Why is organising price intelligence operations essential for e-commerce?

In the world of e-commerce, price intelligence is a marketing technique that consists in closely monitoring prices applied by competitors for products similar to your own. By doing this regularly, and extending the practice to all sales channels (websites, price comparison sites, marketplaces, etc.), companies can adjust their pricing and win over market shares.

As an online retailer, your environment is necessarily a competitive one. As such, you may find it advantageous to look at the prices applied by direct competitors for similar products, and to make pricing decisions accordingly. This is because customers will not hesitate to compare prices for products they are interested in, and have no intention of paying the highest price.

Well-organised price intelligence operations will help you roll out one of the three following strategies:

• Alignment. Your prices are aligned with those of competitors, to avoid others taking the lead. Your products should stand out through other criteria than merely their price.

• Market penetration. Your prices are lower, to guarantee you more market shares – namely for products displayed as being top of the list on price comparison sites and marketplaces. Prices which are lower than your competition’s may also trigger impulse buys. Just make sure you don’t start a long and painful price war!

• Skimming. Your prices are higher than the competition’s, and your main focus is product quality. A reduced customer segment is targeted, but it boasts a higher purchasing power. This can be a major differentiating factor…which requires your products to be of top quality!

Countless tools such as Competitoor, Paarly, Pricemoove or Prysinc can be used to easily run price intelligence operations, by automating price data extraction on various channels. Once competitor prices are known, and your strategy has been set out, do not forget to adapt product prices to all your sales channels, using a product flow manager such as Lengow.