How to Improve Sales by Monitoring Product Categories?
Nowadays it’s hard to imagine an online store without product filtering and sorting options. The division into categories significantly helps potential customers to navigate the website and finalize transactions. But what to do if you’d like to effectively manage prices in various sections of your store? Price monitoring and automation turn out to be one of the solutions available on the market. Keep reading our article and check out how to benefit from these functionalities.
Price monitoring and automation – what is it?
Price monitoring is an automated process of keeping an eye on the offers on the market. When taking into consideration an enormous and constantly increasing number of online stores, it’s almost infeasible to successfully monitor all marketplaces and sales channels without using professional tools. Meanwhile, accurate and proper information concerning market prices is particularly important for both online stores and manufacturers. Thanks to it, it’s possible to optimize sales strategies, take steps and quickly adapt to changing market realities which translate directly into maximizing profits and maintaining a competitive advantage over market rivals.
Just to put you in the picture, imagine that a given customer is looking for the most beneficial offer on the market and your direct market rival has just cut the price. Thanks to the automation tool, you’re able to immediately change the price in your online store and thus maintain your leadership position. Due to the emergence of such tools, it’s possible to take e-commerce steps that not only increase traffic to the website but also help to improve sales.
How to monitor prices in specific product categories?
When introducing online price monitoring, many different criteria are taken into account. It’s possible to monitor only selected stores, marketplaces, price comparison engines or specific product sections. The division into categories makes online store navigation more intuitive and user-friendly.
Filtering products by brand, color, size and price makes it easier for customers to navigate the store. Thanks to it, they don’t have to browse through the entire product range to find a few items they’re looking for.
So how to monitor prices in specific categories? It’s helpful to name and arrange categories in a way that is compliant with UX principles. Thanks to it, they’re identical in many online stores. Consequently, you can effortlessly monitor your market competition and then, on the basis of the collected data, manage your own prices and take strategic steps related to selected product groups.
Price automation in selected categories
Prices in each category can be not only monitored but also automated. Thanks to it, it’s possible to immediately respond to changes on the market and automatically adjust prices in your online store. Certain industries and categories are characterized by rapid price fluctuations that have a significant impact on customers’ purchasing decisions. The airline and hotel industries are perfect examples. However, price automation can also be effectively applied in other sectors, even if given product categories attract customers that are more price sensitive.
Price automation is implemented with the use of smart, self-learning algorithms that take into account price rules consistent with the customer’s strategy. These may be:
- prices of your market rivals (in selected category, industry, shop, price comparison engine),
- demand for specific products during certain time periods,
- average product price offered on the market or by specific rivals,
- setting a price that is lower or higher than the price of a particular market rival,
- setting the lowest, highest or average price (in juxtaposition to the market)
- the number of products available at a certain price,
- out-of-stocks of your market rivals,
- margin limits,
- customer behavior in online stores,
However, when setting prices with the use of price automation tools, it’s crucial to make sure that this automated process doesn’t lead to price wars and loss of margin. But don’t worry. There are certain methods that can help you guarantee high efficiency and safety of this mechanism.
Strategies for price monitoring and automation of product categories
In order to choose the most optimal strategy of price monitoring and automation, it’s worth taking a closer look at the importance and impact of individual products and categories on the business. Thanks to price monitoring tools you have considerable freedom and on the basis of search results and current market situation you can easily select categories that should be automated or monitored.
Start from focusing on products that are purchased the most frequently and enjoy popularity among customers. When thinking about this type of items, we usually don’t witness enormous discounts. However, sometimes it happens that prices turn out to be the most attractive factor when it comes to purchasing popular and easily accessible goods. In such a situation, even a seemingly insignificant discount can effectively attract potential customers. Therefore, in case of highly competitive product categories, it’s definitely worth implementing price automation because quick reactions to changes of prices offered by your market rivals may be critical.
In the next phase, you should focus on products with high margins as they generate the greatest profits. Very often customers who are looking for specific items encounter other goods offered in the store and thanks to skillfully applied mechanisms (e.g. free delivery from a certain amount, discount codes or cross-selling) decide to buy more. It needs to be mentioned that price monitoring and automation rules can be continuously modified and adapted to changing market realities.
Important examples of category monitoring strategies
Throughout the years of cooperation with clients who run online stores offering products from differing industries and categories, we’ve learned how to effectively apply price monitoring and automation in selected categories. Now you can take advantage of our expertise to build your own pricing strategy.
- Lower prices of untypical products
This strategy works well in case of products (such as household appliances, clothing or footwear) that are available in a few color versions or sizes. So, for example, a store decides to use Google Shopping to advertise a red vacuum cleaner. Due to the fact that this color version is definitely less popular among customers, its chances of being sold are much lower than in the case of a black model. The potential customer, intrigued by the attractive price, enters the store and sees that there are many other, more expensive color versions of the same product. The situation looks similar in case of clothes and shoes – less popular sizes and colors are usually much cheaper. With the use of appropriate monitoring tools, it’s possible to differentiate prices offered by your market rivals depending on the color or size of the product. Then, you can use the collected data to determine appropriate rules for price automation in your store.
- Internal categorization of products
Some manufacturers assign features to individual products in different categories and create groups. Then, they devise a separate pricing principle for each group, thanks to which they can easily follow specific strategies assigned to given products. So, an exemplary price management process may look like this:
- Top products are to be sold at the recommended price until their life cycle is completed.
- Some of the products are sold by selected resellers at the highest market price.
- Prices of products whose life cycle is just finishing or whose sales level is low are reduced when compared to market prices.
Thanks to such a pricing policy you can optimize your portfolio and maximize sales revenues.
- Price automation that takes into consideration only selected market rivals
Automation rules that involve setting a price that is only insignificantly lower when compared to the prices offered by your competitors is also an interesting solution. Then, the store owners can choose which manufacturers or stores are their main market rivals and set the recommended price that corresponds to their offers.
- Adjustment to average or lowest price
Price wars aren’t beneficial for the margins and don’t help in maintaining desirable market prices. Moreover, at the expense of being the cheapest at all costs, companies may also lose their recognition and brand image. So instead of going for the lowest possible price, companies that use monitoring systems often decide to set prices calculated on the basis of the average amounts offered by their selected market rivals. Another common solution is to set a product price that corresponds to the cheapest offer on the market but at the same time isn’t lower.
To conclude, dividing products into user-friendly categories is essential to succeed in e-commerce and ensure high online sales. Depending on the product or category type, thorough and regular price monitoring and automation can significantly help you optimize your pricing policy and facilitate its management. As you can see, implementing such solutions is a must as they may noticeably boost your online store sales in the long run.
Very interesting – as a customer I often look for the best deals via many price comparison sites. Interesting that it can be also used in such a way by e-commerce owners!
This is a great piece that sheds light on the benefits of monitoring the variables involved in sales.