How does the electricity merchant website Fight the price war? Dynamic pricing wins mixed

After Thanksgiving, "Black Friday" is America's annual shopping spree, the threshold for consumers to break the market, scramble for discounted goods, the traditional retail stores and electric dealers are racking their brains to start price war. In order to protect profits at a low price, the use of software systems to monitor opponents and to adjust prices on a daily basis has become an essential tool.

For customers, there is no need to line up overnight after parity. So the retailer must provide the lowest price at the first time. With the rise of E-commerce and the emergence of a variety of data-season analysis tools, retailers have reacted faster and more accurately than ever before, after a few seconds of competitors ' bids. Traditional retailers are forced to transform and follow the flexible pricing of the electric dealer. The price war is no longer just a low price, but a system of information mining and strategy.

The origin of dynamic price

In the 90 's, airlines kept changing ticket prices based on the number of spare seats on one flight and the price of competitors. The hotel also soon followed, introducing their "revenue management" system and changing room prices at any time. Now, web retailers are using similar software, one of the purposes is to maintain the lowest price--even a penny lower--so that when the buyer in the price comparison, their products will appear in the search results in the front of the position.

People in the industry say that before the software era, shops would send their employees to a competitor's shop to transcribe prices manually. As E-commerce develops, companies adjust prices by browsing the websites of rival businesses.

The new software has greatly accelerated the process. Nilagi Shah, CEO of Wayfair, a home goods network retailer, said the company had to revise its prices hundreds of thousands of times a day. When the company finds that the price is different--for example, a commodity is priced faster than a competitor's high 5%── company. Pricing is two-way. If the site finds that the price of a commodity it sells is much lower than that of its competitors, Shah said, it could raise prices to keep up with the market price level.

The promotion of price war by ranking mechanism

The most frequent price adjustment is the shop that sells products on Amazon. Amazon encourages ruthless competition among retailers to compete for the top spot in search results. For example, the children's clothing store cookie ' s, in order to keep the leading position in the Amazon rankings, the seller used the software, every 15 minutes to modify the price. The shopkeeper said that the clothes he sells on Amazon are often cheaper than his shop in Brooklyn, New York. "For the new arrival when the Nivino, we have not had time to good marketing, already in the price below their expectations of sales." ”

For retailers selling products on Amazon, having the lowest selling price is the quickest way to get into the coveted "shopping list". The list of shopping recommendations or the product on the default product list has a 95% chance of being selected by the buyer.

The software put the electric trader to the teeth

Mercent, which provides price-adjustment software, says its software can modify the price of 2 million items in one hour. The software will be priced according to a variety of factors, such as competitor prices, competitor transport prices, and seasonal sales. The retailer sets the time frequency of the price adjustment, the product to be tracked and the competition website which can be neglected. The most frequent changes in prices are household necessities such as home electronics, clothing, shoes, jewellery and detergents, razor blades. "In the long run, this means that prices are no longer pure prices," says Eric Best, chief executive of Mercent. ”

Falak, owner of the shop cookie, said that frequent changes in prices have greatly boosted sales, but also need to pay attention to the price bottom line. He first set the price advantage ratio with the competitor in the software, then he set an insurmountable price bottom line, then he will limit the competitor to those in the Amazon five-star rating system to have at least two stars rating of the business.

Price adjustment game wins mixed

So far, buyers have been mixed in price games--about half of the price changes, according to Decide.com, a website based on electricity prices. Decide.com a full time track of commodity prices to determine the best time to shop. Price changes can be dramatic. Last month, Amazon retailers made four changes to the price of a Samsung 43-inch plasma TV in a single day, with a price range of 398 to 424 dollars, according to the decide.com website. In the middle of the afternoon, Best Buy raised the price of the TV from $400 to $500, then reversed prices, while Newegg, an online electronics retailer, raised the price of the TV from $500 to $600 early this morning. Amazon, Best Buy and new eggs declined to comment.