Dynamic pricing is now one of the most popular promotion strategies in retail. In this piece, we discuss how APAC retailers can make use of dynamic pricing efficiently.
According to a report by Statista, e-commerce sales for the year 2020 in the Asia Pacific Region may reach US$2.45 trillion. Estimates place the number of e-commerce sites in Asia to be around 16 million, and retailers need excellent strategies to compete.
One of the most popular retail strategies today is dynamic pricing. Dynamic pricing is a marketing strategy pioneered by Amazon, in which prices are tailored based on the specific preferences of different groups of consumers. In a single day, Amazon changes product prices an average of 2.5 million times, according to an article published in Business Insider.
Dynamic pricing can also be ideal for non-Amazon retailers. If you have a business outside Amazon, you may want to level up your promotion strategies and apply new ways to strengthen consumer engagement before the Amazon Prime Day (APD) event this June 21-22.
According to Criteo’s 2021 report on APD, the event positively influences the consumers’ buying decisions even outside Amazon. 51% of Singaporean shoppers say that they plan on buying from sites outside Amazon during APD as the event helps them be “in the mood” to shop. Meanwhile, 70% of Singaporean shoppers already know the products they’ll buy during the event, which includes electronics, cosmetics, and even toys. If your business is in any of these niches, you may want to apply the dynamic pricing strategy to boost your sales.
The Rise of Dynamic Pricing in APAC Region
According to a forecast made by 360iresearch, the Global Price Optimisation Software Market may grow from US$881.89 million in the year 2020 to a US1.9 billion industry by the end of 2025.
This unprecedented growth is likely to be fueled by the pandemic-driven shift to online shopping with the health concerns associated with shopping in physical stores. For this reason, retailers across the globe use Price Optimisation Software to optimise the pricing of their products. This tool can help tell a retailer at which price a product should get sold to provide maximum revenue.
Dynamic pricing is a critical strategy that APAC retailers can benefit from when used properly. It can help facilitate a quick return on investment (ROI), especially for start-ups trying to compete with established retail giants. But what makes dynamic pricing valuable to retailers, and how can they use it to drive revenue-oriented results?
Better Knowledge of the Retail Industry
Retailers need to adjust data in real-time while considering supply and demand to make dynamic pricing work. Unfortunately, data analysis takes time, and the market may have already shifted when manual data analysis gets completed.
One advantage of Price Optimisation Software is it can crunch a large volume of complicated data in a matter of seconds to allow retailers to adjust prices to meet market and consumer demands. This can provide a retailer the advantage of adjusting prices ahead of competitors and capturing a large market segment.
Adjust Prices Across Categories
Price Optimisation Software can help retailers automatically adjust prices on all products belonging to a particular category at once. This is a practical approach since products belonging to a particular industry often raise prices simultaneously.
For example, prices of products associated with a particular holiday increase at the same time so it makes sense to implement rules that will uniformly raise their prices.
Automation of Retail Processes
Software that can optimise prices can help minimise manual work such as data analysis and market prediction. Instead of depending on manual sales forecasts, a retailer can use automated forecasts to reduce the margin of error.
Retailers can still retain manual sales forecasting while using Price Optimisation Software. Instead of manually collating data, the software can quickly pull together information that sales analysts can use in manual forecasting.
Some retailers use Price Optimisation Software to understand their consumers’ buying patterns better and predict trends that might prevent revenue leaks.
An excellent example is using dynamic pricing to help a slow-moving product by initiating a flash sale. The flash sale benefits the retailer by turning a slow-moving product into a revenue generator while freeing up inventory to make way for more in-demand and profitable products.
The retail industry is a promising arena because of its limitless potential and ever-growing customer base. However, retailers need to have the right strategy if they want to stay ahead of the competition. Price Optimisation Software is gaining traction among Asian retail companies, but it’s still too early to tell if the said software will positively affect the Asian retail market.