Automated Price Competition Tools: A Smarter Way To Do E-commerce
No one who is active in e-commerce can ignore that the market is extremely competitive these days.
Thanks to developments in e-commerce landscapes in emerging markets and well-established e-commerce markets, like in Europe or the US, consumers can easily find a product at tons of different web shops. Consumers can also easily compare products thanks to widely popular price comparison engines. Companies are now fighting over supply in response to this new kind of demand.
The Main Factor in E-Commerce Competition: Pricing
Because of this easy access to so many online offers or options, consumers are always on the hunt for the best products at the best value. It’s no wonder that e-commerce companies create taglines about pricing and value by suggesting the best products for the best value.
But, it’s really hard to get the best value consistently in a dynamic and competitive market, and finding the right price that really offers the best value seems to require science-backed answers.
The idea of stressing the importance of competitive intelligence in e-commerce to offer the best market value is not rocket science. But, if we consider that there are nearly a million active e-commerce companies worldwide, there should be a smarter way to fulfil this need for intelligence, besides the usual way of manual data collection.
With the introduction of a new breed of business intelligence tools that offer automated competitor price tracking, competitive intelligence is becoming more of a commodity—especially since these services offer affordable monthly fees. With these tools quickly gaining ground in the market, companies who don’t have them will start to feel like they’re missing out.
Steps to Take before Becoming Automated
Like many business intelligence applications, competitive intelligence needs input or some kind of guidance from users. The following are the most crucial questions to ask:
- Who are my competitors?
- What are my most important / price competitive products?
After choosing the best answers to these questions, automation will give the best outcomes.
In some cases, e-commerce companies know their major rivals, but they may not be able to identify each and every web shop selling similar products. A very quick Google search for products from different brands and categories will list the real rivals on the first couple of result pages. Companies can even go a little further and run a more direct analysis on consumer-facing price comparison engines like Google Shopping. That lets them find the main web shops that are competing for certain stock keeping units (SKUs).
In any analysis, prioritization is an important step—there’s no exception to that rule. After finding a listing of competing web shops, e-commerce owners/managers can go ahead with a rule of thumb analysis by comparing the Alexa or SimilarWeb rankings of competitors to see how effective they are in the market. The revenue side of e-commerce performance can make estimates using the rankings to better compare apples to apples or oranges to oranges, whatever the case may be.
After competitor selection, the next step is figuring out what products are the most important, competitive, or theoretically price-elastic in the market.
Like with competitor listing, companies can—or actually must—pick a product assortments to be benchmarked against their competitors using a prioritization process. Here, filtering the top 1,000 or 5,000 SKUs with highest sales volumes could give companies an edge. Another idea is to apply a simple Pareto rule of 80-20 to the full assortment of products.
Because many cases being conducted with e-commerce companies using such automated competitor tracking, paring down to the top products instead of getting lost in a portfolio with ten thousand SKUs will earn a quick gain.
Using the list of competitors and products to be benchmarked, the next step is to feed the list of product links into the automated solution. It will show information from the links on pricing and stock availability in a fully automated, hands-off way.
The step of gathering together competitors’ links is a one-time job that can even be outsourced to service providers and handled in a semi-automated way, depending on technological stack of the vendor. The process can be repeated later on when new SKUs are introduced to the competitive portfolio of products.
The Power of Automation
The beauty of this automation is that after all the URLs have been inputted into the tool, it almost magically gathers the updated data from the web shops that were identified as competitors.
This automation really decreases the time it takes to regularly monitor competing companies on a regular basis. And, thanks to its further actionable reports, it also leverages the time spent on analysis.
Basically, these tools let companies check for competitor products all at once—at the very beginning of the process—instead of having to search every single day or week, depending on the company’s competitive strategy.
An automated solution for tracking competitors’ prices means companies don’t have to repeatedly check for competitors’ product links. Instead, e-commerce companies can focus on the results and the analysis produced by the tool.
The effectiveness of the tool depends on the following:
- Frequency of updates
- Market coverage
- Big-picture reporting
- Further integrations
In such a dynamic environment, weekly or monthly reports or updates about the competitive landscape are just not enough. In a market where about 2% of product prices are changed on a daily basis, daily updates or multiple daily updates are essential.
Even though technology lets companies re-imagine market possibilities, there are still some limitations. In this case, these tools might have limited market coverage. Some tools only rely on the competitive landscape of Amazon or Google Shopping, but there are other tools that can cover any vertical market in any country. You can just name your competitors, and the rest is taken care of.
Actionability is an important element in all kinds of business intelligence tools. In competitor price trackers, these actions come from instant reports about competitors’ price changes. You can be alerted about these changes through special notifications that can be changed using the tool’s admin panel. Also, role sharing might be possible in a team so that different members can focus on controlling different brands or categories.
A competitive intelligence tool leverages the effectiveness of action-takers within a company at the price level. It can also offer important insight for higher level executives so that they can observe the retrospective performance of the company within their market landscape.
Historical trends can also be broken-down at a category or brand level. They can show a company’s relative performance for each product group. These trends can also be extended to set KPIs that were came from the tool to monitor the performance of price managers or other employees who are responsible for pricing decisions.
In some cases, tools that are packaged in a generic product format might not cover all of an e-commerce company’s needs. It might leave them thinking about integrating the available data even more with other internal applications. Thankfully, these tools offer automated feeds or even restful APIs that can easily be integrated with any solution that the e-commerce company likes.It’s as easy as that.
The expected outcomes from automation are easy to predict. Many companies already handle competitor price tracking operations by hand and see positive outcomes in their sales figures or profit margins. Unfortunately, it’s impossible to scale this effort to cover a bigger chunk of their portfolio — which is where automation becomes a must.
With fully automated, cloud-based solutions, it’s possible for e-commerce SMBs to use these tools — thanks to their very affordable monthly fees. We know that retail was digitally disrupted by e-commerce. Now, market research or more specifically, competitive intelligence, is also being disrupted. It’s starting to be packaged as SaaS solutions instead of expensive conventional market research services.
The best way to move forward is to test these solutions. The best part of all is that it’s totally free to try out!