It’s not too much of a stretch to say that getting your pricing strategy right could be one of the deciding factors in how successful – or unsuccesssful – your online business is.
Online shoppers are looking for quality products, reliable deliveries, and most of all – great value. By providing excellent value without not damaging your own profit margins – and getting the balance right between the two – you’ll be well placed to succeed. It’s all about how you position yourself against your main competitors at key points in the year. The run up to Christmas is certainly one of them.
So what is the key to getting your repricing strategy right? Firstly, knowledge is power, so make sure you’re armed with information about your inventory’s past performance as well as any seasonal trends. From here, you’ll be able to see how your products have performed previously and what to expect next time, or where to focus your efforts to make improvements.
Next up, you ought to segment your inventory so you’re repricing the right items at the right time. You should also track your item costs so you’re never selling an item at a loss – this may be tricky to do manually if you have a large inventory; there is software available to help you deal with this. “For us, it’s all about putting the power in the hands of the seller,” said Aaron Cohen, co-founder of Appeagle, a price management platform for online sellers. “There’s an unfortunate misconception out there that repricing is simply a race to the bottom. That doesn’t have to be the case. By choosing software that allows for detailed customization and strategy settings, sellers can sell more and at higher profit margins,” said Cohen. It can also be easy to overlook the importance of – and the fluctuations in – shipping costs and currency markets. These can really make a difference to how much you’re paying, and can affect your bottom line if you haven’t considered these. Currency exchange companies like World First can help with a strategy to protect you from adverse exchange rate movements. Consider your FBA storage fees. If these are about to go up for certain products, put the prices on these products down. And think generally about how your profits could be hit should your arrangement with Amazon change.
Be aware that putting an effective repricing strategy will take time and a lot of tweaks and adjustments. Reviewing the results will also be time consuming, but it will be worth it when you have a fully-fledged repricing plan and a formula you can replicate time and time again.
Now it’s time to think again about your competition. Say you’re selling a product that ten competitors are also selling, but you’ve also got a product that only you stock. Both cost the same and the margins are the same, so what do you do? Well, it makes sense to be more competitive with the prices on those products that have more competition. Cohen says: “It’s wise to choose repricing software that allows sellers to get very granular in how they choose who they’ll compete with. Not only can sellers exclude specific competitors, but they also have the option of eliminating listings according to item condition and fulfillment type, for example.”
Whether you’re a big or small business, and whether you go down the automatic or the manual route, getting your pricing strategy right could make all the difference when it comes to your bottom line.