3 ways competitor price tracking can make your brand profitable
Growing your margins requires looking beyond your own walls: what are other sellers doing, how is your market shaping up, and how is your target audience responding? Modern brands forming their pricing plans can’t answer these questions without competitor price tracking.
But, as we’re about to see, competitor price tracking has margin-boosting utility beyond just monitoring rival activity. With the advanced algorithmic tools currently at our fingertips, proper price tracking can improve everything from stocking to salesmanship.
Awareness of competitors’ inventory
Let’s start at the beginning. Before your products even hit the storefronts, the effects of competitor price tracking can be felt in your inventory processes.
To this point, a comprehensive grasp of your own product stock and that of your competitors’ enables you to improve inventory turns. Instead of haphazardly marking items up and down, you can make these decisions based on your knowledge of which items tend to move quickly or slowly. As a result, you’ll avoid the stagnation of idle inventory and squeeze more value out of each item.
For instance, if item A is selling at a high turnover rate, you can more confidently bump the price and capitalise on your remaining stock. If your competitors are running low on their alternative to your product B, you can similarly take advantage of an incoming rise in demand. However, if rival retailers are fully stocked and your item C can’t rely on a clear advantage, the wisest strategy is likely competitive pricing.
In other words, by tracking inventory you can optimise each product to be as attractive and lucrative as possible. Nothing is going to waste on a forgotten back shelf.
And finally, with your margins still in mind, this efficiency can spread to the rest of your supply-side -- from storage and purchasing of materials to delivery and vendor relationships.
Real-time pricing adjustments
Now, let’s talk pricing. How do you adapt what you charge based on market fluctuations? The umbrella answer is ‘dynamic pricing,’ and it requires a commitment to flexibility.
This flexibility may entail pricing down to stay competitive. If other retailers are beating your listings, you may have to match them within reason. But “within reason” is the key part that software can help you with: You want competitive prices, but you need to define a profitable threshold and stay above the lower bound… Else you risk spiralling into price wars guaranteed to harm your revenue and reputation.
On the other hand, competitive price tracking may dictate you increase prices. As mentioned earlier, this may be due to a favourable rise in demand or due to a dearth in competition. Most often, though, you’ll want to raise prices based on timeliness.
We often see seasonal products shoot up as their relevance soars. More people are looking to buy ski gear, for example, in December than in June - regardless of price. Likewise, many industries jack their prices based on urgency. SeatGeek and Kayak’s rates generally rise as the dates of concerts or flights approach.
The key for any price increase, however, is to keep them psychologically reasonable. Consumers have widely-accepted understandings of what constitutes “fair” and “unfair,” and staying on the right side of that line requires you, the seller, to deeply analyse your audience… And to deeply empathise with them.
In achieving this empathy, you may find it pays to be inflexible with certain prices - specifically those of your known value items. These popular products are so ingrained in your customers’ minds - and their price tags so familiar - that your best bet is staying the course. Even with competitor price tracking, the old adage occasionally rings true: No need to fix what isn’t broken.
In-depth pricing strategy
Your implementation of competitor price tracking can extend further towards how you strategically present your products. If you know what your customers value as well as what your rivals are offering, the gaps between the two are your sweet spots of opportunity.
For example, instead of permanent price changes, you can give each buyer his or her own custom incentives to shop with you. Offering future discounts for full-sale purchases is a great way to think big and better leverage each potential prospect. Unlike basic discounts, this method works to win repeat buyers and greater profits from the initial buy.
Another version of this approach guarantees free delivery or return shipping if need be. You obviously hope for no returns in the case of the latter, but that sense of security is itself an added benefit to buying with you. It’s one more reason your product is appealing than your competitors’ - even if never acted upon.
And that brings us to the value of framing your products in relation to one another. Consider Amazon’s recommended bundles. If someone’s buying item A, say, at a discount, and Amazon suggests a related product B at full price, you can bet this won’t hurt product B’s sales numbers. As simple as it sounds, smart product promotion and bundling can be a significant boon for your margins.
To recap, you can streamline your inventory practices, adopt a real-time dynamic pricing model, and use the data to optimise your assortments and sales tactics. And the beauty of it is: you can do all this without breaking a sweat.
The competitor price tracking software solutions currently available to us can inject automation and accuracy into your day-to-day. Instead of fussing over manual data entry, you and your team of executives can put all your focus on high-level strategy and customer experience. You can cut the fat of frivolous expenses and wasted resources… And instead, plan for an optimal future while taking necessary action in the present.
Edited by Javed Gaihlot
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)