The Re-Pricing Advantage in eCommerce

repricing in ecommerce

Airlines have done it; hotels have done it, and now e-commerce is doing it! Wondering what these three have in common? Here’s a hint – it’s the pricing strategy. If you have thought cloud has gathered around dynamic pricing, then bingo! Whether you like it or not, dynamic pricing has found its niche in online marketplaces. If you are still wondering what dynamic pricing is, don’t be disheartened because you already know what it is, you just didn’t know its technical name. Read on to learn more about dynamic re-pricing advantage in ecommerce and find out why it is thriving in the e-commerce industry.

Dynamic is the watchword

Dynamic pricing is a flexible pricing strategy wherein the cost of a product or service changes in response to real-time changes in supply and demand in the concerned market. It can be seen as a form of old world price discrimination, the subtle difference being that the latter is concerned with price changes based on customer’s demographics while the former focuses on price changes depending on fluctuations in the demand and supply in the market.

To illustrate with an example, the discount in entry fees for children in amusement parks is price discrimination whereas on New Year’s Eve when the cost of firecrackers rocket or plummet, then that would be dynamic pricing. As it is clear here, price discrimination makes price differentiation but the prices for each demographic is quite static. In contrast, dynamic pricing responds promptly to a dynamic market and changes prices accordingly often for every customer and not just one demographic. Just to be clear, there’s nothing illegal about either of the two strategies. Magento-banner-AD-2 (1) (1)

The cogs and springs

Manual repricing in compliance with a dynamic market would be next to impossible. The reason is ridiculously obvious with countless products and competitors in the market, not to mention the constant fluctuations in all major facets of the market and the minimal time available for manual computation. And even if it were possible, it wouldn’t be commercially feasible. Then how does dynamic pricing work?

Relevant and accurate data along with fast and reliable technology does the magic. Automated price-tracking software and pricing intelligent software are bots that gather pertinent data and use algorithms to reprice conforming to business rules. With the emergence of big data analytics, automatic repricing according to predetermined rules could be done at a minute level.

In simpler words, this software logs price data directly from innumerable competitors and products from various sites, multiple times per day and keeps you up to date about the market situation thereby giving you the advantage over your rivals. The data gathered is not only limited to price but also includes product availability, shipping charges and the level of demand. All these quality data lets you take control over the situation. Say, you want to ascertain that you always remain the lowest price option available in the market and the software helps you do just the same. On top of that, the software can perform advanced options like optimizing the pricing to comply with already set rules which can include minimum profit margins, exclusive offers or any other auxiliary pricing strategy to give your sales a boost.


The fruits of real-time pricing

Global retail giants like Amazon, Walmart and Best Buy are successfully using dynamic pricing. And the trend is catching on among other retailers. It’s time you opted it too, and here’s why.

Dynamic pricing, aka real-time pricing, ensures incessant monitoring round the clock, allows retailers to catch up with the hyper-competitive online retail industry, and this could inflate profits by 25% on average. The bottom line is simple; efficient dynamic pricing maximizes profit for any retailer. Here are some novel rewards you receive from a powerful repricing software:

  • Product awareness: Meaningful analysis of data bestows the retailer with the knowledge of similar products in the market, their availability, demand and pricing.
  • Competitive intelligence: If you know your competitors, your customers and your current market, then you are equipped with competitive intelligence that makes you capable of wise decision-making with regard to pricing of your product.
  • Valuable insights: The software lets you decipher the real-time market and gives you valuable insights into the patterns and emerging trends in the market helping you stay a step ahead of your competitors.
  • Pricing recommendations: Your software not only interprets enormous data for you, it can also put forward suggestions or pricing recommendations that would work best for you.
  • Track results: Repricing software gives you information regarding how effective your present pricing strategy has been and the profit you made because of it.


Before you leap

Dynamic pricing might be the best contemporary strategy for e-commerce marketplaces but there are things to consider which will ensure you that the move you make is the right one before it’s too late. First of all you need to be aware of the fact that most customers don’t know how dynamic pricing works even today and altering prices could alter customer perception, and it always may not be for the good. For instance, some customers feel that constant change in pricing makes the product less trustworthy.  A negative customer perception may result in a negative customer behavior which in turn has a negative impact on your sales.

Furthermore, every retailer must ascertain that the repricing software he is about to use is efficient. Even so, he should constantly keep an eye for errors in data and algorithm mishaps. Also, the retailer should constantly track his results and see how he is progressing. Keep these guidelines in mind, and you are all set to go for the big fish.
Would you like to know more about it? Then send an email to

Author : Letterbug Date : 16 Nov 2015