The price war, or How I put into practice the experience of Western colleagues

The issue of price competitiveness in my niche (online store, household goods, I have been working since December 2013) was, and is, quite acute. Therefore, I began to study the achievements of recognized pros in this matter. And then, as ordered, I came across an article on blog.crazyegg.com, which was very much in the subject. So, I put it on your court (of course, in Russian) and with my comments / additions / reflections.

If earlier online stores could afford to do reviews of price ratings of competitors once a week, then with the advent of such giants as Amazon.com using dynamic price technologies (the price may change several times a day, depending on demand), you have to keep up with them to stay on the market. But is it worth the rush? It was this question that I, working in an online store, asked myself more than once.

For a start - a little about the strategies of Amazon. And then we will look at how these strategies can be used to increase conversion.
')
What is a dynamic price

The name speaks for itself. The dynamic price changes as the main competitors update their prices in order to keep the lowest prices. Now that regular comparative reviews have become the norm in the web business, such a strategy is not just a tricky trick by an experienced businessman, but the only way to survive in a highly competitive market.

From me: yes, monitoring is our everything. Otherwise, you can fly very seriously. For example, when I launched the campaign for advertising bags bags, on which there were really a lot of conversions, I did not understand why my sales were not growing. A casket just opened. It turned out that my price was higher than that of competitors from the TOP-10 issue, which did not give advertising either. Then I realized how it was. People went over my ad, watched the price and ... returned to the issue to make sure the price was normal. And it turned out that I sell more expensive. Bottom line: I let a potential client down to the idea of ​​a purchase, but the price was set wrong. And gave the client a competitor. Sadly And if I monitored prices, this would not have happened.

How often does the dynamic price change

According to the data of the Internet Retailer for 2013, obtained using the Ugam technology, in the days before the New Year holidays from November 24 to December 14, the prices of electronics, toys and computer hardware on Amazon were changed 9715 times, i.e. much more often than the main competitors of Best Buy Co. Inc., Target Corp., Wal-Mart Stores Inc. and Toys 'R' Us Inc.

Jenn Markey, 360pi's vice president of marketing, argues that prices on Amazon can change on average up to 10 times a day, and the most frequent changes concern such items as electrical appliances for various purposes and clothing. Active sellers, as a rule, daily change prices by 15-20% of their range. From 20% of all prices in online stores can change at least once a day, and prices for the most popular goods - up to several times per minute (reports Michael Paulson, vice president of Decide.com, an online price tracking company recently acquired Concern eBay Inc).

From me: here I began to think that I was very wrong when I was campaigning with bean bags ....

Is all lost and you will never keep up with the leaders?

If it’s critical for you to keep up with Amazon, then yes, it’s almost impossible to keep up with them. If you are ready to put up with a more modest role in the Internet market, while maintaining your individuality and not getting involved in a price war - you have several options.

From me: when I read it, I was glad that I could still blink.

Be especially careful when choosing products for which you are ready to make a discount.

You should not throw out the whole product at once and subject it to a dynamic markdown in the hope that at least something will be sold. You can limit yourself to seasonal items or stock items, and not to touch other items. The higher the demand for goods, the higher the likelihood that they will buy it, and the less need to reduce the price for it. Even if in this situation your profit drops a little, you can easily make up for it by selling accessories, convincing the client that they will add a special charm to his image.

From me: yes, this is true when you have the resources to maneuver. For example, with a wide assortment and different suppliers, you can reduce the price for one product or category of goods, keeping it at the same level (or even raising!) Other prices. At the same time, the number of purchases should have been consistently high. I did not have this, unfortunately. But in the example with bean bags, after all, I could reduce the price, at least a little. At least for the time at which I had exhibited shows.

Do not be afraid to give a discount to your regular customers.

Online trading is, above all, the art of negotiation. Buyers know this very well and are ready to pay if you give them a reason enough convincing. If the system of discount cards operates within your service, then why not provide them to your regular customers, thereby ensuring that they will return to you?

From me: but this is what I took unconditionally. And even made a newsletter in which he described that he was ready to please regular customers with “buns”. It worked! Purchases became 10% more. All ingenious is simple!

Offer exclusive products to brand fans

Along with the increasing popularity of discount cards, it is becoming a trend to offer packages of services or gadgets in relation to the main running product. If fans of a certain brand want, say, a new version of the game console, they have to buy a package attached to it in order to get it. The main temptation here, of course, is that they want to be first, to have an exclusive product in their hands. This is what retailers use, especially during the holiday seasons, selling game consoles and other products and making good money selling packages to them.

From me: during the holidays bundles of goods really worked well. For example, a Christmas tree, and to her at a discount garland, balls, tinsel. I, unfortunately, did not have an exclusive one or fortunately (and where would it come from in home goods?).

Price is not the only factor

Of course, the low price attracts attention, but there are many buyers willing to pay for having a choice, and this factor is much more important for them. This is proved by the experience of eBags, which in 2001 put up for sale a set of three suitcases of the Carnival Hardside Spinner. Until the company started an active marketing attack and did not apply the dynamic price method, $ 180 was the maximum value of the set. Knowing that buyers in search of goods will most likely use such popular services as Google, TheFind and other search engines, which are based on the picture, they reduced the price of the set, but added three new versions of the set of different colors. This move immediately paid off, sales of this particular set quadrupled and it became (and still remains!) In the top five best-selling products of the Internet shop. In addition, buyers, more and more often driving a product code into the search window, without knowing it, increased the rating of an online store in search engines, putting it on the first lines.

From me: yes, it’s a good idea.

How does this relate to conversion optimization?

Pricing is one of the most important elements of conversion optimization. Set a too low price - and the value of your product will drop significantly in the eyes of buyers. Set a too high price - and lose buyers who know the real price of the product well.

But not always the price - exactly what you need to worry about. As you can see from the information above, an important part of your strategy will be exactly HOW you will price your products. In this regard, it is especially important to think over the moment of the climax, that is, the moment when the buyer becomes confident that he needs your product and precisely at this price. The CRO strategy proposes to take into account the following:

The more pictures - the higher the conversion.

The key to success is the introduction of a reward system. Something like: buy ten of our products and get a gift.
Focus on the sale of more expensive products: before the buyer reaches the final step, placing the order, show him that with this product they often buy IT too.

And finally

Of course, organizing a competition based on price alone is too easy. Your competitors probably have a lot of other tricks to attract customers. That is why the application of the dynamic pricing method is not the only strategy that will save you.

Look for ways to create new values ​​or ways to simplify strategy. If your competitors offer their customers a “suitable solution to the problem”, then you will offer your “simplest solution” or vice versa.

Every customer has needs, and he is waiting for the moment to satisfy them. Trying to understand exactly what your buyer wants, when he crosses the threshold of your store (that is, opens the site), you demonstrate your desire to be on the same wavelength with it and not even so much in terms of just satisfying its needs, but convincing customer in its exclusivity, make him feel the true pleasure of the process of shopping.

From me: I decided that my site would become more interesting if I supplemented it with normal thematic content (that is, not only with product cards). Moreover, my audience is mostly women who love to read and look at beautiful pictures. I began to write articles, sharpened by the necessary requests, and supplied with photos unique to Runet (from Western sites, with suitable alt), and only add product cards to them. As practice has shown, it worked. Content was not so expensive, but it provided a steady influx of visitors who willingly switched to products and made purchases. It looked like this to me: an article about gifts for March 8, a description of some ideas in it and a product card as a hint. That is, I did not seem to be imposed, but unobtrusively suggested. In parallel led the newsletter. She put articles that were relevant seasonally (September 1, Teacher's Day, etc.) and several products. Changed the price, monitoring competitors. And it was quite effective (on average, profits increased by 10%). It is a pity that we do not have so many holidays, under which you can do such mailings.

What do you think about the use of the dynamic pricing method in a web business? Is it really in numbers? Or maybe there is something more important? Please share your thoughts with us in the comments (this is how the author concluded his article as if he read my thoughts).