync

This software will help you increase revenue and profit margins by revealing your competitor's strategies and prices. By searching for any relevant stock or product pricing, the application will show all the information in an easy-to-use dashboard. The software comes with:

• Reporting options help track pricing performance or the brand and category level.
• Change your pricing strategy automatically in response to competitor changes to increase your profit margins.
• Gives you access to current price data from the market.

Source: YouTube.

Omnia Retail

With Omnia Retail, you'll be able to automate pricing, get insights on how much your items can grow profitably with its automation and much more. This enterprise software makes it easy for teams to manage pricing without IT. The app comes with the following services:

• You can track and get daily updates on all your products.
• Get data on competitors' pricing and trends.
• You can put price regulations with flexibility and freedom.
• Combine market knowledge with your company's data.

Source: YouTube.

How to beat your competitors without lowering prices?

You don't need to lower the prices of your service to stand out from your competition, in fact there are ways to stand out even by charging more expensive than your challengers.

The essential thing is to add more to your perceived value, that your clients see you as an authority within your union, and therefore, they will always buy from you regardless of your prices.

There is a famous saying in marketing that it is under-promise and over-deliver, which means that your customers get more than they bargained for. However, there will be competitors going to over-promise and under-deliver, and they could lead your consumers with lower-quality products.

The idea is to add value to your services, allowing you to offer extreme quality services so they will be more than pleased with your service when they receive it.

Giving a quality service and being recognized for that allows you not to lower your prices to stand out. You simply must know and study what your audience asks for.

Conclusion

Technology has come to make our lives easier, therefore it is logical that any manual way of doing market research is left behind. Investigating the price of our competition makes it clear to us where we may be treading, and if our products are associated with the price we ask for them.

On the other hand, factors such as our authority in web domains give us the opportunity to ask for more for our services, since the value of our brand is even greater.To add value to our services, we must highlight the benefits we offer so that there is a direct relationship between quality and product.

At Codedesign we will continue to inform you about tactics to do a more in-depth market study, in this way your sales will continue to increase.

See you in a next article !!!

Feel free to contact us to see the unprecedented growth of your business.

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