How Price Intelligence Factors Into the Holiday Shopping Season
With the 2011 holiday shopping season in high gear, online retailers are facing the greatest opportunities and challenges they've ever seen. With the state of the global economy still uncertain, consumers are continuing to shop with their heads rather than their hearts. For online retailers to succeed, they must stay competitive and remain flexible with pricing and other options on a daily basis. Understanding exactly what your customers see as they shop and make decisions online is critical.
To accomplish these tasks, online retailers are relying more on competitive price intelligence. Whether manual or automated, price intelligence refers to the identification, comparison and analysis of pricing and other revenue-related data for a company’s operations as well as its competitors. It's critical data to making informed pricing decisions.
The wealth of data and speed of information online today is causing retailers to use automated systems. Where price intelligence once focused on competitive rate monitoring, today it includes promotions, taxes, service fees, online page placement, conversion for local currencies, and qualitative ranking and review data. Savvy online retailers use competitive price intelligence systems anytime of the year to make sure they stay one step ahead of the competition.
Specifically, retailers are using aggregated information from price intelligence to:
- conduct incisive price analytics and integrate online competitive comparisons with in-house pricing and forecasting;
- view the top- and bottom-performing product selections;
- conduct price trend analysis and analyze market reaction to price changes;
- understand competitor pricing changes and market positioning; and
- conduct what-if analyses to explore the impact of changes in variables on price and margins.
With daily access to a precise, complete market picture and the ability to create digital mashups of high-quality data, online retailers are obtaining accurate, real-time comparisons. Constant monitoring of online marketplaces and competitor portals means they can identify critical market events, including competitor discounting, product shortages and even promotions as they unfold.
Recent tracking of the hottest holiday toy prices across three of the country’s top online retailers illustrates the importance of competitive price intelligence. On any given day over the course of a week, the prices change, sometimes multiple times. The price difference for individual toys at even the same retailer can change over the week, up as well as down. Price differentials have run up to 18 percent on singular items between retailers.
Clearly, retailers with price intelligence data are working to remain competitive and gain a better understanding of how their customers shop. In addition, they can use price intelligence to influence tactics for online abandonment, making sure of absolute value before employing remarketing and other techniques.
This season’s most successful online retailers are evaluating their offerings — and their competitors' — against the same information consumers are using to make decisions. As they become more knowledgeable and confident in their pricing decisions, the last laugh may be with them.
Christian Koestler is president and CEO of Lixto, a web data extraction and analysis firm for the online retail, consumer products and travel industries. Chris can be reached at Christian.Koestler@lixto.com.