We’re just two weekends away from what’s traditionally the busiest online shopping weekend of the year. For our American readers it’s Black Friday (the date retailers turn from loss to profit) and Cyber Monday – the weekend following their Thanksgiving break. In the UK it’s the last pay day before Christmas for many workers who are paid at the end of each month.
Retail intelligence company Upstream Commerce have done some digging into the numbers of the “Special Offers” and “Discounts” offered by retailers and found a marked difference in pricing tactics from different companies in the 2013 holiday season. In fact that discovered that far from deep discounts, you might not be getting the deal you expected as Amazon regularly raised prices on Cyber Monday.
Upstream Commerce analyzed the pricing behaviors of Amazon, Walmart, Best Buy, Macy’s and Zappos over the past three holiday shopping seasons, it found that each retailer employed pricing strategies unto itself, and that Amazon went from low prices on Black Friday to higher prices each Cyber Monday.
Who traditionally discounts and on what dates?
In the 2013 season, Upstream Commerce examined pricing of the twenty largest athletic shoe brands at Amazon, Zappos and Macy’s, finding that “Each lowered its prices to start the Holiday shopping season; and while Amazon discounted the most on Black Friday, it then raised prices the most for Cyber Monday,” said Upstream Commerce CEO/Co-founder Amos Peleg.
“There was no consistent strategy or head-on competition among the retailers,” Peleg noted. “The average discount rate attained at both Amazon and Zappos (at different times in the scale), was 2.8%, but was only 0.5% for Macy’s.”
Similarly, when Upstream Commerce checked out television and toy pricing by Walmart, Amazon and Best Buy in the 2011 Holiday Shopping Season, it found:
— Amazon discounted the most on Black Friday, then raised prices for Cyber Monday.
— Walmart’s average prices were actually HIGHER on both Black Friday and Cyber Monday (in 2011) than their pricing in the Upstream Commerce control group a few weeks earlier.
What does this mean for you as a competing retailer?
According to Peleg, “The most important takeaway regarding pricing for recent holiday shopping seasons is that, each retailer appears to dance to its own drummer with no consistently obvious strategy in relation to each other.”
“Second, although different products are considered, Amazon exhibits the same type of behavior each year, where it raises prices on Cyber Monday”.
“Third,” says Peleg: “While there may be a smaller set of “show” products that are actually being discounted, it’s probably a myth that retailers provide huge discounts across the board during the holiday season.”
“Finally, retailers should stop chasing each other around. Employing predictive pricing strategies based on competitive analytics is the only way retailers can price optimally to sell the maximum number of products most profitably.” Peleg concludes.
What does this mean for you as a shopper?
It may well pay to monitor prices and time your purchases to the moment you believe the price to be the best you’re likely to get! Also whilst some of the larger retailers are constantly changing their prices, smaller retailers may not.
Do a price check on your Christmas shopping list now and then keep track of the prices for expensive purchases over the next few weeks. You’ll soon see which days the cost dives and there’s a genuine offer to be grabbed, but don’t wait too long – the offer may disappear a day or so later and you’ll end up paying more if you gamble on further price cuts which might never materialise.
Over the last 3 years, we have put prices up over the busy periods to slow sales down, the easiest way was to up the shipping price on Amazon.
We only have so much packing capacity and for about 2 weeks of the year, its stretched to the limit.
We have tried Fulfilment for this period, but with increased fees therefore lower margin, it doesn’t take many items that do not sell and then the extra cost in either retrieving them or lowering the price to break even to get them sold before higher storage fees kick in also eats into the overall margin.
Each year our processes improve and we (hopefully) learn from the previous year, but even though we improve our packing capacity, we find that increasing prices slows orders down enough to a manageable level.
Lee Pearce’s say, above, is the most logical explanation I’ve seen for pricing wisely at the Holiday Season — or any time, for that matter. His/her company appears to have taken a very serious look at all the pricing vis a vis costs, and determined it’s just not feasible (or profitable) to get all mixed up in playing with the prices or the delivery systems because it’s cost prohibitive vs the benefits. The only downside is the loss of customers looking for the shipping benefits, but what good is all that if you can’t make a profit?
For most Buy It Now items I have a simple strategy for eBay, search for identical items, filter by cheapest, and then list mine for 5p less.
For some items, I increase my prices on Friday (usually by about 10 – 15%) and then lower the price on Monday.
Another strategy is have more than one listing but all with different prices (and a slightly different title) and ensure that the cheapest listing has the longest remaining time to run. Sometimes I make one UK shipping only and have it as the cheapest but I never let it have an end time before the more expensive listings. To do this you occasionally need to end items and then relist immediately.
Its amazing how ofton the more expensive listing sells and it generates a minimum of a couple of extra quid each time. This strategy takes just a few minutes each week to operate but generates a great deal of extra profit.
And what if I come along and undercut you by 5p? The race to the bottom ebay business model.
I don’t see anything wrong with raising prices to slow down sales, I’m considering it myself. If you de-activate your listings on Amazon, it takes weeks to recover.
I find myself wondering about the problems of ‘Success’ as stated above.
I sell Books. We are always told that Christmas represents an enormous percentage of our annual sales(the actual percentage tends to vary depending on where you get the information). So the very last thing I want is to slow down sales. My attitude is the More the Merrier.
As I am a one man band like I would suggest many others on ebay. I do everything including the packing. So if during the Christmas Rush I sold double, treble or indeed more I would not even consider ‘Temps’. What I would say is oh well I really don’t need sleep and get on with the packing.
So please if you have any customers that you really don’t want send them my way. I will never(or very rarely) turn anybody away.
I never list for the lowest price. I always provide 12 clear sharp high definition large images so buyers can see exactly what they will get. Buyers get a choice of taking a gamble and looking at another sellers single fuzzy image and paying a lower price or looking at my sharp precise set of images and paying a fair price. I’m happy with my sales at my fair prices and I guess my buyers are too!
They are always somewhere between the highest insane price and the lowest poor quality listing price.
This is how eBay works best:
Cheapest sells and usually first. I know this because I sell everything I list and usually pretty quick. I watch competitors and months later they still havn’t sold, by then i’m onto new stock and usually several times over. And I generally achieve a margin of 400% on investment. If I expect to generate less then I usually won’t touch it. Sometimes I get it wrong and if I only make 200% then thats a really bad day. I’m not a charity.
Stratagise all you like but money is King and cheapest usually wins.
Its a No Brainer. Stack it high, sell cheap, reinvest. Keep it moving. All stock is worthless until sold.
Long live the Revolution! 🙂
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