How to Provide Superior eCommerce Experiences with Data-Driven Pricing
Omnichannel experiences and customer expectations have changed the ways brands, retailers and manufacturers engage with customers – and recent years have drastically impacted this.
High-performing organizations have accelerated their digital transformation and leveraged eCommerce, Product Information Management (PIM) and dynamic pricing technology to adapt to changing market realities.
Providing consumers with positive buying experiences starts with rich product data. But if your products aren’t effectively priced, then there’s a strong possibility that you’re not even going to have the opportunity to display your rich data, as you won’t win the click.
Pricing is the tip of the spear when it comes to eCommerce. Knowing their position in the market enables online retailers to dynamically adjust their prices, both up and down, to win more sales and maximize revenue.
What you will learn from this webinar:
- Hear from leading Forrester analysts on how they perceive the current and future market
- How PIM & eCommerce strengthen each other and scale bottom-line result
- Product data allows for a more nuanced pricing strategy
- Competitor monitoring enables behavioral-based pricing to be leveraged
- The dynamism of eCommerce should be reflected in price strategies
- Growth in eCommerce leads to an increase in competition
- Price is a key factor in making purchase decisions
|Eric Jan van Putten
Eric: Welcome to today's webinar together with PriceShape on how to Provide Superior eCommerce Experiences with Data-Driven Pricing. We will hand it over to Karl Reynolds, who will talk a bit about how important it is to have product data available and how to apply that with PriceShape, being able to identify competitive pricing on products and how to apply that into your e-commerce environment to create the best experience for e-commerce possible, with dynamic pricing. With that, I would like to welcome Forester. Please take it away.
With that, we are actually going over to Karl Reynolds from PriceShape, where he will talk a bit about the importance of data-driven dynamic pricing and how that have shaped e-commerce experience. Karl, all yours.
Karl Reynolds: Thank you very much, Eric. Thank you for having me. Thanks to Joe and Amanda for really great insight today. So just to build on what they've discussed, really, it'll be great to dive into a topic that is a little bit more involved with pricing, which is I like to think of the tip of the spear really when it comes to e-commerce.
Karl Reynolds: So a bit of background on myself. I'm the Marketing Project Manager here at PriceShape. PriceShape, in a nutshell, we help a range of different sizes of company. So some small mid-size companies and their retailers and brands, and we help them get an understanding of their price position in the market and then to create dynamic price rules so they can win more sales and maximize revenue.
Karl Reynolds: So with that, it'll be great to go through some points I will be touching on. So firstly, we'll be looking at the importance of complete product data, again, building on what's been discussed so far. Then we look at customer experience and price and how poor customer experience can have an impact on brand equity. We then look at the overall growth in e-commerce and what that means in terms of competition. On competition we look at manual competitor monitoring and some of the challenges that are faced. Then we'll dive into a little bit more of the platform, so we'll see how you can know the price position on all your products, how to develop a nuanced and dynamic pricing strategy and then really a new frontier in pricing, a nice behavioral based pricing.
Karl Reynolds: So we will start with product data and the importance of complete product data. In this regard, I'd really like to isolate a specific instance where product data is paramount really to e-commerce and that is the GTIN number. So the global trade item number, a lot of you probably aware of this, there's a, I wouldn't say controversy around it, but some people think it's not important, other people think it's very, very important. So we're trying to bust some misuse and take down to what it means for e-commerce. So in 2015, Google performed a test where it insisted on GTIN numbers being applied.
Karl Reynolds: For those not aware of GTIN number, as you can see from the image here, it's ultimately a bar code. So it's a set of numbers that allows companies to identify a specific product and there is a huge, huge millions tens of millions of GTIA numbers out there and they relate to variants of products, individual product. So, there's a massive of information out there about GTIN numbers.
Karl Reynolds: From what I've highlighted there underneath, that's Google's definition of a GTIN, and the key part there it's a specific number that makes your ad or unpaid list in richer and easier to find for your customers. So the overall theme here is richness of data. This is a perfect example of where the GTIN number will allow Google to not only index your product, it'll know exactly all the relevant information on that product. It learns over time from other retailers about that specific product and it ensures that, that product is displayed to people who are searching on this term may be a different term and associated term even in a different language. So it's of the utmost importance to have GTIN numbers in there.
Karl Reynolds: Often times, Google will sometimes reject products in its Google shopping platform that don't have GTIN numbers. It's difficult to find the numbers on this, if you don't have GTIN it doesn't mean you're not going to be able to advertise on Google Shopping. You will be able to, but Google may reject your product somewhere down the line. So if you can have GTIN numbers in there, fantastic. With Google, obviously they plough their own furrow, basically and other retailers, other the platforms follow them. So you find other price comparison websites, other platforms are now also requiring GTIN numbers. It allows them to precisely display relevant product and enables the consumer to make more informed purchase decisions.
Karl Reynolds: Going back to the test that I discussed earlier on, it increased advertisers conversion rates by 20 percent when they introduced GTIN numbers and increased the CTR by 40 percent. So you can see those kind of numbers provide a better experience for consumers, and that is ultimately the reason why Google now prefers products that have GTIN numbers in there. The algorithm becomes smarter over time, and it can provide relevant information to consumers.
Karl Reynolds: So moving on to another topic, which is, customer experience and price. This is actually taken from a Forrester study of a few years back. Customer experience, obviously, it is very, very important that you have all rich data that the customers are able to see, enables them to make more informed purchase decisions, but when it comes down to it, even on an anecdote level, on a personal level, I know that the price is key for me when I'm shopping online, when I come to make a decision.
Karl Reynolds: If a product is cheap, if there's a range of products within a certain price range, maybe I'll check a few of them out, but I certainly wouldn't be looking at a product that is 60 percent, for instance, more expensive than the cheapest one on my search results. So having the best price or having a competitive price is very, very important. Google prioritizes the price attribute. So if you're using Google Shopping, price is going to be a key factor in you coming towards the top of those search results. As we all know, Google dominates the market. 46 percent of all searches begin on Google. If you also include Amazon in certain countries, you look at a high 80 percent of all searches start purely on those two platforms.
Karl Reynolds: So if you don't have the right price strategy, it will impact the traffic that you're driving to your website. So then all the rich data that you have, all that time you've spent, updating product titles, putting videos on there, having descriptions, categories, you're not going to get a chance to display that to consumers. So prices is often a key to driving traffic. You can then provide that better experience to visitors to your website and then hopefully win the sale.
Eric: Karl, can I ask you a question on that or maybe share my own experience because I have to admit that as a private consumer, when I purchase, I find prices absolutely important as well, but it's also the combination with the second part, and that is the best experience, it's such a fine balance because I'm okay paying a bit more for a certain product, let's say you were buying something for 200, 300 euros, dollars, whatever. Then you're paying a little bit more if you can buy it at a good shop or something I have experience with in the past, right? I'm okay paying 5, 10 percent extra. At the moment, I can get 20 percent kind of differences, honestly and it doesn't look like a complete rip off somewhere. I'm happy to purchase somewhere else.
Eric: So it's quite an interesting element on how that places and maybe you get to it, but I have a follow up question. I'm not sure you have that, but what you also encounter often you come in via Google or whatever kind of search into a shop with a certain price being shown based on your search, but they're actually listing the wrong product related to it. So then you have to drop down and you need to get the exact right product and boom you're based on a higher price point anyways. Do you have info or experience on what happens then because the experience isn't great.
Karl Reynolds: No, exactly. Google is all about providing the best experience possible. So what you've maybe identify there is an issue with GTIN numbers. Yeah, because it's not indexed correctly, maybe the product title is a little bit misleading, you've clicked on it, you direct it to the product page. Let's say it's the wrong product. Best case scenario is just the wrong variant. If it is the wrong price Google eventually will remove those products from its shopping platform so you will be penalized. Not only will the product be removed, there's a risk of all your products being taken down. So that is a really key point, Eric. That's the one thing I would say Google dislikes the most, and it will be able to tell if people are bouncing back off the product page, if it's not converting and if there's a lot of traffic, then they will switch on to that pretty quickly, and before you know where that website won't be able to list any products on Google Shopping any longer. So that is a key issue that retailers need to know about.
Karl Reynolds: GTIN numbers enable Google to better understand whether a price looks dodgy. It's 80 percent cheaper than everything else out there, maybe there's some issues here. Going back to your first point in terms of, it's not always about being the cheapest. If you can provide a better experience then you're providing more value, you don't always have to be the cheapest, and that's something we'll come on to where, I think some people, there's a misconception that dynamic pricing is always about being the cheapest. It's always a race to the bottom, but that's certainly not the case. It's about finding the right price point for the right company, the right web shop.
Karl Reynolds: If you've got hundreds of customer reviews, you have high brand recognition, maybe you don't want to be the cheapest in the market. You add value, so maybe you can charge a little bit more and people trust in your website, seeing reviews will be willing to pay more than that. I know certainly I fall into that category as well. So I like a good price and that includes having trust in the website, knowing that it's going to be delivered on time and those kind of things. So people are willing to pay a premium for those feelings really, those feelings of safety, those feelings, okay, I know what I'm getting here. So this is a really good point.
Eric: Please continue. Thanks.
Karl Reynolds: Yeah, no worries. So sort of touching on what we've just covered there in terms of branding. So not just in terms of a retailer, a reseller, but branding. I know this was touched upon by Joe and Amanda, poor customer experience can have an impact on brands. So you can see a study there from McKinsey back within the last couple of years, which showed that the top 40 brands performed significantly better than the standard in the market.
Karl Reynolds: So you can see why companies invest so much time and effort and resource into communicating their values, their purpose, their identity. They tell their story and build up their brand equity. People are willing to pay for that. So again, it's not always about being the cheapest, if you've got high brand equity, you probably don't want to be the cheapest that would negatively impact your brand as well. So for brands, it's about finding the right price.
Karl Reynolds: With brands if you have an army of resellers out there as well, another way to protect brand equity is to insist on minimum advertised price. This is very popular in the US. Again, it varies from state-to-state. There are some legal issues, so I would advise anyone, if you look at into this, please speak to your legal team. In the EU, it's seems anti-competitive behavior, but still brands can insist or enforce, put into contracts that their resellers can't sell their product or advertise their product below a certain price. So again, it's about protecting their brand equity, their brand identity, and certainly a poor customer experience will contribute to that.
Karl Reynolds: So one of the things we do as well as monitoring competitors, we can monitor resellers. Again, I'll come onto that a bit further on in a few slides time, but it's about maintaining the brand that you've invested in, so people are not selling your products too cheaply and effect in the view of your brand, really. I know that it was discussed previously by Joe, the COVID wake up call, and we can see that in the numbers. So again, Joe mentioned 10 years of economic growth in three months, and that is exactly what we've seen here. Year-on-year growth is anticipated to continue this. it looks like it'll be a long term trend, but with increased growth inevitably comes increased competition.
Karl Reynolds: So as physical channels evaporate during lockdown, people have moved online. You can see segment by segment this growth across the board. Some a little bit more obvious than others, food and personal care. People now shop food, groceries online, maybe they won't go back to their old ways. Certainly, we're seeing record growth across all segments of e-commerce. As I said, that is going to bring more players into the market, barriers to entry within certain segments are low. People can set up a Shopify web shop in almost no time. They can get up and running. They can just drop shipping options. So. It will become more competitive moving forward.
Karl Reynolds: It's important to keep an eye on the market to see what your competitors are doing out there, what are they doing in terms of price promotions, those kind of things? If you are looking to monitor competitors to get an overview of the markets and see your price position, it's going to be very, very challenging to do that manually. One of the key reasons there is, we find on average, our clients have 300 competitors. Now that may seem like a huge number to some of you out there, and you may know a handful of companies that sell the majority of your inventory. That's great. Keep monitoring in those companies, but companies often or retailers often have a blind spot, so there could be another company that is selling or another competitor that is selling. Maybe only 10 percent of the same inventory is you. If those products are core to your business, if they're revenue drivers, traffic drivers, you're going to have serious problems if you don't keep an eye on them and they are cheaper than you.
Karl Reynolds: The transparency with somebody can hop online these days, search Google Shopping and be confronted with lots of different product, lots of different companies, all ranked on price, it's going to be an issue if you don't have an overview of all the competitors in the market. There's a lack of internal resources for companies to do this. Just imagine if you've got 100 products, tens of thousands of products across 300 competitors, even the biggest companies, the biggest brands are not going to have the internal resources to do that manually, to check every day, to check all those competitors on all those products.
Karl Reynolds: So there are tools out there, such as ourselves that can now do that for you, basically. So, it's also very difficult to monitor delivery charge. I keep talking about Google Shopping. That presents now delivery charges as well and that is a key decision maker as well for people shopping online.
Karl Reynolds: Moving slightly on to our platform for a few moments. It says they know your exact price position on all your products. That's exactly what we do. So to talk you through the process on why GTIN numbers have another benefit, we're able to find competing products based on those GTIN numbers. If you don't have GTIN numbers, you can add matches manually, just makes it a lot easier with GTIN numbers. In our platform, we will show you your products. We will show you all the competitors products. The difference in price, the delivery charge, if the products are in stocks, there are lots of intelligence there to enable you to create pricing rules based on your cost price and you can position yourself if you want to be cheapest, if you want to be slightly more expensive, you have the ability to do that.
Karl Reynolds: So, again, product data, that is the overarching theme of what we're all discussing today, but having the right price at the right time in the right channel would enable you to capture the traffic, drive traffic to your website and then provide that superior ecommerce experience that is going to win you the sale, ensure repeat business and ensure long term success really for online retailers and brands.
Karl Reynolds: We're able to find data on your competitor. So we're sort of using their own product data, not against them, but it allows us to pick up their stock levels, the product title, as I said, delivery charges. So we can collect data presented to you in a dashboard. I said earlier reckon, there's a misconception that dynamic pricing is always about being the cheapest. It's a race to the bottom. It's eroding profit margins. On the contrary, you can see here it's about was what identifying where you're too cheap in the market. You can see the top few products here, over 50 percent cheaper than the nearest competitor.
Karl Reynolds: In those instances, it would be a case of raising the price. So instead of being 50 percent cheaper, you might want to be 10 per cent cheaper. You still going to win the sale, but you're making 40 percent more revenue or more profit on that particular product. It's about finding the right price strategy. Some products, you want to be cheaper, some products, certainly, you can afford to raise the price.
Karl Reynolds: It's not about finding a one size fits all strategy to all products. Again, I think this has been an issue in the past where even if companies to do some cursory competitor monitoring, they'll set a price one day, maybe they'll wait a couple of months to change another price again. It is not dynamic enough. It doesn't keep up with the dynamism within e-commerce, within online sales. Things are changing regularly. Prices are changing regularly. To be brutally honest, if one of your competitors is using a platform such as PriceShape, then they're going to beat you to the punch. You're not going to be changing prices often enough to win enough sales, and you won't have an overview of the market that's up to date as you need it really.
Karl Reynolds: So in terms of developing a nuanced price strategy, it can be on product types, it can be on individual products, it can be set up against specific competitors, it can be over a certain time range, Black Friday, for instance. So it allows you to be super specific and your pricing strategy to be as complicated as you need it to be. That's key as well. There's no point overcomplicate things if you don't need it to be that complicated really.
Karl Reynolds: So it's all about providing a better experience and driving that traffic to enable you to provide a better experience. You can see her in the drop down, in terms of brand identity or if you provide a better experience, as I said, you may not want to be the cheapest, you may want to be the second cheapest, you may want to be the most expensive if you're a luxury brand. You can really place yourself wherever you want to be. So you can be super specific in terms of your price position in the market.
Karl Reynolds: It's all based on your profit margin. We all need to make a specific profit margin to stay in business. Here you can set how much is a minimum you're willing to drop down to. If you're too cheap, the system will then increase your price, so you're still say five percent cheaper, but you're still going to win that sale. If your competitors don't have the product in stock, again, once they are unable to deliver, you'll be able to increase your price when the sale, but you're maximizing revenue.
Karl Reynolds: You're also able to set a specific price ending, and that may sound like such a small afterthought, and I think it probably is for a lot of companies, but you can specify whether you want to have an even number ending in zero zero, an odd number ending in nine nine. It's rather surprising the effect that this can have on people. E-commerce is all about psychology, and there's been studies done that show that companies that go with odd pricing, so nine nine will be seen, as price leaders. There were studies done in 2005 where a group of people were given $73 and they were asked to estimate how much they could buy from a basket of products ending in zero zero and a basket of products ending in 0.99, and overwhelmingly across all conditions, you guessed it, people thought they could buy more products when the products were oddly priced ending in nine nine. So, even small things like that should be considered, should be part of your brand strategy, if you're Gucci, do you want to end your products in $0.99 probably not. You probably want to round it up.
Karl Reynolds: So all these things should be taken into account and it well along the line be small changes, these increases in price, these reductions in price, they will build up. If you've got thousands of products, it's so small wins that will eventually cascade into you, maybe not dominating the market, but certainly generating more sales and more revenue on every sale. I think that's key.
Karl Reynolds: Finally, I wanted to touch on something that is a new frontier in terms of pricing, and that's behavioral based pricing. So we're able to integrate with Google Analytics and that provides us with lots of data that we're then able to allow our clients to empower our clients to create pricing strategies based on that. So it's not now always a case of, we want to look at our competitors, we want to be cheaper. You can now set price strategies based on your product performance. So have you not sold this particular product in the last 12 days, then I want to apply a price strategy, dynamically, by the way.
Karl Reynolds: Customer behavior. So does it have a low conversion rate, I'm driving lots of traffic there, but it's not converting, then maybe there's an issue with pricing. If you've also got a high profit margin on that product, then it's time to reduce the price. Again, stock levels, if you've got a lot of this particular stock on hand in the warehouse, taking up space, gathering dust, then you may want to apply a price strategy that clears it out.
Karl Reynolds: On the contrary, if you've got two products left in stock, you don't really want to run out, so people associate you with, okay, they can't fulfill this order. They did the same on another product. You may be want to increase the price there to slow sales down a little bit, just to pump the brakes. So the number of price strategies you can create is almost, there's no limit to it basically. You can group products in different ways and these products then will dynamically hop in and out of different groups, have different pricing strategies apply to them based on the rules that you set up, basically.
Karl Reynolds: So again, another tactic, if you've got high traffic, high conversion rate, so you're doing a really good job of getting in traffic to the website is converting really well, it is probably a little bit too cheap. In those cases, our platform will realize the numbers. It'll crunch the data and realize, okay, this is conversion really well. There's lots of traffic. It's time to increase the price slightly. Then you'll be able to see the performance, the conversion rate, how that was affected, total revenue generated.
Karl Reynolds: So it's very much shifting the focus from a spiral to the bottom, a race to the bottom to maximizing product profit. So it's not about eroding those profit margins. As I said, it's about providing the right price at the right time on the right platform, driving that traffic to your website, then you can provide them with that rich data, all the information they need to make an informed purchase decisions. Then they will come back purchase again and it's a self-fulfilling prophecy, really. I see pricing very much as the tip of the spear in terms of driving traffic to your website, then being able to convert them through provided superior e-commerce experiences. That was the last slide I had there. Eric, do you have any points, any questions?
Eric: So very interesting when you work in retail, when you have competitors, this seems like a must have. I think this is so important that this is what data driven based on product data can really fuel these days. I can also imagine is, how important it is that the ease of integration into e-commerce solutions like that in the web are to really fuel the success of a platform approach like this. So no questions, it looks easy to use. I can see the immense power that is behind something like this when you're working on retail B2C. I can even see that overlapping with B2B e-commerce as well. So no further questions. I would say anything else you would like to add Karl, otherwise, we can wrap this up.
Karl Reynolds: No. I think, great to share our insights here. At PriceShape, if anybody would like to find out more, maybe with a test to see what competitors we can find for you, by all means, get in touch. We'd be happy to sit down with you and have a chat and see if there's a there's an opportunity to work together. Really great to share our insights, Eric. Great to hear from Joe and Amanda. Very insightful. So, yes, thank you very much for having us.
Eric: Absolutely. Thank you, Karl. Talk to you next time.
Karl Reynolds: Yes. Cheers. Thank you, bye-bye.
Eric: Thank you, Karl. Really interesting to listen and understand a little bit more about how dynamic pricing really isn't just the race to the bottom, but how it can help maximize business result by keeping a track, keeping an eye out on what are other web shops e-commerce stores are offering, what their pricing is and then to have it apply to your own. Before we wrap this up, I would like to take a brief moment to talk briefly a little bit about the Dynamicweb.
Eric: At Dynamicweb, we really believe in reducing e-commerce complexity. The dynamic web e-commerce suite is a great example of that. It incorporates four standard solutions, a CMS, an e-commerce, product information management and a marketing solution, all pre-integrated in one unified e-commerce suite, meaning that to work between these different kind of technical solutions in Dynamicweb you can do that from one backend, reducing a ton of integrations. We refer to that as the Frankenstack.
Eric: If you need to build a similar solution that Dynamicweb is offering, you need to get different suppliers, different best of breed kind of solutions, integrate everything, and integrations are just often a pain. You have four different kind of beckons. You have four solutions. You need to make sure the right data goes to the right place, and integrations can break every once in a while.
Eric: With Dynamicweb, we are a big believer that the best of suite approach having the one platform that you can then extent where necessary is the way to go to midsize and enterprise organizations. The Dynamicweb is approximately 20 years old. We are a global player, a vendor. We have partners that implement, a technical partners to extend the solution all over the world. Well over 4000 customers that are running Dynamicweb for their e-commerce were quite good in the B2B square.
Eric: With that, also because of time, I would like to wrap up. If there are any questions left, please feel free to reach out to me personally or find us online. With that, I would like to thank you very much and I look forward to the next webinar.