While online retailers are leaving no stone unturned to woo the consumers and get noticed in the market, right from getting celebs for endorsement to offering products at prices quite lower than those at physical stores, this strategy called 'dynamic pric
Given that comparative pricing has been the success mantra for e-tailers, the consumer moves to a payment gateway only after he is assured of getting the best deal at the lowest price. First introduced by American Airlines in early 80s, dynamic pricing is taking eCommerce by storm in India now. While this practice allows retailers to be in the race 24*7, pricing, including monitoring and changing pricing at different intervals, offers a great opportunity for consumer engagement, thus increasing chances of earning greater profits.
En-route to price variations
Dynamic pricing has been around in eCommerce for nearly 15 years when e-retail giants like Amazon started testing this concept and the e-tailers in India are commonly practicing it. For instance, recently when the nation was busy predicting and praying for the ICC World Cup 2015 semi-final between India and Australia, the online retailer Myntra was playing with prices and planning ICC World Cup centric offers around the entire duration of the match. Interestingly, during the day, Myntra floated the price for a black maxi dress initially at Rs 1,799 which came down to Rs 899, which later on after the game was floated at Rs 1, 259. The same dress was priced at Rs 799 during the great online sale by the e-tailer.
One must be wondering about the need to float varying prices every now-and-then and the pain taken by them to do so, but the fact is, that such a strategy offers retailers the much needed flexibility to reduce price and hence, increase sale in case of sluggish economy and vice versa.
Many retail players opt for pricing through intelligence software with ability to scan entire database for thousands of products every 10 minutes, thereby lifting the burden of manually tracking competitors.
Sameer Parwani, Founder & CEO, CouponDunia.in opined, “We analyse shopping patterns and interests of consumers based on users’ past browsing behaviour. We monitor merchant campaigns on regular basis and figure out what discounts strategies are working the most for merchants before creating a discounting strategy.”
Briefing about the tools to aid pricing strategy, Gobind Pahwa, Founder & CEO, Nineteen said, “We have implemented a number of analytical tools on the website, which help us measure a number of variables to track customer behaviour while on the website. The analysis is then divided between the relevant departments such as technical, marketing and design which is then worked up on to improve the overall experience of the customer."
Vikram Chopra, CEO & Founder, Fabfurnish asserted, “Our rigorously changing product range depends on latest design trends, seasonality, customer demands etc. Hence, there’s tremendous research and much thought behind every product in our assortment. The idea is to provide tastefully-picked, quality products at unbeatable prices to our customers.”
Price variations across retail segments
There may not be any gradual drop in price of furniture, but fashion segments rules the lanes, while travel segment lags when it is about the crest and trough of prices. You never know, when your favourite dress is available at a whooping discount and hours later, it retains same (higher) price.
However, the strategies slightly vary in case of jewellery. Hardik Kapoor - Founder, Jewelsify.com asserted that range of fluctuation in case of jewels and ornaments highly depend on the market condition at that point of time.
“The pricing strategy differs from product to product in case of jewellery. For instance, the price of diamond depends on the 4-Cs, namely, cut, colour, clarity and carat. Similarly, for gold it is its purity. For example, our finest pieces are certified by BIS, GIA, IGI, HRD, EGL certification which also has an effect on the pricing strategy.”
Brands are the bosses
While one may think that retailers can fluctuate the prices as they wish, the ground reality is that pricing is closely monitored by the brands and they do have a say in the maximum level of deduction in price of the products.
“The decision of the pricing is taken solely by the brand. We do share our inputs based on the sales, but at the end, it is their decision which counts. The promotions are planned together which means that from time to time, we offer attractive prices to our consumers, but again, the final decision lies with the brands,” said Chopra.
Commenting on the association with brands to work upon price factor, Parwani said, “We work closely with our partners to work out the discounting strategy. eCommerce merchants have GMV (gross merchandise value) and new user acquisition targets that they need to reach. They often work with us to design their promotions in a way to best attract users.”
In words of Hemang Desai – Founder and CEO, Giftkarting, “Brands do have a say in finalising the maximum drop in price and if the retailers decide to go beyond the given level, it is the retailers who bear the difference.”
Win-win for all
While the fashion retailers, specifically the ones dealing in online fashion have the liberty to float prices as many times a day, the brick-and-mortar retailers do not enjoy this privilege. A big success in eCommerce, dynamic pricing is not ready for brick and mortar businesses, as one can’t simply change a price tag in front of a customer or update it before he goes to the cash-counter.
The frequency of floating price increases when the manufacturer retails through its own portal, donning the role of retailer. For instance, the Noida-based women’s brand, nineteen, comes up with a new collection every fortnight and floats price at short intervals. Further, in the case of Myntra, the offers make a buzz almost every afternoon.Clearly, dynamic pricing is getting more and more advanced day by day and both retailers and consumers are benefitting from it. While the customers get the best deals, e-retailers in a legal manner can vary the prices.
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