Is Price Parity The Best for Multichannel Brands ?
Price parity is a principle that helps to determine when it makes sense for an investor in bonds or stocks to convert their holdings into the other. For example, if bond and stock prices are equal, there’s no point in converting because they will be worth the same. This article looks at how eCommerce technology will change in 2020.
If Adam Smith were alive today, he would be surprised that no one is buying beaver pelts anymore and confused by the pricing of goods across multiple channels. His theory about “natural prices” does not seem to apply in this case.
So many eCommerce brands are conflicted when it comes to pricing. They want the same price for products sold on their website and at brick-and-mortar stores, but they don’t know how this would affect sales.
When it comes to price, many retailers are in a tough spot. Should they charge the same fees everywhere or stagger them based on what people would be willing to pay? Is investing in repricers worth it when there is no guarantee that shoppers won’t notice discrepancies between different stores’ pricing schemes?
This article discusses the benefits and drawbacks of having price parity or dynamic pricing. For those who don’t know what these are: they affect your eCommerce brand in various ways. The question is which price you want to use if you choose that route.
What Price Parity Means in Modern Ecommerce?
Back in the day, eCommerce was a small market, and sellers had to charge low prices or risk losing out. But now that there are more places for people to buy from, we’ve become accustomed to price parity.
Amazon had a clause in their seller agreements that prevented them from selling the same items on other marketplaces for less. This was only beneficial to Amazon and made it hard for sellers because they couldn’t sell at lower prices.
Amazon just made a huge move that may change the game forever. They ended their price parity policy, which means they are no longer legally obligated to offer lower prices on items than other retailers.
Amazon has been testing a new feature that allows sellers to change their prices based on the marketplace. Click To Tweet
This means you have to consider whether it’s better for your customers if all of your products are priced identically or not.
Does It Imply Customer Loyalty or Profits?
Price parity in eCommerce is a complicated issue that can’t be solved with simple answers. If we boil it down to the heart of the debate, you have two options: customer loyalty or profits? This isn’t just a rhetorical question because you need to consider what’s more important for your business strategy and priorities.
Some companies live and die by the sale, only looking to increase profits from each purchase. Some companies focus on their customers instead of just making a quick buck with high-profit items.
The debate of how to price your product should depend on what you prioritize more: maintaining a higher average price or having the ability to change prices depending on supply and demand.
If you’re a company that markets to niche customers, builds communities around your brand, and is always looking for ways to be loyal by offering the same prices on different platforms, then this will help. Even if most people stick with their preferred platform when shopping online or in-store – they might still check out other channels.
Dynamic pricing is a great way to make more money if you don’t care about customer loyalty. You’ll lose some of your regular customers, but the people who would’ve never come in will spend tons.
Specific industries and product categories, like the food industry or any other customer buying products in bulk, need to build loyalty with their customers. That’s because if you’re selling something small-scale but expensive, for example – let’s say an iPhone charger cable – it doesn’t matter how much they spend so long as they keep coming back.
It’s much more expensive to find a new customer than keep an existing one. The longer you have someone as your client, the more loyal they will be to your company.
It turns out that the longevity of purchase is not as crucial for businesses that sell one-time purchases. This goes double if you’re selling low-cost goods or limited edition products.
Furthermore, if your strategy is to compete with Amazon on price alone, you may not be able to afford the luxury of beating them in terms of parity.
How to Identify the Best Repricers?
Have you found out that dynamic pricing is the best strategy for your business? The good news is once you have automated software installed on your website to monitor competitors and prices changes – you won’t need to check competitors’ websites continuously. Here are some recommendations for getting started.
- Informed — Being informed may be the best option for you if you’re selling on Walmart and Amazon. They offer custom repricing strategies to help increase your sales.
- Skuuudle — The best thing about this website is that they have a team of humans reviewing prices instead of an automated algorithm.
- Omnia Dynamic Pricing — An excellent recommendation is a dynamic pricing algorithm for sellers who have been in the game for a while and can handle higher costs.
- Prisync — The cheaper option for you is Prisync, which generally has positive reviews. The only issue with it is the occasional technical glitches.
- xSellco Repricer —If you’re in the Amazon game, Xsellco is one of the most popular repricers for optimizing prices and winning Buy Boxes.
- SellerRepublic — SellerRepublic is a well-known price for Amazon and eBay that’s cheaper, which is great if you’re starting.
Of course, you can always do the work yourself. This is more time-consuming and will require constant attention to detail – but it’s worth it if you want to have a competitive edge. Click To Tweet