Most e-commerce sites do not change their prices very often. Larger companies like Amazon continually change their prices in real time to keep a competitive edge and try to increase sales and profits. Until recently, the high cost of implementing real-time pricing made it prohibitive for smaller retailers from using real-time pricing, but this is no longer the case.
What is real-time pricing?
Real-time pricing is the practice of changing prices very quickly based on various sales factors, such as stock availability of a high-demand product, prices charged by competitors, the browsing history of customers, customers’ previous purchases and even the weather. An example of this is lowering the price of gloves when a visitor is browsing the website from a city that is in the midst of a cold spell.
You need to analyse a lot of data very quickly if you want to offer a promotional price in real time, including whether the person browsing is a returning customer, previous purchases (if any), location, and how long you want to offer a promotional price.
Previously, the extent of the required data analysis prevented smaller e-commerce sites from using real-time pricing, With the advent of faster and cheaper computers and specialised vendors offering real-time pricing services, small online retailers can now take advantage of this technology.
What are the benefits of real-time pricing?
Real-time pricing can increase the demand for your products, especially if your updated price meets or beats the prices offered by your competitors. Your customers will know they can receive a competitive price without the need to visit competing sites. In addition, when you change your prices in real-time based on your customer’s situation you increase the chances of making the sale. Real-time pricing can improve your conversion rate and increase your revenue.
Also, your customers will become more loyal if you provide them with excellent pricing and promotions based on their situation. Your customers are also more likely to give you positive reviews and refer their friends and family members, which will increase traffic to your site and generate more sales and profits.
Real-time pricing is not just about lowering prices. In some situations, real-time pricing could mean you could increase your prices. For example, if you have a product with a limit supply that is selling very quickly, you may have the opportunity to raise your price and increase your profit margin. Also, you might be able to increase profits by having different prices for several customer segments based on their shopping behaviour.
How do you implement real-time pricing?
There are several vendors that specialise in this field and who can tailor a real-time pricing system for your e-commerce site. These firms use artificial intelligence to analyse your customers’ behaviour to offer them various discounts, coupons and other promotions as they browse your site. These personalised incentives integrate seamlessly with your sales process.
Real-time pricing can give you a competitive edge and give your customers a better shopping experience.