The largest shopping event of the year is upon us, but the Black Friday of 2020 promises to be different. The global pandemic’s economic setbacks are pushing the retailers to go the extra mile to entice the financially apprehensive consumers. This means that this year will see the fiercest competition yet.
Retailers can take insights on crafting a winning strategy for the most significant shopping event from last year’s statistics. In 2019, in the USA alone, over 93 million people chose to do their shopping online. With the Covid-19 global situation around the globe, this number unexpectedly will only grow, along with consumers’ ever-growing pricing sensitivity.
These insights mark a huge shift in the public’s spending patterns. Those retailers who will apply pricing intelligence and dynamic pricing to their e-commerce strategy will most likely come out on top during this Black Friday.
Winning Black Friday with dynamic pricing
The allure of Black Friday for consumers is all about attractive prices. Retailers in 2020 are faced with a challenging task to guarantee the largest possible profits while at the same time remaining competitive.
To effectively address the challenge, dynamic pricing is a must. It is a practice employed by retailers to set flexible prices for their goods or services based on real-time demand. Prices are adjusted based on supply and demand fluctuations, competitors’ prices, and other market conditions.
Examples of dynamic pricing
Most commonly, dynamic pricing is used by airline companies, transport services, and e-commerce websites. For example, a transport service can modify their ticket prices according to the demand. If a particular travel destination or time is particularly popular, the price is raised to capture larger revenue. In the opposite case, when the seats are left unsold, ticket prices tend to go down to attract more sales.
E-commerce websites also use intelligent pricing to control supply and demand. Their dynamic pricing strategy is often based on various factors, including inventory levels, competitors’ prices, and even shopper location.
The same can be applied when crafting a winning pricing strategy for Black Friday. Switched-on retailers must consider the popularity of specific goods and services, as well as direct competitors’ pricing. In turn, this will allow setting the most optimal prices for their products and services, resulting in winning the customer of the new normal and a healthy bottom line.
How to apply dynamic pricing
Companies need to continually follow their competitors’ prices in real-time, which is one of the biggest challenges when implementing dynamic pricing, especially on a large scale.
Retailers must make sure that the data they receive is accurate and updated continuously to adapt their pricing strategy accordingly. This requires having a reliable web data gathering infrastructure and expertise.
There is also an option for retailers to outsource real-time web data gathering solutions to effectively address business’ needs. In this case, retailers must be aware of the quality and type of data they want to obtain, as well as determine how much management or resources their preferred data acquisition method will require.
Adapting to the new normal
Charles Darvin famously said: “it is not the strongest of the species that survives, it is the one that is the most adaptable to change.” It rings particularly true in the business environment. Companies such as Kodak, Nokia, and Myspace have experienced the unforgivable effects of failing to innovate and neglecting customer trends.
For a large part of the retail sector, dynamic pricing has been known to a limited degree due to complexities, which arise with data acquisition. However, its steady rise to popularity starts slowly pushing out companies that cannot compete against data-driven businesses. These switched-on retailers are already reaping the benefits of increased control in pricing strategy, better stock management, and larger revenue.