With so many online retailers using repricing technology, it’s sometimes worth stepping back and deciding what you want to achieve from your pricing strategies.
The last thing that most retailers want is a race to the bottom on price and there are also a number of other promotion strategies that can be used. The first thing to decide however is what you’re looking to achieve with your promotion.
- Are you looking for an immediate increase in turnover?
- Are you looking to liquidate slow moving lines or last season’s stock?
- Are you looking to increase your average order value?
- Are you looking to increase your basket size (number of products per order)?
- Are you looking to increase exposure for products across your range?
- Are you looking to take advantage of highly publicised consumer buying promotional days?
Once you’ve decided your strategy you can start to implement a sales strategy to achieve your goals, for instance there’s little point offering a straight percentage off with strike through pricing if your end goal is to increase your basket size. If basket size is your goal then offering a discount for additional related items would make more sense.
Agreements you have to abide by
If you have supplier agreements, it’s worth checking that there are no restrictions on the promotions that you run with their products. Here in Europe, price controls are pretty much illegal giving you freedom to raise and lower prices at will on all the venues you sell but that’s not so in other countries you may trade in.
Price Parity was scrapped by Amazon in Europe in 2013 to meet EU regulations, but is still a requirement on Amazon.com. This means that if you for instance run a price promotion on eBay.com, you will also need to lower your price on Amazon.com for the same period. Automatic repricing technology also carries the risk of falling foul of conditions such as Amazon’s price parity rule. Repricers don’t just lower your prices, they also raise them so make sure you have rules in place to raise prices on all the sites you trade on if you’re subject to price agreements.
Are you still making money?
Finally the golden rule is of course to make sure you’re making money. Of course sometimes you’ll want to cut your losses and sell below cost to liquidate stock that’s simply not shifting, but when you’re aiming to make a profit don’t forget to factor in staff and overheads.
If you have such a successful promotion that you have to pay staff overtime in to get items dispatched, cutting your margins to the bone could end up costing you money rather than being a profitable exercise.