In the past, retailers relied on personal experience, manual tracking and pure gut reactions to optimise their assortment and pricing relative to their competitors but this manual approach is no longer practical or feasible in today's intensely competitive and highly dynamic markets.
The reality is that in order to compete effectively retailers need to track competitors daily to gather real-time information about competitors' pricing, assortments, promotions and products. Technology now makes it possible to be more competitive in real time.
Why You Should Use Competitor Price Tracking Software
The current retail environment is much more multi-dimensional than ever before, new competitors are joining all the time – and the consumer is well and truly in the driving seat.
As soon as you change your prices you can bet your competitors will follow suit and the future imperative will be to function and compete in this "real time" bubble.
Once you start competitor price tracking you will see how prices change over time and how competitors react to your prices/price changes.
Competitor price tracking also allows you to determine what trends are developing. With this knowledge, you can apply your strategies and tactics accordingly to set the best prices. Once you understand your competitors' strategies you can compete much more effectively – and you can price optimally.
"It is imperative for multichannel retailers to be opportunistic and flexible with their pricing so they don't miss opportunities." Kevin Sterneckert, VP of Gartner Research.
Competitor price tracking software will alert you immediately on those products you've labelled to be checked in comparison to your competitors and requires no extra effort on your behalf to keep on top of your competitors' prices.
Combat Ecommerce Incumbents
Companies with automated, dynamic pricing systems like Amazon are aggressive and trying to price below you most of the time.
To compete effectively you have to be aware of both Amazon's prices and the prices of your competitors. Without tracking prices daily it's extremely difficult to price competitively.
In a recent poll of 1,858 members of a LinkedIn Group – Competitive Pricing for Online Retail, members were asked how often they or their company track competitors' pricing.
The results showed that 75% of retailers don't track their competitors' prices every day. This could mean that if you switched to price monitoring on a daily basis you would have a huge tactical advantage over your competitors.
However, it's not always about being the cheapest, it's about pricing correctly and offering the greatest value.
Reduce Price Tracking Mistakes
Excel is the most common method of manually tracking and storing competitors' prices but you run the risk of making mistakes when transferring data, however careful you think you are.
By using a proven competitor price tracking tool, you will eliminate the risk of making what could be extremely costly mistakes.
Accelerate Your Price Changes
Price wars can be fierce and for many ecommerce sectors, particularly electronics, home maintenance and construction, prices are highly dynamic. Add to the pot special promotions, discounts and seasonal sales, and it becomes almost impossible to manually update pricing data on a daily basis.
When you use competitor price tracking software you are monitoring the whole market and the alerts you will set up means you can accelerate your response/adjust your prices dynamically according to your competitors' prices.
Your time is valuable and your day should be spent in a productive fashion, not bogged down in the product prices of your competitors, particularly if we are talking hundreds, perhaps thousands of products here.
Let the software trawl the internet for you.
Competitor price tracking software is more effective, accurate and economic than employing someone to track prices and your ROI will be realised in a very short space of time.
Improve Data Analysis
By investing in price tracking software you'll soon learn what is the life cycle/stage of your product, whether the product could be cheaper or higher priced in the future, whether price changes should occur regularly or seasonally - and whether discounts or promotions would be appropriate.
Competitor price tracking software means you have all the relevant pricing information at your fingertips and it becomes much easier to make accurate decisions for the future success of your business based upon an analysis of what the competition is up to pricing-wise.
You can choose to price-match - or price your goods higher or lower, depending on what your overall business goals are and how you wish your product to be perceived.
If you have a fairly solid grasp on your product’s quality, target audience and cost of production, pricing competitively will most likely serve you in good stead. You’re not likely to lose volume or market share – after all, if it's kept your competitors afloat, it should do the same for you.
A word of caution though: don't ALWAYS assume that your competitors have got their pricing right – their circumstances may be very different to yours.
Competitive Pricing Has a Good Chance of Success When
- Your competitor is better known than you. If a larger competitor matches your prices, that puts you on a level playing field in the minds of the target audience.
- You have an identifiable differentiation. To get potential customers to choose you instead of the competition, you need to show them how you are unique and better in one or more aspect.
- You make it easy to switch. It can be a daunting proposition for someone to switch large and complex products or services. The more painless you can make the transition, the better.
- Your competitor raises its prices or has a problem with quality/delivery. This creates a strong sense of urgency on the part of the buyer and they are more likely to switch to you.
- Your offer is convincing. The benefits of switching to you have to be greater than sticking with the competition. This might mean that you have to lower your prices to such an extent that you lose money initially. This can be worthwhile if the lifetime value of the new customer will be worthwhile.
Retail has become increasingly more competitive and crowded so prices are being changed more and more frequently. In order to keep up and ahead, retailers need to be doing data analysis, strategic decision-making and price optimisation based on real-time information.
Competitor price tracking software is a necessity for retailers – you just can't compete without it. If you track your competitors' prices daily you'll be way ahead in the race – and the competition will find it harder and harder to catch up.
One data source BlackCurve can use is "Competitor Information".
The Strategy and Tactics of Pricing by Tom Nagle and John Hogan, 2016
Pricing Strategy: Tactics and Strategies for Pricing with Confidence by Warren D. Hamilton, 2014
Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table by Reed K. Holden and Mark Burton, 2014
Pricing for Profit: How to Develop a Powerful Pricing Strategy for Your Business by Peter Hill, 2013