An increasingly popular customer question related to e-commerce monitoring tools is the issue of automatic pricing based on recognition of market conditions. For online stores with numerous different products, manual monitoring and price adjustments is a burden and can reduce profit due to late reaction, insufficient data, or miscalculation.
To optimize the margin for different products, several factors should be considered:
- competitors’ price level (monitoring of prices of both: other sellers of the same products and comparable products of other brands)
- demand for a specific assortment and its changes in different periods, related to season, fashion, or needs arising from recently changing situational, social, or even political factors
- availability of products on the market, also dynamically changing
- you should not forget to monitor the marketing activities of various producers, distributors, or sellers, both in terms of advertising (banner monitoring) and various promotions (not only price reductions), which, as we know, are a good way to increase sales
Current verification of all these factors, by even the most experienced people, is time-consuming, costly, and often ineffective, or even impossible.
Hence, the more and more common use of tools for collecting, analyzing, and reporting monitored data.
If you already collect data using the tracking tool and have it in the form of useful reports, the next step is to automate prices in your store. And that’s where the tools come in handy, too. However, when relying solely on their algorithms, we must remember that if for some reason, some collected data is incorrect, then after processing them, the algorithm may incorrectly calculate prices and lead to losses.
How to avoid such costly mistakes?
Quite often, intermediate solutions are used to control price changes before they are published. Various alerting mechanisms are also used, based on the adopted rules. For example, we assume that if the proposed price exceeds the specified margin, the user receives a notification, and the price update process is suspended until verification. It happens, however, that the discrepancies are not so large, and yet they cause the proposed prices are not optimal, and we sell too cheap, or sales suddenly drop.
If you decide on a comprehensive solution that collects and analyzes data and automates the valuation, you should check:
- how the solution provider approaches data quality, does he supervise and modify data acquisition mechanisms on an ongoing basis, being up-to-date with any changes on the websites of online stores
- does the tool in the process of calculating the proposed prices use data from the above-mentioned factors affecting sales?
- what mechanisms does it use to prevent the publication of incorrect prices, does the software producer adapt these mechanisms to the specificity of the client’s business and sales goals.
Every modern e-commerce, on a certain scale, needs a solution, that facilitates work, reduces service costs, and removes the limitations of manual data collection and price management. Before choosing it, however, it is worth looking at the tool itself, the supplier’s quality assurance, and your own needs, so that the investment brings the expected results, and does not become a source of errors, sometimes very costly.
Miłosz manages sales at Brandly360. For many years works on projects involving the implementation of software for businesses. On a daily basis, he works with trading companies, providing tools and services that improve work and follow the most recent market trends. Driven by a passion for data analysis, modern management systems, and process improvement.