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Loading...Price monitoring and automation - what is it?
Price monitoring is an automated process of keeping an eye on the offers on the market. When taking into consideration an enormous and constantly increasing number of online stores, it’s almost infeasible to successfully monitor all marketplaces and sales channels without using professional tools. Meanwhile, accurate and proper information concerning market prices is particularly important for both online stores and manufacturers. Thanks to it, it’s possible to optimize sales strategies, take steps and quickly adapt to changing market realities which translate directly into maximizing profits and maintaining a competitive advantage over market rivals.Price monitoring is often combined with price automation. It’s precisely the latter one that makes it possible to effectively react to the steps taken by your market rivals.
Just to put you in the picture, imagine that a given customer is looking for the most beneficial offer on the market and your direct market rival has just cut the price. Thanks to the automation tool, you’re able to immediately change the price in your online store and thus maintain your leadership position. Due to the emergence of such tools, it’s possible to take e-commerce steps that not only increase traffic to the website but also help to improve sales.
How to monitor prices in specific product categories?
When introducing online price monitoring, many different criteria are taken into account. It’s possible to monitor only selected stores, marketplaces, price comparison engines or specific product sections. The division into categories makes online store navigation more intuitive and user-friendly. Filtering products by brand, color, size and price makes it easier for customers to navigate the store. Thanks to it, they don’t have to browse through the entire product range to find a few items they’re looking for. [caption id="attachment_27749" align="aligncenter" width="750"]
Product filtering in the ASOS online store.[/caption]
So how to monitor prices in specific categories? It’s helpful to name and arrange categories in a way that is compliant with UX principles. Thanks to it, they’re identical in many online stores. Consequently, you can effortlessly monitor your market competition and then, on the basis of the collected data, manage your own prices and take strategic steps related to selected product groups.
Price automation in selected categories
Prices in each category can be not only monitored but also automated. Thanks to it, it’s possible to immediately respond to changes on the market and automatically adjust prices in your online store. Certain industries and categories are characterized by rapid price fluctuations that have a significant impact on customers’ purchasing decisions. The airline and hotel industries are perfect examples. However, price automation can also be effectively applied in other sectors, even if given product categories attract customers that are more price sensitive. Price automation is implemented with the use of smart, self-learning algorithms that take into account price rules consistent with the customer’s strategy. These may be:- prices of your market rivals (in selected category, industry, shop, price comparison engine),
- demand for specific products during certain time periods,
- average product price offered on the market or by specific rivals,
- setting a price that is lower or higher than the price of a particular market rival,
- setting the lowest, highest or average price (in juxtaposition to the market)
- the number of products available at a certain price,
- out-of-stocks of your market rivals,
- margin limits,
- customer behavior in online stores,
Strategies for price monitoring and automation of product categories
In order to choose the most optimal strategy of price monitoring and automation, it’s worth taking a closer look at the importance and impact of individual products and categories on the business. Thanks to price monitoring tools you have considerable freedom and on the basis of search results and current market situation you can easily select categories that should be automated or monitored. Start from focusing on products that are purchased the most frequently and enjoy popularity among customers. When thinking about this type of items, we usually don’t witness enormous discounts. However, sometimes it happens that prices turn out to be the most attractive factor when it comes to purchasing popular and easily accessible goods. In such a situation, even a seemingly insignificant discount can effectively attract potential customers. Therefore, in case of highly competitive product categories, it’s definitely worth implementing price automation because quick reactions to changes of prices offered by your market rivals may be critical. In the next phase, you should focus on products with high margins as they generate the greatest profits. Very often customers who are looking for specific items encounter other goods offered in the store and thanks to skillfully applied mechanisms (e.g. free delivery from a certain amount, discount codes or cross-selling) decide to buy more. It needs to be mentioned that price monitoring and automation rules can be continuously modified and adapted to changing market realities.
Important examples of category monitoring strategies
Throughout the years of cooperation with clients who run online stores offering products from differing industries and categories, we’ve learned how to effectively apply price monitoring and automation in selected categories. Now you can take advantage of our expertise to build your own pricing strategy.- Lower prices of untypical products
- Internal categorization of products
- Top products are to be sold at the recommended price until their life cycle is completed.
- Some of the products are sold by selected resellers at the highest market price.
- Prices of products whose life cycle is just finishing or whose sales level is low are reduced when compared to market prices.
- Price automation that takes into consideration only selected market rivals
- Adjustment to average or lowest price
A case study of a store offering bathroom and kitchen equipment is a perfect example showing AI-supported price automation of selected product categories. Thanks to appropriately tailored price rules and automation, together with the client we managed to achieve a 60% increase in daily sales conversion (1.39 p.p.) which translated into a 50% increase in profit in AI-managed categories. All of this just in one month.
To conclude, dividing products into user-friendly categories is essential to succeed in e-commerce and ensure high online sales. Depending on the product or category type, thorough and regular price monitoring and automation can significantly help you optimize your pricing policy and facilitate its management. As you can see, implementing such solutions is a must as they may noticeably boost your online store sales in the long run.
