The Pricing Blog by Omnia Retail

Our pricing experts cover all the latest trends, Omnia pricing events, customer insights and pricing strategies on our Pricing Blog.

What is Price Discrimination and how to leverage it?

What is Price Discrimination? In today’s highly competitive retail landscape, pricing is no longer just a numbers game—it’s a strategic lever that can make or break a business. As consumer expectations evolve and...

What is Price Discrimination? In today’s highly competitive retail landscape, pricing is no longer just a numbers game—it’s a strategic lever that can make or break a business. As consumer expectations evolve and markets become increasingly fragmented, retailers face the challenge of setting prices that maximize revenue while staying competitive and meeting diverse customer needs. Price discrimination (also known as differential pricing or price differentiation) is defined as a strategy that involves tailoring prices based on customer segments, behavior, or willingness to pay, offers a powerful solution. It enables businesses to unlock hidden revenue potential, capture greater consumer surplus, and provide personalized value to their customers. When executed effectively, price discrimination doesn’t just boost profit margins; it also strengthens customer relationships by aligning pricing with perceived value. However, success in this area requires a deep understanding of market dynamics, robust data analytics, and the ability to navigate challenges like fairness and compliance. In this article, we’ll explore the fundamentals of price discrimination, its practical applications in retail, and how businesses can leverage this strategy to thrive in an increasingly complex marketplace. If you are interested in other pricing methods, check out our recent blogpost on 17 key ecommerce pricing strategies. 3 types of Price Discrimination Price discrimination is the practice of charging different prices for the same product or service based on specific customer characteristics, market conditions, or purchasing behaviors. It allows businesses to optimize revenue by capturing as much value as possible from diverse customer segments. Broadly, price discrimination is categorized into three types: First-degree price discrimination involves setting a unique price for each customer based on their willingness to pay. While challenging to implement, it can be seen in industries like real estate or high-end consulting, where prices are often negotiated individually. Second-degree price discrimination offers varying prices based on the quantity purchased or the version of the product chosen. For example, bulk discounts, tiered pricing plans, or premium product variations fall under this category. Third-degree price discrimination segments the market into distinct groups based on characteristics such as age, location, or time of purchase. Examples include student discounts, regional pricing, and off-peak travel rates. For price discrimination to succeed, three key conditions must be met. First, the business must have a degree of market power, enabling control over pricing rather than being dictated by competition. Second, the market must be divisible into distinct customer segments with different price sensitivities. Third, the company must ensure limited or no arbitrage between segments, preventing customers from exploiting price differences across groups. These principles form the foundation of effective price discrimination, enabling businesses to align their pricing strategies with consumer behavior while maximizing profitability. Price Discrimination Examples Price discrimination in retail and ecommerce manifests in various ways, tailored to the unique characteristics and purchasing behaviors of different customer segments. Subscription-based services like Amazon Prime or Dropbox offer another example of second-degree price discrimination, utilizing tiered pricing structures to cater to diverse customer needs. For instance, Dropbox offers four different plans, allowing customers to choose based on their usage preferences and budget. Another proven method is regional price discrimination (third-degree price discrimination) and involves setting prices based on geographic factors like local market conditions or cost of living. Retailers might charge higher prices in metropolitan areas compared to rural regions, or low-income vs high-income countries, like the Big Mac index from McDonalds, reflecting differences in purchasing power and operational costs. At last, another common example of third-degree price discrimination is dynamic pricing, where prices fluctuate based on demand, inventory levels, or customer behavior. This approach is widely used in e-commerce, where pricing software adjusts prices in real-time to optimize sales, as seen during flash sales or peak shopping seasons like Black Friday (see below). When to use Price Discrimination? Deciding whether to leverage price discrimination in your business requires understanding its feasibility, customer impact, and potential to boost profitability. Here’s a structured way to evaluate it: 1. Understand your Market Segments Before implementing price discrimination, ensure you have a clear understanding of your customer base. Are there distinct groups with varying willingness to pay, such as business users versus personal users or price-sensitive versus convenience-focused customers? Effective segmentation is essential, and this can be achieved by analyzing demographic factors, geographic location, purchase intentions, or other attributes. The better you understand your market segments, the more tailored and effective your pricing strategy will be. 2. Assess your Product/Service Not all products or services are suitable for price discrimination. Consider whether your offering has elastic demand—products with varying perceived value among customers are better suited for this strategy. Additionally, low marginal costs are a key factor; price discrimination works best when the cost of serving an additional customer is minimal, allowing you to capture value without significantly increasing expenses. 3. Check Operational Feasibility Implementing price discrimination requires robust operational support. Do you have the tools and data systems necessary to execute dynamic pricing or customer segmentation? Advanced analytics and real-time data are critical for success. Additionally, ensure you can enforce segmentation effectively; preventing arbitrage, such as customers reselling products between segments, is crucial to maintaining the integrity of your strategy. 4. Analyze the Competition Understanding the competitive landscape (see below) is vital when considering price discrimination. Are your competitors already using this strategy? If so, it may indicate that customers in your market expect it, and adopting it could help maintain competitiveness. However, you must also evaluate how price discrimination might affect your market position—while it could strengthen your edge, it might also alienate certain customer segments if perceived as unfair. 5. Test and Iterate Price discrimination is rarely a one-size-fits-all approach. Start small by running limited experiments, such as A/B tests or pilot programs, to gauge customer responses and measure outcomes. Use these insights to refine your strategy, making data-driven adjustments as needed. Iterative testing ensures that your approach evolves with your customers’ needs and market dynamics, maximizing effectiveness while minimizing risks. When to avoid Price Discrimination? Retailers and D2C brands should avoid price discrimination when there is no customer segmentation possible, or when there is a risk of harming customer trust or brand values like transparency and fairness. It's also unwise in highly commoditized markets, where customers can easily compare prices. A thoughtful, transparent approach ensures pricing strategies align with both business goals and customer expectations. So in summary: No clear segmentation: If customers have similar willingness to pay, it won’t yield benefits. High enforcement costs: Preventing abuse or arbitrage may outweigh the benefits. Negative customer impact: If it leads to backlash or distrust, it could harm your brand long-term. Addressing fairness and compliance concerns While price discrimination can drive significant business benefits, it also raises important ethical and legal considerations. Striking the right balance between profitability and fairness is crucial to maintaining customer trust and avoiding reputational risks. One key concern is the perception of unfairness when customers discover they are being charged different prices for the same product. Transparency can help mitigate this issue—clearly communicating the basis for price differences, such as discounts for loyalty or reduced prices during promotional periods, can ensure customers feel the pricing is justified. Another challenge lies in navigating regulatory frameworks that govern pricing practices. For instance, certain forms of price discrimination, such as discriminatory pricing based on race, gender, or other protected characteristics, are illegal in many jurisdictions. Retailers must carefully design their pricing strategies to comply with these laws while achieving their business objectives. Ethical price discrimination requires a careful balance: leveraging data to offer personalized and value-driven pricing while ensuring fairness, transparency, and compliance. Retailers who prioritize these considerations can implement price discrimination strategies that enhance customer satisfaction and maintain long-term loyalty.

What is Price Discrimination and how to leverage it?

Developing a pricing strategy: From 'Pricing by feel' to data-driven decisions

Pricing is one of the most important, and often misunderstood, topics in retail and e-commerce. The pricing 'iceberg' goes deeper than most expect. It starts with a single question: what company aims are you trying to...

Pricing is one of the most important, and often misunderstood, topics in retail and e-commerce. The pricing 'iceberg' goes deeper than most expect. It starts with a single question: what company aims are you trying to achieve within pricing? Data-driven pricing strategies impact more than just revenue generation. They also play a vital role in shaping customer perceptions, and market competitiveness. Businesses can leverage a wealth of information to fine-tune their pricing strategies. In this blogpost, we dive deeper into the importance of data and automation and how they affect shaping your pricing strategy. The challenge of pricing In the dynamic world of retail and e-commerce, pricing is both an art and a science. Many industry professionals have developed an intuitive sense for what works in pricing, relying on experience and market knowledge to make decisions. However, this intuitive approach, while valuable, often falls short of a comprehensive, developed strategy. The pitfalls of intuitive pricing Companies frequently operate with loosely defined pricing rules that have evolved over time. This approach, sometimes referred to as "pricing by feel," may seem effective in the early stages of a business. However, as companies grow and markets become more complex, several challenges emerge: 1) Overwhelming assortment growth As product catalogues expand, manually managing prices for each item becomes increasingly time-consuming and prone to errors. What once was a manageable task for a small team or even an individual becomes an overwhelming endeavour. 2) Rapid shifts in competitive pricing The digital marketplace is characterised by its volatility. Competitors can adjust their prices multiple times a day, responding to market demands, inventory levels, or promotional strategies. Keeping up with these changes manually is virtually impossible. 3) Expanding market dynamics As companies grow, they often enter new markets or face increased competition. Each market may have its own pricing norms, consumer behaviours, and competitive landscapes, further complicating the pricing process. 4) Inconsistent pricing decisions Without a structured strategy, pricing decisions can become inconsistent across products or over time, potentially damaging brand perception or profit margins. Find out how your team can benefit from Dynamic Pricing. Download free whitepaper The need for a structured approach Recognizing these challenges, it becomes clear that transitioning from 'pricing by feel' to a codified, explicit pricing strategy is crucial for sustained success, especially as you expand either the number of products or number of markets. However, this transition can be daunting. It requires a shift in mindset, the adoption of new technologies, and often a restructuring of some internal processes. This article aims to demystify this process, breaking down the first steps in developing a robust pricing strategy. Our goal is to guide retailers through the transition from intuitive pricing to making objective, data-driven decisions with increased speed and accuracy. By embracing a structured approach to pricing, businesses can: Respond more quickly to market changes Maintain consistency across large product assortments Optimize prices for different market segments Automate routine pricing decisions, freeing up time for strategic thinking Make more informed decisions based on data rather than gut feeling In the following sections, we'll explore how to begin this journey, starting with understanding your current position and defining your pricing goals. We'll then delve into practical steps for implementing a data-driven pricing strategy that can grow and evolve with your business. The importance of data and automation In the modern retail landscape, pricing excellence is closely linked to the quality and accessibility of data. High quality, trusted data is the foundation upon which effective pricing strategies are built. This data includes not only your own sales and inventory information, but also competitive intelligence and market trends. The role of data in pricing 1) Competitive Intelligence: Accurate data on competitor pricing allows you to position your products strategically in the market. 2) Historical Performance: Past sales data helps predict future trends and identify seasonal patterns. 3) Customer Behaviour: Data on how customers respond to different price points can inform segmentation and personalisation strategies. 4) Market Trends: Broader market data can help you anticipate shifts in demand or supply that might affect pricing. The power of automation While data is crucial, its true power is unlocked through automation. Pricing automation tools, like those provided by companies such as Omnia, offer several key benefits: 1) Speed and efficiency: Automated systems can adjust prices across thousands of SKUs in real-time, a task impossible to manage manually. 2) Consistency: Automated rules ensure that your pricing strategy is applied consistently across your entire product range. 3) Complex decision making: Advanced algorithms can consider multiple factors simultaneously, optimising prices based on a complex set of rules and goals. 4) Freeing up human resources: By automating routine pricing tasks, your team can focus on strategic decision-making and long-term planning. Building trust in automated systems The transition to automated pricing requires trust and reliability. To build this trust: 1) Start with a pilot program on a subset of products 2) Regularly audit and validate the system's decisions 3) Ensure transparency in how the system makes decisions 4) Provide ongoing training to your team on how to work with and interpret the system's outputs By leveraging high-quality data and reliable automation, retailers can transform their existing strategies into flexible, integrated workflows that adapt to market changes in real-time. Starting your pricing strategy 1) Self-Assessment: Understanding your current position Before looking outward, it's essential to have a clear picture of your internal situation: Analyze your current pricing methods and their effectiveness Evaluate your product portfolio and its price sensitivity Assess your cost structure and profit margins Review your brand positioning and target customer segments 2) Define your strategic objectives Consider key questions that will shape your strategy: Market position: What position do we need to achieve or maintain in the market? Brand perception: How do we want to be perceived through our pricing? Growth targets: What does ideal market growth through pricing look like? Operational efficiency: Where are our current pricing processes inefficient? Competitive strategy: How do we want to position ourselves relative to competitors? Customer value: How can our pricing reflect and enhance the value we provide to customers? 3) From abstract to concrete: Developing actionable steps Transform your strategic objectives into practical steps: Set specific, measurable goals (e.g., "Increase profit margin by 2% over the next quarter") Identify key products or categories for initial focus Determine the data and tools needed to support your strategy Outline the decision-making process for price changes 4) Align with business goals and resources Ensure your pricing strategy supports overall business objectives: Coordinate with other departments (sales, marketing, finance) to ensure alignment Assess the resources (human, technological, financial) required to implement the strategy Develop a timeline for implementation, including milestones and checkpoints 5) Create a feedback loop Build mechanisms to continuously improve your strategy: Establish KPIs to measure the effectiveness of your pricing decisions Set up regular review periods to assess and adjust the strategy Encourage feedback from sales teams and customers Talk to one of our consultants about dynamic pricing. Schedule demo here Anticipating market reactions In the fast-paced world of e-commerce, where prices can change multiple times daily, anticipating and responding to market reactions is crucial. When implementing a new automated pricing strategy, consider not just your actions, but how competitors and customers might respond. Understanding competitor behaviour 1) Analyse historical patterns: Look at how competitors have reacted to price changes in the past. 2) Identify key competitors: Not all competitors are equal. Focus on those who have the most impact on your market. 3) Monitor frequency of changes: Some competitors may adjust prices hourly, others weekly. Understanding these patterns can inform your strategy. Price monitoring software helps you with this crucial step. Mitigating Risks To avoid detrimental outcomes like price wars, it's essential to adopt a strategic approach. One effective strategy is selective price matching, where you only follow the prices of key competitors and set clear boundaries on how low you're willing to go. This approach allows you to consider matching prices on key value items (KVIs) while maintaining margins on other products. Additionally, implementing safety rules such as setting minimum profit margins, establishing maximum discount percentages, and using dynamic floor prices based on cost and desired profitability can help safeguard your business. Another important strategy is to manage your repricing frequency strategically. Balancing responsiveness with stability is crucial, and you might consider time-based rules, such as not changing prices more than once per day. Different product categories may require different repricing frequencies. Beyond price, differentiation can be achieved by enhancing your value proposition through service, warranty, or bundling. Using dynamic pricing on unique product combinations that are harder for competitors to match can also be beneficial. Lastly, maintaining a consistent price position, such as always being 5% below a key competitor, and adjusting the index based on product category or lifecycle stage can help you stay competitive without engaging in harmful price wars. Monitoring and adjusting Implement a system to continuously monitor the effects of your pricing strategy: Track key metrics like sales volume, revenue, and profit margin Set up alerts for unusual competitor behaviour or market shifts Regularly review and adjust your rules and thresholds By anticipating market reactions and implementing a flexible, rule-based strategy, you can navigate the complex e-commerce landscape more effectively, balancing competitiveness with profitability. Conclusion: Embracing the future of pricing in E-commerce As we've explored throughout this article, the landscape of pricing in retail and e-commerce is undergoing a dramatic transformation. The shift from intuitive, "feel-based" pricing to data-driven, strategic approaches is not just a trend—it's becoming a necessity for businesses looking to thrive in an increasingly competitive and dynamic marketplace. Key takeaways 1) The power of strategy: A well-developed pricing strategy is crucial for optimising sales, margins, and market position. It provides a framework for consistent decision-making and helps align pricing with broader business goals. 2) Data as the foundation: High-quality, trustworthy data is the bedrock of effective pricing. It provides insights into market trends, competitor behaviour, and customer preferences, enabling more informed and precise pricing decisions. 3) Automation as a game-changer: Pricing automation tools allow businesses to respond rapidly to market changes, maintain consistency across large product assortments, and free up valuable time for strategic thinking. 4) Anticipating market reactions: In the fast-paced world of e-commerce, it's crucial to not only set prices but also anticipate and plan for how competitors and customers might react. 5) Continuous Improvement: A successful pricing strategy is not static. It requires ongoing monitoring, analysis, and adjustment to remain effective in a changing market. The road ahead As we look to the future, several trends are likely to shape the evolution of pricing strategies: 1) Artificial intelligence and machine learning: These technologies will play an increasingly important role in predictive pricing and real-time optimization. 2) Personalisation: As data becomes more granular, we may see a move towards more individualised pricing based on customer behaviour and preferences. 3) Ethical considerations: With greater pricing power comes greater responsibility. Businesses will need to navigate the ethical implications of dynamic and personalised pricing. 4) Integration with other business functions: Pricing strategies will become more tightly integrated with other aspects of business operations, from supply chain management to customer relationship management. Final thoughts The journey from "pricing by feel" to implementing a sophisticated, data-driven pricing strategy may seem daunting, but it's a journey well worth taking. The benefits—increased profitability, improved market positioning, and enhanced competitiveness—far outweigh the initial challenges. Remember, you don't have to transform your pricing approach overnight. Start with small steps: gather data, experiment with automation on a subset of products, and gradually refine your strategy. As you gain confidence and see results, you can expand your approach across your entire product range. Pricing is more than just a number—it's a strategic tool that can drive your business forward. By embracing data, leveraging automation, and continuously refining your approach, you can turn pricing into a powerful competitive advantage. The future of retail belongs to those who can price smartly, react quickly, and adapt continuously. With the right strategy and tools, your business can be at the forefront of this pricing revolution. The time to start is now. Learn more about our revolutionary and intuitive approach to Dynamic Pricing here. Read more about interesting pricing strategies here: What is Dynamic Pricing?: The ultimate guide to dynamic pricing. What are the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

Developing a pricing strategy: From 'Pricing by feel' to data-driven decisions

Top 7 strategies for successful digital pricing transformation

7 Strategies for Successful Digital Pricing Transformation Pricing transformation means completely changing the way a company sets its prices, using new digital tools and technologies to make better pricing decisions....

7 Strategies for Successful Digital Pricing Transformation Pricing transformation means completely changing the way a company sets its prices, using new digital tools and technologies to make better pricing decisions. This process aims to set prices that accurately reflect the perceived value of products or services, dynamically respond to market competition, and maximize profitability. Leveraging software solutions, businesses can ensure they are setting optimal prices for each transaction, considering factors such as customer demand, market trends, and competitive landscapes. In today's rapidly evolving business landscape, pricing transformation has become a critical priority for organizations seeking to stay competitive and maximize profitability. As market dynamics shift and customer expectations evolve over time, companies must adapt their pricing strategies to keep pace. Pricing platform provider Omnia Retail has joined forces with Horvath, the international management consultancy with a focus on transformation and digitization, to share insights on the key elements of success we observe in businesses that have successfully undergone a pricing transformation. Drawing on our combined expertise in pricing software and strategies, we've identified seven key pillars that can help businesses successfully navigate this crucial process: 1. Secure Full C-Level Sponsorship The foundation of any successful pricing transformation lies in obtaining full support from top management. Our experience shows that pricing transformation needs to be a top priority for sales and marketing, product management, finance, and IT departments. Without strong backing from the C-suite, pricing initiatives often struggle to gain traction, especially because they impact many teams and may fail to deliver the desired results. With C-level sponsorship, the right KPIs (profit/revenue) can be prioritized effectively within each team. To achieve C-level sponsorship, we suggest: - Articulate the potential value and impact of pricing transformation on the company's top line - Develop a compelling business case that outlines both short-term wins and long-term strategic benefits - Quantify benefits by running a proof of concept (POC) where you A/B test the effectiveness of your pricing strategies - Ensure that pricing objectives are aligned with overall business goals and strategy By making pricing transformation a C-level priority, companies can ensure that the necessary resources, attention, and support are allocated to drive meaningful change. 2. Foster Collaboration Between Business and Technology Teams Successful pricing transformations are not solely a business initiative or an IT project; they require seamless collaboration between both domains. Our experience shows that when both the business and IT sides feel ownership, a well-developed pricing strategy will take shape and can be effectively implemented. We suggest to consider the following: - Establish cross-functional teams that bring together business expertise and technical knowledge - Ensure clear communication channels between business stakeholders and IT professionals - Develop a shared understanding of pricing goals, challenges, and potential pitfalls - Leverage technology as an enabler of pricing strategies, not just as a tool for implementation Remember, introducing pricing software alone does not solve pricing problems. It's the synergy between business acumen and technological capabilities that drives true transformations. 3. Focus on Big Wins and Quick Victories While pricing transformation is often a long-term journey, it's essential to maintain momentum by focusing on major achievements and celebrating quick wins along the way. To do so, we suggest the following: - Build confidence in the transformation process - Demonstrate tangible value to stakeholders early and fast (e.g. the aforementioned POC) - Generate enthusiasm and buy-in across the organization - Secure ongoing support and resources for the initiative To achieve this: - Start with an isolated part of the business. E.g. one category or 1 geographical location. This allows for a quicker ROI and lower time investment. Successful pilots then typically serve as boosters for global roll-out. - Identify high-impact areas where pricing improvements can yield significant results such as focussing on highly dynamic product groups, Key Value Items (KVIs), and high runners. - Use available technology in steps. First automate the more tedious tasks to free up time, then use that time to focus on developing commercial strategy in more depth. - Celebrate and communicate successes internally to maintain motivation and engagement as a transformation needs to be sold internally as well in its early stages. Any improvement in pricing should pay for itself. By delivering on quick wins, you can cross-finance the journey and support fast achievements, creating a positive cycle of improvement and success. 4. Internalize Pricing Know-How External consultants and software partners can kick-off a pricing transformation. They will generate value quickly but it’s crucial to internalize pricing know-how within your organization. Both for adoption and continuity, dedicated resources are critical. This ensures long-term success. We suggest following steps to internalize pricing knowledge: - Invest in training and development for your team - Document how you develop and execute your pricing strategy - Encourage knowledge sharing and best practice dissemination across departments/teams/countries - Use a proper pricing platform that enables collaboration & knowledge sharing within your organization - Develop a pipeline of pricing talent within your organization By making a pricing transformation program truly yours, you build internal capabilities that will drive continuous improvement and adaptation to market changes. 5. Include Local Teams in the Process Pricing transformation should not be an "ivory tower" exercise conducted solely at headquarters. To ensure success, it's crucial to involve local teams and incorporate diverse perspectives from across your organization. We suggest the following to include local teams: - Engage sales representatives in target markets to gather on-the-ground insights - Seek feedback on conceptual and design ideas from front-line employees - Involve top performers from various regions in the transformation program - Conduct pilot programs in select markets to test and refine pricing strategies By going out and involving sales reps in markets, you can get valuable feedback, test ideas, and create a more robust and effective pricing transformation program. 6. Embrace Continuous Iteration and Adaptation In today's fast-paced business environment, a static pricing strategy is a recipe for obsolescence. Your competitors are constantly evolving their approaches, and your pricing strategy must do the same to remain effective and competitive. Following key reasons to prioritize continuous iteration: - Market dynamics change rapidly, affecting demand patterns and customer preferences - Competitors adjust their strategies, potentially eroding your competitive advantage - New technologies emerge, offering opportunities for more sophisticated pricing approaches - New competitors might pop-up or existing competitors might fundamentally change their commercial strategies in certain categories/geographies - Economic conditions fluctuate, impacting customer purchasing power and behaviour To implement an iterative approach to pricing: - Establish a regular review cycle for your pricing strategy, considering both short-term adjustments and long-term strategic shifts - Leverage data analytics to monitor market trends, competitor actions, and the impact of your pricing decisions in real-time - Create a feedback loop that incorporates insights from sales teams, customer service, and market research - Develop scenario planning capabilities to anticipate and prepare for potential market shifts - Foster a culture of experimentation, where testing new pricing approaches is encouraged and learnings are quickly incorporated By committing to continuous iteration and adaptation, you ensure that your pricing strategy remains agile, responsive, and ahead of the curve. This iterative mindset will help you stay one step ahead of competitors and maintain a strong market position in an ever-changing business landscape. 7. Ensure Transparency and Organization-Wide Understanding A successful pricing transformation goes beyond just implementing new strategies and technologies. It's crucial that the entire organization understands and embraces the new approach. Transparency in both the strategy and the tools used to execute it is key to preventing resistance and fostering widespread adoption. Following key reasons why transparency is critical: - Builds trust across departments and hierarchical levels - Increases buy-in and commitment from all stakeholders - Facilitates better decision-making at all levels of the organization - Prevents the "black box" syndrome where pricing decisions seem arbitrary or unexplainable Steps to promote transparency and understanding: - Clearly communicate the rationale behind the pricing strategy to all employees, not just those directly involved in pricing decisions - Provide comprehensive training on the new pricing approach and any associated software or tools - Ensure that the pricing software used is user-friendly and provides clear explanations for its recommendations - Provide access to relevant pricing dashboarding broadly in the organisation - Create accessible documentation that outlines the principles, rules, and logic behind the pricing strategy - Establish open channels for questions, feedback, and suggestions from employees at all levels - Regularly share success stories and case studies that demonstrate the positive impact of the new pricing approach If a pricing strategy is not understood, it is unlikely to be effectively implemented. By prioritizing transparency and fostering organization-wide understanding, you create an environment where everyone from sales representatives to C-suite executives can confidently explain and support the pricing decisions being made. A pricing transformation is a complex yet critical process for retailers aiming to thrive in today's dynamic market. By implementing these seven key strategies, organizations can set themselves up for long-term success. As market dynamics shift, customer expectations evolve, and competitors adjust their strategies, your pricing approach must remain flexible and responsive. By internalizing expertise, leveraging technology wisely, and fostering a culture of pricing excellence throughout your organization, you can create a pricing strategy that is both robust and adaptable. At Omnia Retail and Horvath, we're dedicated to helping businesses navigate the complexities of pricing transformation. By leveraging our combined expertise in retail pricing strategies and management consulting, we provide comprehensive solutions that drive sustainable growth and profitability. As you embark on your own pricing transformation journey, keep these seven key strategies in mind. With the right approach, commitment to transparency, and a willingness to iterate and adapt, you can unlock the full potential of your pricing capabilities. This will not only lead to improved financial performance but also position your organization to swiftly respond to market changes and maintain a significant competitive advantage in your industry. Read more about pricing strategies here: What is Dynamic Pricing?: The ultimate guide to dynamic pricing. What our the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

Top 7 strategies for successful digital pricing transformation

17 Winning Pricing Strategies in e-Commerce

Setting the right price for your e-commerce products is like playing a game with extremely high stakes, no clear rules and ultra-intense competition. Choose the right price over time and you can win over your target...

Setting the right price for your e-commerce products is like playing a game with extremely high stakes, no clear rules and ultra-intense competition. Choose the right price over time and you can win over your target customers, creating loyal buyers who keep your business growing for years to come. Choose the wrong price and everything could go south, quick. So, how can e-commerce merchants choose the right pricing strategy or combination of strategies? In this comprehensive guide, Omnia covers 17 common pricing strategies in e-commerce and offers some advice for finding the right action plan for your business. What are e-commerce pricing strategies? E-commerce pricing strategies are approaches used by online businesses to determine, adjust and maintain the prices of their products or services over time. Strategies should take into account the company’s revenue goals, production costs, and other KPIs like customer lifetime value (CLV) and average order value (AOV). What is the difference between a pricing strategy and pricing rule? A pricing strategy is the high-level concept behind pricing decisions and policies, while a pricing rule is goal-oriented and about the actual execution of that strategy. Perhaps a retailer chooses a premium pricing strategy, where they price a product higher than market average, in order to increase the perceived value; for example, pricing a black chair higher than the average of all black chairs. The pricing rule in this case is the concrete translation of a price formula for a product or product group. In the Omnia platform, this would mean: New price = Market average price x 1.2 So, the price will be calculated and set to be 20% higher than the market average that day. With Omnia, this can be also combined with conditions, filters and more. The complexity of a rule is limitless. All your Pricing Strategies in one overview with Omnia's Pricing Software Request a free demo Top pricing strategies for retail and e-commerce There are endless examples of pricing strategies in e-commerce, so we compiled a list of 17 common types of pricing strategies below: 1. Dynamic Pricing Dynamic pricing is a pricing strategy where companies or stores continuously adjust prices during the day to optimise margins and increase sales. The strategy applies variable prices rather than fixed prices, meaning they don’t have to decide on a set price for a season, but can instead adapt to the ever-changing market. It is important to note that although the two strategies are often confused, dynamic pricing differs significantly from personalised pricing, which focuses on the behaviours of an individual consumer and adjusts product pricing based on their past shopping experience. 2. Premium Pricing Businesses using a premium pricing strategy want to keep their pricing levels higher than the competition. This can be paired with messaging and branding that shows customers why the higher price is justified. For a premium pricing strategy to work, sellers usually have to have some combination of a strong brand image, unique offerings or innovative product attributes. Examples of companies with a premium pricing strategy include Rolex, Apple and luxury fashion brands like Louis Vuitton and Chanel. 3. Competitive Pricing One of the more common pricing strategies in e-commerce is competitive pricing, where sellers set their prices based on the prices of competitors. Competitive pricing is most often used by businesses operating in competitive markets or one with fairly similar products and little differentiation, as all sellers are then trying to win over the same customers. A competitive pricing strategy does not always indicate undercutting the competition, but rather setting prices in relation to competitors; this could mean setting product prices lower, higher or the same as competing sellers. Running a competitive pricing strategy with manual research can take a significant amount of time and is challenging in today’s fast-paced e-commerce environment. To make price adjustments for listings in real time, most companies use some type of Dynamic Pricing software. 4. Value-based pricing Value-based pricing, sometimes called value-added pricing or perceived value pricing, is a powerful strategy that requires a deep understanding of the market and of the value your products offer to potential customers. Sellers can use value-based pricing to shape how consumers perceive your product. Want to position yourself as a luxury brand, or to be the best value-for-money option? Price accordingly. Implementing value-based pricing demands extensive research into your target market and what the competition is doing, as well as reflection on and alignment with your business objectives. It will require collaborative effort across the organisation, but can create a very cohesive and effective pricing strategy. 5. Price Discrimination Price discrimination, also called price differentiation or differential pricing, is a strategy employed by e-commerce companies to maximise profits by charging different prices to different customers for the same product or service, based on characteristics of the customer. The objective is to extract the maximum amount of consumer surplus and capture additional revenue based on individual customers' willingness to pay. To use this strategy, sellers make use of their vast amounts of customer data, including browsing history, purchase patterns, demographic information and geographic location. This data is leveraged to segment customers into different groups based on their preferences, behaviour and purchasing power. Once customer segments are identified, prices can be tailored to each segment's characteristics. For example, customers who have shown a higher willingness to pay in the past may be charged a higher price, while price-sensitive customers may be offered discounts or promotions to encourage purchases. The success of price discrimination in e-commerce relies heavily on sophisticated data analysis and algorithmic pricing systems. By leveraging customer data and market conditions, companies can optimise their pricing strategies to increase revenue and overall profitability. However, it is important to note that price discrimination can also raise concerns about fairness, privacy and potential consumer backlash if implemented in a way that is perceived as discriminatory or exploitative. 6. Odd-even pricing Odd-even pricing falls under the category of psychological pricing strategies and taps into the psychology of numbers to influence consumer behaviour. Odd prices, like €5.99, are commonly used, but even prices, like €6.00, have their own psychological impact. This strategy can be employed in various ways, from offering strategic discounts to trying to create a memorable price point. For example, take a look at the difference between how luxury jewellery brand Tiffany & Co uses even pricing and more affordable brand Kay Jewellers uses odd pricing. Customers coming to Tiffany & Co. are looking for luxury items and are likely less price sensitive, so the company uses even pricing. Shoppers on the Kay Jewellers website may be more interested in finding a deal, so many of their prices use odd pricing and end in .99 or .95. 7. Charm pricing Charm pricing, also called psychological pricing, is similar to odd-even pricing, as it leverages pricing to evoke an emotional response and prompt action. This strategy is often observed in late-night infomercials, where potential buyers can be swayed by a price ending in “.99” or “.95” to make an impulse purchase. But infomercials aren’t the only place charm pricing is seen; many retailers use elements of this pricing strategy. There are a number of theories for why charm pricing is so effective: A perception of loss: This is when consumers value a product based on the loss they feel without it rather than the gain. In the Western world, most consumers read prices from left to right, so there is a high likelihood of grasping the first number as an anchor. Under this theory, that’s why €599 would feel so different from €600, even though there is only a separation of €1. A perception of gain: On the other side, perhaps consumers feel they have gained something, i.e. saved money, when they see an example of charm pricing. If the higher price of €600 is the anchor, then the lower price of €599 means you gained something and saved €1. This theory pairs well with the .99 or .95 pricing, which may make a consumer think they’re getting a discount. Specificity: With a charm pricing strategy, the price of an item is so specific that it can trigger a psychological response of customers believing it must be priced at the correct value. This is especially relevant if pricing is fractional, meaning it ends in a cent value. Example: Uniqlo Although the apparel brand rarely has sales, they signify to customers that they are getting a good deal by ending almost every price in “-9.90” or “-4.90”. 8. Bundle pricing Bundle pricing, also called product bundle pricing, is a strategy companies use to sell more items with higher margins while giving customers a discount for increasing the size of their order. Products are “bundled” so customers receive several different products as a package deal, costing them less than it would have if they made separate purchases of the included products. This incentivises purchases by creating higher perceived value and cost savings. E-commerce companies typically select complementary or related products and combine them into bundles to encourage larger purchases, increase average order value and enhance customer satisfaction. By offering discounted bundle prices, companies can attract price-sensitive customers, drive sales of slower-moving products and create a competitive advantage in the market. 9. Promotional pricing A promotional pricing strategy in e-commerce involves offering temporary price reductions or discounts on products or services to create urgency, stimulate sales and attract customers. The primary goals are usually to increase sales volume, clear out excess inventory, introduce new products or gain a competitive advantage. Promotional pricing can take various forms, such as percentage discounts, buy-one-get-one (BOGO) offers, limited-time sales, flash sales, coupon codes or free shipping. These promotions can be advertised or offered through any channel, from email marketing and social media to online ads or on-site banners. 10. Predatory pricing A predatory pricing strategy in e-commerce refers to a practice where a company deliberately sets extremely low prices for its products or services with the intention of driving competitors out of the market or deterring new entrants. By selling products at a loss or below cost for an extended period, the predatory pricer aims to eliminate competition and subsequently raise prices once competitors have been forced out. Predatory pricing is often considered anticompetitive and is illegal in many jurisdictions as it violates antitrust laws created for consumer protection and to ensure market competition is fair. 11. Penetration pricing A penetration pricing strategy is often employed by online sellers and business owners to attract customers to new products being brought to market. It involves offering an initial lower price than competitors to entice more buyers to purchase. The goal is to secure market share, undercut established sellers in the market and attract new customers who will remain loyal, even after prices are adjusted back up. For this e-commerce pricing strategy to succeed, however, there must be a high demand for the product. Without a significant market, penetration pricing becomes less effective. It's also important to make the price increases gradually to avoid competitors implementing their own penetration pricing tactics and stealing customers. Businesses employing a penetration pricing strategy will need price monitoring software to track and analyse average market prices over a set time period, then use the data to calculate introductory pricing. 12. Price skimming With a price skimming strategy, the product is initially priced high and then reduced later on, rather than starting with a low price like penetration pricing strategies. This approach aims to maximise short-term profits and segment customers based on how much they are willing to pay, and is often used for innovative products and products with high demand. The top level of customers, the most loyal ones, will buy at high prices. The seller can then continue accommodating new levels of potential customers by gradually lowering (“skimming”) the price. This practice continues until it reaches the base price. Price skimming can be a great way to quickly generate revenue and even break even with a lower number of sales, but companies must be able to rationalise the high price point, especially if the market is saturated and customers have other low-priced alternatives to choose from. One real-world example of a price skimming strategy is Samsung. When a new mobile phone release is planned and demand is high, the price is set higher to bring in more revenue and capture market share and attention from competitors like Apple. The newest model above, for example, retails for as much as €1.819,00 to start. After the demand and hype lessens, the company skims the price back down to reach more customers. Samsung Galaxy phones, for example, are priced to capture share from the iPhone. 13. Price optimisation Price optimisation is a practice used in most e-commerce businesses that involves analysing data from customers and the market to calculate and set the optimal price for a product. The objective is to find the ideal price point to attract customers and maximise sales and profits. The types of data used can range from demographics and survey data to historic sales and inventory. Pricing optimisation is similar to dynamic pricing, but while the former can be more of a long-term process, the latter is built more for rapid change and adjusts pricing based on real-time data. 14. Surge pricing Surge pricing is a pricing strategy that temporarily increases prices in response to high demand and limited supply. It is used in many industries, from hospitality and tourism to entertainment and retail. Here are three common types of surge pricing: Time-based: Adjusts prices based on the time of day or during special events and expected or real-time high demand periods. For example, online retailers raise prices between 9 AM and 5 PM when customers shop online during office hours, as well as during large, industry-relevant events, like the Olympics for sporting goods sellers. Weather-based: Incorporates weather forecasts to determine pricing decisions. When favourable weather conditions are expected, prices are increased. For instance, if the weather forecast promises good conditions for the summer, prices for beach goods, summer apparel and BBQs can be raised in anticipation of higher demand. Location-based: Adjusts prices based on the geographical location of the buyer. It is often observed in crowded cities or areas with high-income populations, where customers have a higher willingness to pay. Additionally, surge pricing may be used in places with above-average shipping costs, resulting in higher prices. 15. Loss-leader pricing Loss leader pricing, often used as part of a penetration pricing strategy, involves intentionally selling certain products at a loss to attract customers and stimulate additional sales of other higher-margin products. The purpose is to entice customers with attractive prices on popular or essential items, with the hope or expectation that they will make additional purchases of complementary or higher-priced items. While the initial product may be sold at a loss, the strategy aims to generate profits through the sale of accompanying products or services. Effective implementation requires careful product selection, pricing analysis and understanding of customer behaviour to ensure the overall profitability of the business. 16. Honeymoon pricing Like penetration pricing, honeymoon pricing sets the initial product price low during launch to attract customers. This strategy is common in subscription models, where a low-priced starter offer entices customers who must then be retained. Retaining customers in this model can be achievable, however, since switching providers may be expensive or require too high a level of customer effort. 17. Yield pricing Yield pricing is a pricing strategy most often seen in the aviation and hotel industries. It involves pricing differently depending on when the customer makes the purchase. Airline seats, for example, are priced based on where you are in the booking period: Booking earlier gets customers a lower price, while late bookings are at a higher price point. This enables those airlines to avoid empty seats and lost profits. How to find the right pricing strategy for your e-commerce business Choosing the right e-commerce pricing strategy requires careful analysis and consideration, and it’s worth noting that most sellers use some combination of strategies. Here are five key steps to guide your research and discussions as you build your pricing strategy: Understand your market and customers: Conduct research to gain insights into customer preferences and market dynamics. Analyse costs and profit margins: Evaluate expenses and calculate desired profit margins to assess feasibility. Consider your business goals and value proposition: Align pricing with your objectives and unique value proposition. Test, monitor, and adapt your strategy: Implement and continuously evaluate your pricing approach to optimise results. Stay agile and regularly evaluate pricing against competitors: Keep an eye on the market and adjust pricing as needed to remain competitive. Over time, pricing strategies must adapt and evolve, both to keep up in the market and to meet the needs of the brand and product assortment. As you build, implement and execute your pricing strategies, Omnia Retail can seamlessly automate any strategy you choose, blending any combination of rules with advanced Machine Learning and AI algorithms. Learn more about our revolutionary and intuitive approach to Dynamic Pricing here. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments.

17 Winning Pricing Strategies in e-Commerce

The Ultimate Guide to Dynamic Pricing

What is Dynamic Pricing? Dynamic pricing is when a company or store continuously adjusts its prices throughout the day. The goal of these price changes is two fold: on one hand, companies want to optimize for margins,...

What is Dynamic Pricing? Dynamic pricing is when a company or store continuously adjusts its prices throughout the day. The goal of these price changes is two fold: on one hand, companies want to optimize for margins, and on the other they want to increase their chances of sales. Dynamic pricing is a pricing strategy that applies variable prices instead of fixed prices. Instead of deciding on a set price for a season, retailers can update their prices multiple times per day to capitalize on the ever-changing market. Dynamic pricing often gets confused with personalized pricing. But these two different types of pricing are extremely different from one another. To put it simply, dynamic pricing looks at your products and and their relative value in relation to the rest of the market. Dynamic Pricing vs Personalized Pricing Personalized pricing, on the other hand, looks at individual consumer behaviors and gauges (and changes) a product’s value based on past shopping experience. Personalized pricing is controversial because it uses individual data and shopping experiences information that many consumers consider private and personal. It’s also somewhat risky in an age where consumers can interact with and talk to each other like never before. If Consumer A finds out they paid more for the exact same product than their best friend, their trust in a company will erode. Dynamic pricing, on the other hand, allows you to capture extra sales and take advantage of a changing market without invading consumer privacy or trust. Why is Dynamic Pricing important in e-commerce? Dynamic pricing and e-commerce co-evolved together. As the internet became more sophisticated and online shopping grew, so has the need for dynamic pricing. Consumer electronics was one of the forerunners in the retail landscape in terms of the trend towards online. As a category of elastic products that are sensitive to price changes, it makes sense. Retailers need dynamic pricing to stay on top of the market and continue to offer competitive prices. But as consumer spending rises in this category (and with it the online market share), two developments that affect dynamic pricing have emerged: Increased price transparency: As more people shop for consumer electronics online, the amount of comparison shopping also increased. Consumers are now far more likely to evaluate a retailer’s prices against the company’s competition. This shines a spotlight on your product price and makes it the most important part of each sale. Since consumer electronics are typically highly elastic, a 5%-10% difference between your price and your competitors could be the deciding factor for a consumer. More frequent price changes: Because of this increased demand for price transparency and matching, the number of prices changes every day has increased dramatically since the dawn of e-commerce. Traditionally, the supplier or the manufacturer would determine the price of a product with a consumer advised price (CAP). However, this CAP quickly became irrelevant with the growth of comparison shopping online. Today, prices are determined by the retailer instead of a supplier, and are based on a variety of variables, including general market trends, competition prices, and stock levels. A complete guide to Dynamic Pricing Download free whitepaper A variety of other categories, such as Toys and Games, for example, follow the same pattern: when online spending rises, so does the demand for price transparency. This, in turn, leads to an increased frequency of price changes and the use of dynamic prices. This trend often also attracts new players on the market without physical stores, which makes it difficult for traditional retailers. Although the traditional retailers have the first mover advantage, they are generally less flexible in adapting their (pricing) strategy. However, the retailers that do capitalize on their omnichannel advantage can move ahead of the pack. What are the benefits of Dynamic Pricing? Dynamic pricing is no longer just a strategy for airlines, hotels or ride-sharing apps. For large retailers and D2C (Direct-to-Consumer) brands, embracing dynamic pricing can unlock significant growth opportunities, enhance profitability, and strengthen customer relationships. Here’s why dynamic pricing should be a cornerstone of your pricing strategy: 1. Maximizing Revenue Potential Dynamic pricing allows retailers and D2C brands to adapt prices in real-time based on demand, inventory levels, and market trends. By pricing high-demand products competitively or increasing margins on less price-sensitive items, you can optimize revenue streams without alienating customers. 2. Staying Competitive in a Fast-Moving Market Retail is a highly competitive space, where prices are compared at the click of a button. Dynamic pricing ensures that your brand remains competitive without resorting to blanket discounts, enabling you to respond to competitor price changes swiftly and strategically.Monitoring your competitors' prices enables you to quickly adapt your pricing strategies. 3. Improved Inventory Management For retailers and D2C brands, holding unsold inventory can lead to wasted resources and lost profits. Dynamic pricing can be used to strategically discount slow-moving products while maximizing profitability on in-demand items, keeping inventory turnover healthy. 4. Data-Driven Decision Making Dynamic pricing software harnesses advanced analytics to provide actionable insights into customer behavior, market conditions, and pricing performance. These insights enable brands to make smarter, data-backed pricing decisions, resulting in higher margins and better customer experiences. Dynamic Pricing software By leveraging pricing software, you can simplify the complexities of implementing dynamic pricing, integrate seamlessly into your operations, and realize measurable business outcomes. Most retailers practice a most basic form of dynamic pricing by discounting items at the end of a season or using a clearance sale to get rid of extra stock. However, dynamic pricing can go much further than a discount at the end of a season. When you use a dynamic pricing software, you can wield the power of data to capture more sales and take control of your assortment. Today, almost all major retailers will use some sort of dynamic pricing software. Dynamic pricing software has obvious benefits online: you can follow the competition, adjust prices instantly, and easily capture quantitative metrics about your store to improve your performance. Dynamic Pricing is also useful offline. Through the use of electronic shelf labels (ESLs), you can easily apply dynamic pricing practices to your physical store. This helps you keep your prices up-to-date with what you present online, and makes pricing management easier. Dynamic Pricing software can help you stay in control of your pricing strategies. What are Dynamic Pricing strategy examples? Traditionally, there are three basic ways retailers set their prices: the cost-plus method, the competitor-based method, and the value based method. The cost-plus method is the most simple out of all three. All you need to do is take the cost of your product and add the desired margin on top of that cost. The main advantage of cost-plus pricing is that it’s easy to understand and implement. However, its main disadvantage is that it only considers internal factors, ignoring external market conditions. To determine the margin or 'markup' percentage, use this simple formula: subtract the product's cost from its selling price, then divide that difference by the cost. Finally, multiply the result by 100 to get the markup percentage. The competitor-based method follows your competition. If your competitor changes their price, you’ll change your price as a result, whether that’s to be lower or higher than your competition. The main advantage of this pricing approach is that it considers external factors like competitor pricing. However, its downside is that it assumes competitors have accurately set their prices. The value-based pricing method follows the price elasticity of a product. Different consumers value items differently, so everyone has a certain threshold that they are willing to pay for a product. A value-based pricing method capitalizes on the public’s perception of the value of a product and charge accordingly. The main advantage of this pricing method is that it integrates both external and internal data, providing a balanced approach. However, its main drawback is its complexity, making it the most difficult pricing method to implement. Dynamic pricing software allows you to combine different pricing methods at the same time. Some softwares also allow you to incorporate other useful information, such as your stock levels, popularity score, and even the weather forecast. How Philips implemented Dynamic Pricing Read case study How to implement Dynamic Pricing? Implementing dynamic pricing is a journey, one that has a lot of twists and turns. And it does create a big change in your organization. That’s why you should view the adoption of dynamic pricing as an opportunity to improve your overall pricing strategy and internal systems, as well as your overall margin. After hundreds of implementation projects, we’ve come up with a five-step process to successfully implement dynamic pricing: Define your commercial objective: Your commercial objective is like your company’s compass: it’ll help you navigate any institutional changes and keep you heading in the right direction. The commercial objective applies to more than just pricing and marketing, but it’s the first step for a successful dynamic pricing strategy. Learn more about how to define your commercial objective here. Build a pricing strategy: Your pricing strategy takes your commercial objective, then translates it into strategy that your team will use to sell products. An example? Say your overall commercial objective is to be known as the cheapest retailer on the market. Your pricing strategy would then be to make sure every product in your store is cheaper than the competition’s offering. To develop an effective pricing strategy, follow a three-step approach. Learn how to build a pricing strategy here: Assess Your Place in the Market Start by evaluating your current pricing model—this is known as the "As-Is Situation." Gather stakeholders to review your existing approach and answer key questions: What is your current pricing model, and what are its strengths and weaknesses? Are you a market leader or a challenger? Is your focus on maximizing sales volume or overall profitability? This reflection helps you understand where you stand before making any changes. Build Your Pricing Strategy Framework Next, engage stakeholders in solution sessions to establish a shared understanding of the As-Is analysis. Many assume this step is unnecessary, but it's crucial to ensure everyone is on the same page about existing pricing strategies. Use these sessions to review findings and create a draft framework. This involves leveraging expertise from sales, segment managers, and pricing specialists to craft a strategy that aligns with your business goals and customer needs. Set Business Rules for the Future With a clear framework in place, the next step is defining the "To-Be Situation"—how you want your pricing to function going forward. Establish the levers and rules that will guide your pricing and calibrate them based on your analysis. After aligning internally, begin testing and iterating these rules using tools like Omnia to see what adjustments yield the best results. Choose your pricing method(s): Your pricing strategy tells you what you want to do. Your methods are how you’ll achieve those pricing goals. Your pricing methods are more specific than your pricing strategy. Establish pricing rules: Pricing rules tell your dynamic pricing software what to do. You should set a rule for every product that the software needs to track and change. Test and monitor: The final step for getting started with dynamic pricing is to test and monitor your software’s changes. Learn more about testing the effectiveness of your online pricing. Read more about interesting pricing strategies here: What our the best pricing strategies?: Read about 17 pricing strategies for you as a retailer or brand. What is Price Monitoring?: Check out everything you need to know about price comparison and price monitoring. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers.

The Ultimate Guide to Dynamic Pricing

Reflecting on Price Points Live: Lessons for e-commerce in 2024

It’s been a few weeks since Europe’s e-commerce and pricing event of the year, produced and hosted by Omnia Retail, took Amsterdam by storm at the modern Capital C building in early March. Our invited guests were on the...

It’s been a few weeks since Europe’s e-commerce and pricing event of the year, produced and hosted by Omnia Retail, took Amsterdam by storm at the modern Capital C building in early March. Our invited guests were on the receiving end of the knowledge and expertise of some of the e-commerce world’s greatest minds and leaders, making for a successful annual rendition of Price Points Live. On this year’s stage was Prof. Hermann Simon, the co-founder and chairman of Simon-Kucher, who was a returning speaker at Price Points Live. He is known as the world’s leading expert on pricing and growth consulting. Also on the stage was Natalie Berg, an analyst, author and podcast host; Dr Doug Mattheus, a business executive and consultant in marketing, retail and branding; Gerrie Smits, a business consultant, speaker and author, and lastly, Cor Verhoeven, Group Product Manager at Bol, specialising in pricing and assortment insights. To conclude, the warm and confident Suyin Aerts returned as our host. Whether it be transparency in pricing, marketing or e-commerce practices, our panel of speakers bring more than a century of collective knowledge and experience to the table. So, what did our guests learn and take away from each of our speakers? What can brands and retailers understand about pricing, consumer behaviour and branding? Omnia shares the insights and knowledge pertinent to e-commerce success in 2024. Natalie Berg: E-commerce author and analyst “We are living in a perpetual state of disruption, and retail is no stranger to this, but the past few years have seen unprecedented levels of volatility and uncertainty,” shared Natalie. Whether we want to call it disruption, a seismic shift or a geopolitical and socio-economic tsunami, the one mitigating force to today’s ecommerce landscape was - and still is - Covid-19. “Covid has digitised our world - the way we live, the way we shop, or the way we exercise. And when it comes to shopping, most of it is still done in a brick-and-mortar store, but the majority of these sales are digitally influenced,” shares Natalie. This has brought brands and retailers to the popular omnichannel strategy, which has become more and more common and necessary. However, Natalie predicts that retail will start moving from omnichannel to ‘unified commerce’ which is “not just about being present in those channels but centralising those operations and connecting everything in real-time,”.. We see this already taking place with the partnership that shocked the e-commerce world in 2023 when Meta and Amazon announced that Meta users can shop Amazon products without even having to exit their Instagram or Facebook apps, creating a centralised and synonymous experience for social commerce and marketplaces’ shoppers. She goes on to speak about the customer’s time and how much more precious it is going to become for e-commerce and retail leaders. “28% of Amazon purchases take place in three minutes or less,” she stated,” so if you’re not saving a customer’s time, you have to be enhancing it.” A customer’s tolerance for mediocrity or for average service or experiences is getting lower and lower, which is how the customer experience has become the new currency. “It’s about really wowing your customers. Going beyond! Disrupting the status quo.” She shares that a new phenomenon is taking place because of this refreshed focus on the customer experience: The democratisation of white-glove service. “It’s a technology that is helping brands and retailers give this level of service,”.. This includes Walmart, in the US, which will go into your home to stock your kitchen with your newly purchased groceries while other retailers will collect your returns from your house when they make delivery, allowing the customer to kill two birds with one stone. Adidas in London has installed a system called “Bring it To Me” in change rooms where, if you want an item that’s in a different colour or size, a store assistant can collect it for you without you having to leave the change room. “Tech-enabled human touch - that’s what will separate the retailer winners from the retail losers,” Natalie argues. To conclude, Natalie speaks on how the use of AI will empower both e-commerce players and customers when shopping. “In the future, we won’t know where the physical world ends and the digital one begins,” giving an eerie yet exciting conclusion. “As a brand or retailer, standing still is the most dangerous thing you can do.” Dr Doug Mattheus: Consultant and branding expert Hailing from South Africa and living in the UK is Dr Doug Mattheus whose presentation focused on the art and science of brand building. So, what makes a brand long-lasting? “It is a mix of tangible and intangible features that, if properly managed, creates influence and generates value,” says Doug. But, as we’ve seen brands rise and fall over the last few decades, what are some of the factors that have created the most valuable brands in the world, from Apple to Mercedes Benz to Walmart? Creating a brand hook The ways in which a customer can get hooked on a brand are limitless: Reflecting back to the time he received his first pair of Nike shoes in high school, the one item Doug cared about keeping just as much as the shoes themselves was the box they came in. “It wasn’t just a box - it was a Nike box.” Fast-forward to adulthood, he visited a Harrods store and witnessed customers buy empty single-use packets and bags with the Harrods logo on them. In a more recent case, the fragrance of bath bombs and body scrubs in the air at a mall or airport has become one that is synonymous with LUSH. “Just follow your nose,” says Doug. “So, what is your brand hook?” On the contrary, we see brands like The Body Shop that have struggled to keep up with digitally-native challenger brands like Drunk Elephant, Glossier and Paula’s Choice in the personal care market and is undergoing mass closures across the US and EU. Doug’s advice to brands is to create a unique hook - whether it be in the sights, smells, sounds or physical world. What’s your differentiator from competitors? A small player in the award-winning wine industry in South Africa is a vineyard called Vergenoegd Wine Estate. By a large stretch, it is not the most well-known or award-winning brand. However, this boutique vineyard did not refrain from harnessing the commercial value of organic farming. The winemakers introduced runner ducks to the vineyard, which roamed around eating worms, snails, and bugs that could be detrimental to the vines. In addition, these ducks became a tonic for families and couples with kids wanting to experience the vineyard while having something fun for children. The ducks have become a unique feature to Vergenoegd Wine Estate and a key driver of foot traffic and revenue. “This is a great example of how a small player is not being defined by its smallness and not being intimidated by bigger players.” Multiple touchpoints for customers Stemming from Natalie’s thoughts on brands having to go the extra mile to impress customers, Doug shares that there are moments of magic around us at all times, and it is up to business leaders to find and develop those moments. However, where there is ease and innovation between brands and customers (like at Nordstrom in Seattle, USA who did not want to lose their “eyeball moments” with customers from rapid digitalisation, began offering curbside pick-up so they can still have face-to-face interactions with shoppers), there are also moments of friction and time-wasting that cause frustration for customers. It’s about fine-tuning interactions and creating moments that make a brand memorable. Relevance: Do you reinvent like a butterfly or a bull? As the title suggests, brands in many verticals, but especially in fashion, personal care, sporting goods, fitness, and electronics, are faced with the rapid rise of digitally-native brands that exist to challenge the status quo. In fact, these brands, which have only known a digital world, are, in fact called “challenger brands” because of the innovative approach to design, production, supply chains, customer interactions, marketing, and everything under the e-commerce sun. According to Doug, brands who reinvent like a butterfly are those who can go with the changes and challenges in front of them with agility and resilience while those who face reinvention like a bull may be stubborn and ignorant and may face their own downfall. Cor Verhoeven: Group Product Manager at Bol. Coming from one of Europe’s largest and most successful marketplaces, Bol., Cor Verhoeven delved into pricing, specifically how Bol. tackles bad prices on the platform and what the negatives are for a marketplace or e-commerce brand. “We have 38 million items for sale, 13 million active customers, and 50,000 unique selling partners. That means almost every home in the Netherlands and Belgium has bought something from Bol.,” says Cor. With numbers like that, it’s more than possible that a marketplace would run into pricing issues. “Part of our strategy is to make Bol. an equal playing field. Our sellers must be able to make a living off what they sell on Bol. - it’s not just us that needs to do well.” So, how does a customer-centric pricing strategy fall into this? “We all work hard to make sure that the price of an item is not the reason someone doesn’t buy something on Bol.,” says Cor. “Pricing is important because it positions you in a competitive market, it establishes customer trust, and it establishes customer lifetime value. Our success is caused by growth, monetising and retaining in a loop,” explained Cor. “Our three main beliefs when it comes to pricing are High-quality deals, trustworthy and reliable prices, and competitive prices in line with the market.” The balancing act between insult pricing and best-in-market pricing is tricky and precarious, which is why Bol. judges their products on their prices. “If a product’s price is above an allowable price, we take it offline to product the customer,” Cor stated. How does Bol. decide on what is an allowable price? “We source benchmarks. If a product has a benchmark, it’s given a classification - an insult price or an allowable price - and business rules are set,” explained Cor. “When we don’t have a price benchmark, that’s when we have little control.” When Bol. doesn’t have a price benchmark for a product, they utilise their data science model to predict a price while, daily, the model is manually looking for prices to benchmark those products.” The result is a price for a product that is more aligned with the market and within the boundaries of what a customer will accept. “Of course, taking insult prices offline decreases revenue, but what we get back in return is way bigger. The seller sees increased conversion,” said Cor. Sander Roose: CEO and Founder of Omnia Retail Joining the panel was our very own CEO Sander Roose who started his keynote speech by making good on a promise. “At the last Price Points Live event, I promised that Omnia would release a new platform sometime in 2023, and the whole Omnia team is proud to have achieved that.” As a veteran in the dynamic pricing industry, with 12 years at the helm of Omnia Retail, Sander brought to the stage what he believes are the pricing elements and design principles of successful dynamic pricing. According to Sander, there are three factors to successful dynamic pricing implementations: Clearly defined objectives; securing engagement and support; and the spirit of continuous learning. “Without clear objectives, you can have a strong pricing platform, but you won’t know how to harness it,” he said. “And as the market changes, you need to be able to change your objectives.” For the second factor, pricing managers and teams need to be fully on board: “If they don’t understand how prices are calculated, they will reject the implementation as a whole.” Then, the third factor speaks to a dynamic pricing user's ability to be agile and curious: “We see that customers that used the system most intensively to make iterations with their prices get the best results.” As a result, Omnia found that two key design principles for dynamic pricing success are necessary: flexibility and transparency. “Being able to automate any pricing strategy you can think of, to facilitate all the objectives, to keep control while the system is on autopilot, and finally, making sure the users are adopting the system.” Flexibility and Transparency A pricing platform needs to be able to support a vast array of pricing objectives and strategies. “A platform needs to be able to endure various high-level objectives. Perhaps on a global level, you have a profit maximisation objective while the strategy on lower levels, such as on a per country basis, may be different,” explained Sander. “For example, if your global brand has just launched in the Netherlands, you may want to maximise market share. Then, even further down, depending on your various verticals, you may want a stock-based strategy.” Flexibility must also be present not just in pricing strategies but in data collection and the recalculation process. Using the example of a Tesla self-driving car with a blacked-out windscreen, Sander makes the point that customers of dynamic pricing still need to be able to see and understand what’s going on - even if the system is on autopilot: “If you create transparency while the system is on autopilot, you can create buy-in from internal stakeholders and facilitate learning loops.” How flexibility and transparency exist in Omnia 2.0 The culmination of these two values resulted in the Pricing Strategy Tree, developed specifically for Omnia 2.0, making strategy building and interpretation easier and faster. “The copy-and-paste feature means a large D2C brand that wants to launch in a new country can simply execute their entire pricing strategy with just a few clicks by copying the strategy in the tree from another country. This is huge for an international customer to be able to do this.” Another feature called Path Tracking allows you to visually see how your strategy came to be, step by step. “This feature helps to validate if you set up the tree how you intended to,” explained Sander. Another feature that elevates transparency is Strategy Branch Statistics which works to answer burning questions from pricing managers: ‘Which part of my strategy is most impactful? The Strategy Branch Statistics feature works to show you which business rules are doing the work to give your prices.’ An additional feature highlighting transparency is the ability to name branches within the tree. The names not only help coworkers understand what you’ve built, but they differentiate the various strategies that are at play at the same time. Strategy Branch Statistics feature works to show you which business rules are doing the work to give your prices.’ An additional feature highlighting transparency is the ability to name branches within the tree. The names not only help coworkers understand what you’ve built, but they differentiate the various strategies that are at play at the same time. AI in pricing “From private label matching, creating automated weekly reports to send to category managers, to automated insights, AI is a powerful technology that has the potential to contribute to the superpowers we offer customers,” says Sander. However, as of today, Sander believes that AI is one part of the machine and should not be considered the holy grail of price setting. “The true need is goal-based pricing,” Sander says.”AI is a means and not an end.” Sander's vision for AI in Omnia’s pricing platform sees a move from granular pricing strategies that affect the business’s objectives to a scenario where the customer sets the objective, and the Omnia platform automates and optimises prices. “We want to move more and more towards goal-based pricing in our platform. We believe the end game for price automation will be rules and AI, not just AI, and the Pricing Strategy Tree allows for a rules and AI combination.” Prof. Hermann Simon: Founder of Simon-Kucher, author As a world-renowned expert in pricing and consulting, Prof. Hermann Simon joins the panel to share what he thinks are the hidden champions in e-commerce and retail and what their successful strategies are. Specifically, the small and midsized global market leaders with a market share of above 50% and that are little known to the public. “In China, which is by the largest global exporter, 68% of the exports come from small and midsized companies, and behind this number are the hidden champions,” says Hermann. “Inside super export performance requires large companies plus a very strong mid sector. Hidden champions, not large corporations, determine whether a country really excels in global competition. Hidden champions are an untapped treasure to learn about business success.” Focus and Globalisation What characterises these companies? “The three pillars of the hidden champion’s strategy are ambition, focus, and globalisation fueled with the tools of innovation, value and price,” shares Hermann. Focusing on your product makes your market small. How does hidden champions enlarge their market? An example of successful globalisation is Karcher, the global leader in high-pressure water hoses, which began internationalisation in the 1970s slowly and then accelerated in the 90s to become the global market share leader at 70%. Other examples include Deichmann, the largest shoe retailer in Europe, which sits in 31 countries across Europe, Africa, the Middle East and the US. “The lesson here is that if you have a good product, multiply it by regional expansion,” says Hermann. Value and Price For successful companies, value comes from innovation and a closeness to the customer. But what drives innovation? The answer is different for hidden champions and the average company. Below is a pie chart where we can see how little an average company prioritises customer needs: What is the most important aspect of pricing? “It’s customer-perceived value. The willingness to pay is a mirror of perceived value, and therefore, value equals price,” explains Hermann. “Understanding, creating and communicating values are the key challenges in pricing.” Using the example of the iPhone, the cost has always been above the market average for a smartphone, yet the success of the product indicates it must obviously bring value to the customer. “Value drives price,” concludes Hermann. According to internal studies at Simon Kucher, only one-third of companies can say they have real pricing power. So, two-thirds are exposed to the sensitivities of the customer. “The result is that value-to-customer and pricing power is created by differentiating your product, changing the way customers perceive your products and your price, and changing the mindset and confidence of your own people in your company,” says Hermann. Closeness to customer “88% of hidden champions say that closeness to the customer is their biggest strength, even more than technology,” says Hermann. Simon-Kucher found that 38% of employees at hidden champion companies had regular contact with customers, while large corporations only had 8%. In retail, it is difficult to understand value perception because there are many competitors selling the same thing. This makes retail’s soft parameters, such as the store layout, service and friendliness, more helpful in understanding value perception. The challenge then becomes how do enterprises effectively communicate their value offering. “Hidden champions are true value leaders with their intense closeness to customers. They achieve a more profound understanding of a customer's needs; their continuous innovations create higher value, and they integrate customer needs and technology much better than the average company.” Gerrie Smits: Speaker and author Gerrie believes we’re getting customer-centricity all wrong. From his 25-plus years of experience in helping companies prioritise customers as well as how to deal with the changing digital world, he has found a common thread of issues: “Technology is getting in the way, companies are seeing customers as a target, and teams are siloing their responsibilities and not wanting to take on other responsibilities,” says Gerrie. “Companies are getting tech just for the sake of it, not because there is any use for it. If you’re going to invest in tech, make sure you have a competitive edge.” According to US business leaders, the number one skill a company needs to have to succeed in the digital world is empathy. “Technology is fantastic if you know what to do with it. My clients are driven by technology, and that’s not customer-centric.” When it comes to companies seeing customers as a target. “I’ve never met a company that doesn’t say they’re customer-centric - obviously,” says Gerrie. But there is a large difference between intent and action. “For example, Amazon has always said they are obsessed with understanding the customer. Yet still, they got it wrong when, in 2022, they reportedly lost $10 billion from dismal sales for their voice-activated Echo. “What brands need to understand is that there is only a small part of me that is your customer. The rest is me as a human being,” says Gerrie. “Seeing your audience as buyers, you are not fulfilling the whole potential.” Concluding Price Points Live 2024 In closing, our panel speakers joined Suyin on stage to answer a round of interesting questions and to share their final thoughts. “To drive loyalty, one must understand what your customers value,” said Natalie, while Doug shared that although pricing is vital to brand loyalty, it is not the only factor. Answering a question about how smaller players in e-commerce can grow and succeed against large enterprises, Natalie says, “It’s like Prof. Hermann said: It’s about focus. You have to know what your strengths are, and then you have to execute really well.” The world of e-commerce is set to make $6.3 billion in global sales in 2024, which is expected to increase to $8 billion in 2027. However, what’s more interesting is the amount of e-commerce users which is set to increase to 3.2 billion by 2029 - a third of the current world population. More shoppers don’t necessarily mean more revenue and sales, so it is safe to say that brands and retailers need to focus their efforts on pricing, innovation, unique marketing and frictionless experiences if they want a segment of the ever-growing pool of e-commerce users. With these insights and go-to strategies for elevating the success of brands and enterprises, Omnia is excited to see what the e-commerce landscape will be for our customers and other growing e-commerce companies. We’d like to thank all of our speakers - Natalie Berg, Dr Doug Mattheus, Prof. Hermann Simon, Gerrie Smit, Cor Verhoeven and our own Sander Roose - and our host, Suyin Aerts, for their knowledge and time spent at Price Points Live 2024. Watch keynote presentations here.

Reflecting on Price Points Live: Lessons for e-commerce in 2024

Transparency in e-commerce: Leading the conversation at Price Points Live 2024

Europe’s e-commerce and pricing event of the year is returning in 2024, as Omnia Retail gears up for another exciting edition of Price Points Live. As leaders in e-commerce pricing across Europe, Omnia Retail is...

Europe’s e-commerce and pricing event of the year is returning in 2024, as Omnia Retail gears up for another exciting edition of Price Points Live. As leaders in e-commerce pricing across Europe, Omnia Retail is perfectly positioned to bring together experts and leaders in retail, pricing, marketing and branding to share insights and knowledge. Taking place at the modern Capital C building in Amsterdam on 7 March 2024, the building’s majestic glass dome ceiling sets the tone fittingly for this year’s main topic: Transparency. Whether it be transparency in pricing, marketing or e-commerce practices, our panel of speakers bring more than a century of collective knowledge and experience to the table. Joining us is Prof. Hermann Simon, the co-founder and chairman of Simon-Kucher who is returning to Price Points Live for a second visit. Known as the world’s leading expert on pricing and growth consulting, Prof. Simon is an award-winning author. Also on this year’s stage is Natalie Berg - an analyst, author and podcast host - who will add value to the conversation on all things global retail. Dr Doug Mattheus, a business executive and consultant, will be bringing his 35-years of knowledge and experience in marketing, retail and branding. Lastly, Cor Verhoeven is a Group Product Manager at one of Europe's largest marketplaces, Bol.com, specialising in pricing and assortment insights. He’ll be bringing his entrepreneurial spirit and his 10-plus years of e-commerce, product management and marketplace experience to Price Points Live. Our speakers will be brought together by the charming Suyin Aerts, who is also a returning panel member. Challenges in today’s world of e-commerce What are brands and enterprises facing in e-commerce in 2024? From branding to pricing to consumer behaviour, the e-commerce arena has experienced more phases and changes in the last four years that it did in the previous decade. Let’s discuss some of the industry’s key trends and issues as of today. Growing competition and price-war strategies As e-commerce grows and oversaturates each vertical, consumers have more choice and power. This is not necessarily a bad thing, however, it does mean that brands and retailers start employing more competitive pricing strategies that ultimately lead to price wars between competitors and a race to the bottom. This undercuts the value of products and only results in losses for each business involved. This has been evident with smartphone brands like Samsung and Huawei who competitively lower the prices of their smartphones to achieve higher market share. It’s also common between wholesale retailers like CostCo and IKEA or large online marketplaces like Amazon that employ tactics to get their vendors to sell their products lower than on any other marketplace. Increased customer expectations For decades, the relationship between retailers and consumers had been dominated by the former. Customers had only a few options for where they trusted to purchase their groceries, shoes, school supplies, winter essentials and everything in between. Today, that relationship has been flipped on its head as consumers enjoy the pick of the litter in just about every retail vertical. As this trend has developed, consumers have come to expect faster shipping, better prices, higher quality, and more benefits for their loyalty. This will naturally affect a brand or retailer’s pricing strategies as they try to maintain customer retention and even attract new customers with promotions, benefits from loyalty programs and clubs, and bundles that appeal to shoppers. Changing customer loyalty What makes a customer loyal to a brand? At what point does a customer’s loyalty erode? And, what are the factors that could cause this to happen? For most customers, it’s a balancing act between quality and cost. However, in 2024, brands and enterprises must face other factors that could affect customer loyalty: Sustainability efforts. A 2023 McKinsey and NielsenIQ study found that products with ESG claims (environmental, social or governance) accounted for 56% of the total sales growth during the five-year period of the study, from 2017 - mid-2022, showing, for the first time, that brands with some kind of sustainability mention are growing faster than those without. This is all due to changing customer loyalty and the very parameters that shape and shift that loyalty. Social changes may be another factor. For example, in the sporting goods vertical, participation in social sports like pickleball and paddle tennis have increased by 159% while lacrosse, skiing and track declined by 11%, 14% and 11% respectively. Stubborn inflation The issue that has plagued global e-commerce since 2021 is still having its ripple effects on the industry in 2024. In the first quarter of 2024, the EU has already cut GDP growth expectations for the year from 1.3% to 0.9% as interest rates remain high while consumers still grapple with a 40% increase in gas and food prices that peaked in 2023. With this reality, pricing has never been more important nor more sensitive to the consumer. McKinsey’s latest ConsumerWatch report shows that shoppers were buying less items at the end of 2023 compared to the previous year’s period, with personal care dropping 3%, household items dropping 3% and pet care dropping 5% which results in AOV (average order value) loss. The importance of transparency in pricing software The use of dynamic pricing in e-commerce has grown exponentially in the last decade, however, that does not mean every software provider offers the best-in-class platform. Not every pricing tool is made equally. Transparency is something that has not been prioritised as a core tenet of pricing software, which has often allowed for a murky relationship between a brand or enterprise and their own pricing strategies. For a user of pricing software to experience the full potential of a pricing tool, they need to be able to build, test and edit each pricing strategy with clarity and ease. They need to be able to understand how and why a pricing recommendation has been made. They should be physically able to see every pricing strategy simultaneously at play without convolution or confusing coding jargon. While this may seem obvious, some pricing platforms have found that withholding pricing knowledge from a customer is the way to go. How is Omnia enhancing transparency? When Omnia set out to build its new pricing tool, named Omnia 2.0, its main goal was to create a next-generation platform that would enhance a user’s flexibility, user experience and transparency. Why was this necessary? The reason is two-fold: Pricing for SMBs and enterprises can be overwhelming, time-consuming and confusing. For enterprises, as assortments become larger and competitors thicken the competition, pricing may become more complicated. “As the ability to run detailed and complex pricing strategies has become mainstream, it has snowballed into the next level of challenges: Complexity overload,” says Omnia’s CEO Sander Roose. By developing our one-of-a-kind Pricing Strategy Tree™ coupled with information dashboards that give a God-like view of the market and every strategy you have at play, pricing becomes what it should always be: Transparent, flexible and simple. “Omnia 2.0 successfully cuts through the clutter,” says Sander. Another development that enhances transparency for users of Omnia 2.0 is the “Explain Price Recommendation” feature which provides a full explanation of how the price advice of a particular product came to be. This not only enables full control over how and why prices may change but it increases the customer’s pricing maturity. “The ‘Price Explanation’ visually tracks the path through the Tree to show the logic and how the price advice came about,” explains Sander. Join us at Price Points Live 2024 “Although at Omnia we believe it’s still day one in terms of building the ultimate pricing platform we are building towards in the long-term, we are very proud of how the Omnia 2.0 next-generation pricing platform gives our users of and customers ever growing superpowers,” says Sander. Join our exclusive annual event by reserving your seats on our Events page or simply email your dedicated Customer Success Manager who will assist you. We’ll be seeing you in Amsterdam!

Transparency in e-commerce: Leading the conversation at Price Points Live 2024

Unleashing Superpowers in Pricing: How Omnia's Visual Decision Tree Approach Revolutionises Dynamic Pricing

Omnia Retail’s origin and purpose In 2012, my co-founder and I had conversations with category managers from established online retailers in mature e-commerce categories, such as consumer electronics, and learned that...

Omnia Retail’s origin and purpose In 2012, my co-founder and I had conversations with category managers from established online retailers in mature e-commerce categories, such as consumer electronics, and learned that they were spending a lot of time each week manually looking up prices of their competitors on comparison shopping engines and were still running behind with repricing the products in their assortment. Propelled by e-commerce, product ranges were increasing in scope, and the heightened transparency of online pricing resulted in frequent price fluctuations. It became increasingly laborious and time-intensive to maintain competitive pricing as it required manual gathering of pricing data, calculation of optimal price points, and implementation of adjustments. This challenge led us to founding Omnia Retail. Over the years, we saw that as other retail categories matured online, they struggled with the same problem. Similarly, over the last few years, brands have become more serious about their direct-to-consumer (D2C) channels. Brands selling a product against the initial Recommended Selling Price (RSP) for the whole product life cycle leads to insult pricing and the need to change their prices, yet again, to align with the market. As a result, we now see that brands are starting to struggle with the same problem that retailers experienced over a decade ago. Simply being passionate about the challenge and using our prior retail and e-commerce knowledge, we applied our engineering expertise to solve this problem for retailers and brands. It was only later - when our company had grown to a size where everyone couldn’t fit on the same lunch table anymore - that we started reflecting on why we were so invested about solving this challenge. This very reflection led us to establishing Omnia’s purpose explicitly: “We give retailers, brands and their teams superpowers by unleashing the full potential of pricing through market data, insights and automation.” The most central concept here is the word “superpowers”. On a basic level, it refers to automating the tedious and time-intensive tasks that thousands of our users at retailers and brands had to manually do before: looking up prices of competitors, making calculations, and implementing changes. This already removes a lot of tedious work and frees up time to focus on more strategic and creative work. However, that is only one of the basic layers of “superpowers”. Another more exciting element is that we enable our users to do things that were never possible before, even if they would have all the time in the world to spend on pricing. In terms of insights, an example is providing dashboards that provide our users with a “God-view” of the market: fully understanding their own price positioning and understanding what their key competitors (or resellers) are doing. Regarding pricing automation, it’s about having nuanced and advanced strategies, understanding how they are set, impacting results in terms of price positioning and ultimately sales, and contribution margins. Elements of success for dynamic pricing software implementations Through the more than a decade of serving retailers and brands with pricing software, we have seen that certain elements lead to success and ensure the best returns on dynamic pricing implementations: Clearly defined pricing objectives: Begin by setting clear pricing objectives, emphasising the importance of starting with a clear end-goal in mind. Without clearly defined objectives one can have the greatest pricing platform in the world, but there is no guidance on how to use it, and how to measure success. It's essential to recognise that pricing objectives may vary across different parts and levels of the business and are likely to change in response to external factors. Therefore, the pricing platform must accommodate for these varying objectives to remain effective. Securing engagement and support: Securing the engagement and support of team members with direct involvement in pricing is crucial whether it’s as their core responsibility, such as dedicated pricing managers, or as part of their wider role like category managers and buyers. If these individuals struggle to implement the pricing strategies they aim for in the system, or if they cannot explain the prices suggested by the system, they may resist adopting the dynamic pricing software or, at the very least, lack the motivation to leverage the platform's potential fully. Continuous improvement: Rapid cycles of learning and enhancement drive ongoing improvement. This process is supported by ensuring all operations occur in the software's front-end. Any hardcoded rules established by a pricing software vendor in the back-end will hinder such a learning cycle. Moreover, maintaining transparency about the operational logic and performance metrics is essential. From these elements of success we have learned at Omnia, we derived two essential design principles for developing our price management platform: flexibility and transparency. Flexibility to remove barriers to adoption, improving results and ensuring control. Transparency to keep control while on auto-pilot, create buy-in from internal stakeholders and facilitate learning loops. As the ability to run detailed and complex pricing strategies has become mainstream, it has created the next level of challenges: complexity overload. Omnia 2.0 successfully cuts through the clutter with its revolutionary visual pricing logic with the Pricing Strategy Tree™. It gives complete pricing flexibility and control, coupled with transparency. The power of flexibility: Removing barriers to adoption, improving results and ensuring control Flexibility is a core principle in our design philosophy, enabling our clients' users to execute any desired pricing strategy across all parts of their business. We have seen a vast array of pricing strategies being used and broadly speaking, they are driven by differences in objectives at the highest level, the need to differentiate on objectives on lower levels, and differences in definitions. On the highest level, the main differentiation we see is between maximising revenues - with the constraint that a minimum contribution margin needs to be reached - and maximising contribution margin. Traditionally, we saw pure e-commerce players being primarily focused on the former, while more traditional omnichannel retailers were more focused on the latter. With the changing economy and higher interest rates, the importance of being profitable in the present, we now see pure e-commerce players also shifting more towards margin maximisation strategies. While on the highest level, a retailer or brand might have a margin maximisation strategy, virtually, they will always need to differentiate on the lower level as well. Take for example a racket sports retailer. Although overall profit maximisation might be the main objective, the retailer might be focused on penetration (maximisation of sales, given a minimum margin constraint) in a market where they recently launched, as well as that being the main objective to establish itself in a nascent category like padel rackets. Finally, we have learned that retailers and brands have differences of definitions and that their chosen software should support that, rather than enforcing a rigid rule or definition. Take the example of a stock-based strategy, where a company wants to automatically become more aggressive when stock coverage becomes too high or take the opportunity to steer toward margin when stock coverage becomes too low. The definitions of what’s too high and too low differ not only between companies, verticals and markets but also within a company and on different parts of its assortment. It’s crucial for pricing software to be able to provide that flexibility and give the power to the user, not only to ensure that the retailer or brand can reach its objectives but also to ensure that there are no barriers in the adoption of the pricing software. If business users - like category managers - are not able to implement the strategies, they will be inclined to resist the implementation, putting the dynamic pricing implementation project at risk. Pricing software must be able to support flexibility, but it’s even more crucial that everything is fully supported in the front-end of the user-interface (“the portal”). If there are rules or constraints hardcoded within the back-end, a common practice of some pricing software vendors in today's market, it leads to a lack of transparency and limits the pace of learning (testing with strategies). At Omnia, we’re proud to have this flexibility in our software, with not one line of customer-specific code while serving hundreds of retailers and brands since 2012. The examples previously mentioned demonstrate how the principle of flexibility is integrated into the pricing automation part of the Omnia platform. However, our commitment to flexibility extends throughout the entire platform. For instance, we don't confine our customers to predetermined calculation schedules. Instead, they have full autonomy to set the timing for pricing data collection and dynamic pricing calculations. Additionally, they have the capability to initiate calculation runs manually at any moment from the front-end, such as when assessing the impact of strategy modifications. These calculations are efficiently completed within minutes, even for extensive product assortments. Transparency to keep control while on auto-pilot, create buy-in from internal stakeholders and facilitate learning loops Automation has the potential to save time and improve results. However, when implemented poorly, automation may lead to a lack of control. From the early years, this has been our belief, and preventing our dynamic pricing software from becoming a black-box has been a core design principle. Even in our earlier years, the Omnia software had a “Show me why™” button that took the user by the hand in terms of how the software arrived at a particular price advice. Transparency in pricing software ensures control while being on auto-pilot. An element of this transparency is how your strategies will affect the prices for all products such as the number of products that received “price advice”: prices up, down, equal, price difference vs various benchmarks, and so on. One level deeper is the need for dynamic pricing users to understand the impact of every element of their pricing strategy. For example, one could have a very elaborate pricing strategy, but if anywhere in the strategy there would be a pricing rule “always adjust to the lowest price in the market”, there would be a high chance that the rule will set the prices for the majority of your assortment, and most likely down. Understanding how elements of your strategy impact the eventual prices set links to another significant benefit of transparency: improving results by enabling learning loops. When implementing dynamic pricing you can achieve surprisingly strong results by implementing a pricing strategy once, and then never touching the system again. However, we see that customers who use our software more continuously and are evaluating and testing new approaches achieve the best results. This is only achievable with a pricing tool that creates maximum transparency, facilitating those learning loops. The Pricing Strategy Tree™ as embodiment of flexibility and transparency Our previous pricing platform, Omnia 1.0, was very flexible. However, our most advanced enterprise customers using complex pricing strategies could end up with a long list of pricing strategies. Although relatively easy to build up incrementally, this could make it hard to grasp the strategies running and the logic behind them. In numerous instances, consultants specializing in pricing strategy assisted our customers by creating decision trees to map out and advise on their clients' strategies. This inspired us to use a decision tree as the main interface when building pricing strategies. Although we already had the idea of a Pricing Strategy Tree on our roadmap, acquiring German pricing strategy company Patagona GmbH at the end of 2021 gave us an unfair advantage. Patagona had developed a Pricing Decision Tree to build strategies in their Pricemonitor product. We evaluated this concept with our customers and based on their invaluable feedback, we developed the Pricing Strategy Tree as one of the core elements of our next-generation platform, Omnia 2.0. The new platform was launched in the Summer of 2023, with new product features being added monthly. Not only does the Pricing Strategy Tree lead to more transparency in terms of letting our users understand what’s running, we see that in practice it also makes it easier and simpler to create strategies. That is because it’s a visual drag-and-drop interface, but also because we embedded functionality; such as copy-and-pasting of selected branches within the tree (typically set-up for one market or format) and copy-and-pasting of entire trees across countries or formats. The latter is particularly relevant for our global customers to be able to roll out pricing strategies to additional markets with just a few clicks. To drive transparency even further, the Pricing Strategy Tree proved the ideal canvas for additional functionality: path tracking through the strategy tree, strategy branch statistics of the tree, and naming of tree branches. The path tracking is an evolution of the “Show Me Why™” in Omnia 1.0 called “Explain Price Recommendation” in the Omnia 2.0 platform and provides a full explanation of how the price advice of a particular product came about. This is a typical question for a business user as a category manager or buyer. The “Price Explanation” visually tracks the path through the tree to show the logic and how the price advice came about. “Strategy Branch Statistics” covers another use case, one that was never possible in our previous Omna 1.0 platform: It highlights how elements of the overall pricing strategy impact the eventual prices set. It does this by showing how many products are repriced by each branch in the tree, the average price difference and percentage difference of the price advice vs current price points, as well as the number of products priced up and down. One important benefit of this is that it gives our users insight into which branches are most dominant in setting the eventual prices. Remember the example of having an elaborate pricing strategy with a rule somewhere to “always adjust to the lowest price in the market” in the transparency section above. However, the value of Strategy Branch Statistics goes beyond that. It also provides users insights into the performance of a particular strategy branch, thereby facilitating the important learning loops discussed above. Another functionality we have added to the Pricing Strategy Tree™ canvas is the naming of branches of the tree. Although the tree already makes it easy to show the logic applied, the naming of branches makes it even more practical for users and co-workers to understand what happens in a particular branch by describing it in natural language, for example “Follow the lowest price point of key competitors when stock coverage is too high”. The naming of tree branches also lays the foundation for the steps we plan to take providing more insights in the performance or effectiveness of branches. “We have seen several pricing tools, but the pricing strategy tree plus “show me why” is a super unique selling point and best implementation of dynamic pricing we have seen so far.” International enterprise office supplies retailer. AI is a means, not an end: A case for blending rules, AI, and goal-based pricing We believe that AI as a powerful technology can greatly contribute to the “superpowers” in our purpose. Think about automated import mapping, creating reports based on natural language, surfacing conclusions from data and charts, and so forth. We are also convinced that AI will provide more and more value in the future core area of price setting. However, given the importance of transparency and flexibility, we firmly believe that the future of pricing setting won’t be AI only - on 100% of the products in 100% of the cases - but rather a combination of pricing rules and AI. In terms of intelligence in price setting, AI is a means not an end itself. The core need that we see at the retailers and brands across our customer base is more focused on moving away from setting granular business rules - with the aim of reaching specific objectives - to rather focus on setting the objectives themselves at a higher level and letting our Omnia pricing platform optimise for that. As a company focused on and committed to delivering value to our customers, we naturally plan for this need with more and more goal-based “nodes” (blocks) in the Omnia Pricing Strategy Tree™. Goal-based nodes can have a combination of complex AI running under the hood, for other goal-based nodes less complex statistical rules, depending on the need. The first example of such a goal-based node with AI under the hood is our Amazon Buy Box AI block whereby our user sets the Amazon Buy Box win probability certainty and the AI - based on large amounts of historical data - tries to land exactly at the right price point to reach maximum margin while keeping the win probability as a constraint. This is very different from the previous approach in our software and, to our knowledge, the current state of Buy Box optimisers in most channel management software which has usually been going step-by-step down until you win the Buy Box and then up again to increase margin. That approach is simply too slow and there are too many variables with influence that have changed in the meantime. Although we envision that larger and larger parts of the assortment will be priced by such goal-based nodes in the future, we believe they will always be combined with business rules on part of the assortment (again, it will be rules and AI). For example, our users may want to apply hard constraints (such as upper and lower boundaries) which can differ on different parts of the assortment. For promotions, retailers and brands will want to set hard price points during a certain time frame. Those are just some examples of why the goal-based nodes need to be combined with business rules. The crucial thing is that the principles of flexibility and transparency continue to be crucial when combining rules and AI. You need one single interface where rules and AI can be seamlessly combined, applied by business users, and it remains transparent how and why prices were set. Again, the Pricing Strategy Tree is the ideal concept that automatically ensures this. While this may seem to be a trivial design prerequisite, we see that other pricing software vendors that have begun making first steps with AI in their platforms often are violating this principle. There are vendors that offer “AI-only” with no capability to combine it with rules. We have seen vendors with a separate “AI-version” of their product, next to the old rule-based version of their product to let customers choose one of the products. Then, finally, there are vendors that perhaps are actually more of a team of pricing consultants, as they have to hardcode rules in the back-end, as well as requiring a lot of manual intervention from the team of the vendor for the algorithms to at least provide decent results. The latter case also leads to very long implementation times and learning loops that are too slow, as we learned when taking over customers of these vendors. “With that pricing tree, the flexibility is almost endless.” Pricing Team Manager of the largest beauty pure e-commerce player in Europe. Unleashing superpowers with Omnia 2.0 At Omnia, we believe we are still in the early stages of developing the ultimate pricing platform we aim for in the long term. Yet, we're immensely proud of how the Omnia 2.0 platform is already giving our customers superpowers by enhancing their capabilities more and more. We have made huge leaps in terms of dashboarding, and are constantly evolving those dashboards on a weekly basis thanks to the great feedback from our customers, and the way we have decoupled the visualisation layer from the data layer, enabling us to make fast interactions with little development time. We are clearly on the path of having that “God-view” of the market from the introduction above. Perhaps an even bigger leap has been the core topic of this article: the introduction of the Pricing Strategy Tree in Omnia 2.0, which combines ultimate flexibility and transparency, and we believe is the ideal concept to combine business rules with (partially AI-driven) goal-based pricing. We couldn’t be more proud of the feedback we have received from our customers, and the market as a whole, since the launch of Omnia 2.0 in the Summer of 2023. And we are very excited about further growing the superpower of our users by adding more intelligence to the Pricing Strategy Tree and the entire Omnia 2.0 pricing platform.

Unleashing Superpowers in Pricing: How Omnia's Visual Decision Tree Approach Revolutionises Dynamic Pricing

How to use markdowns to manage stock throughout the Product Life Cycle

Any e-commerce seller knows how tricky markdowns can be. You don’t want to markdown stock too early when it could be selling at a higher price, but you also don’t want to markdown too late and end up with old stock you...

Any e-commerce seller knows how tricky markdowns can be. You don’t want to markdown stock too early when it could be selling at a higher price, but you also don’t want to markdown too late and end up with old stock you can’t sell. There’s no one-size-fits-all solution for this challenge, but aligning markdowns with your life cycle strategy is a great way to maximise sales and minimise leftover inventory, all without sacrificing margin. Here’s Omnia’s recommendation for how to do it. An overview of life cycle strategy The Product Life Cycle (PLC) refers to the stages that a product typically goes through, from its initial introduction to the consumer market to its eventual decline. These stages help e-commerce businesses understand how to manage a product's marketing, pricing and inventory strategies over this cycle. The PLC is usually broken down into four stages: 1) Introduction Characteristics: This stage begins when a new product is introduced to the market. Marketing Focus: The primary focus is on creating awareness and generating initial interest in the product. Marketing efforts may include online advertising, social media campaigns and influencer marketing. Pricing: Prices are often set competitively to attract early adopters and build a customer base. Inventory: Inventory levels are usually low to test the market's response and prevent overstocking. 2) Growth Characteristics: In this stage, the product gains popularity, and sales begin to increase rapidly. Marketing Focus: The emphasis shifts to expanding market share and customer acquisition. Marketing efforts may involve scaling advertising campaigns and targeting a broader audience. Pricing: Prices may remain stable or even increase if demand is strong. Inventory: Inventory levels may need to be increased to meet growing demand, but careful management is essential to avoid overstocking. 3) Maturity Characteristics: Sales growth stabilises, and the product reaches a saturation point in the market. Marketing Focus: Marketing efforts aim to maintain market share, differentiate the product from competitors and retain loyal customers; for example, product updates, loyalty programs and customer engagement. Pricing: Prices may become more competitive as the market matures and more alternatives become available. Inventory: Inventory management becomes critical to prevent overstocking. 4) Decline Characteristics: Sales start to decline, often due to market saturation, changing customer preferences or the introduction of newer products. Marketing Focus: The focus shifts to clearing out inventory, possibly through stock markdowns, promotions or bundle deals. Discontinued products may be phased out. Pricing: Prices are typically reduced to encourage remaining inventory to sell. Inventory: Careful inventory management is essential to avoid excessive carrying costs for unsold products. It's important to note that not all products follow this linear path through the entire product life cycle. Some products may skip certain stages, experience shorter or longer cycles or even go through cycles repeatedly due to updates and rebranding. Think of a product like Coca-Cola, which has been around since 1886. The product has gone through many iterations and experienced a close call with the decline stage and product death when the company rebranded and changed the formula to “New Coke” in 1985 – this only lasted 110 days before reverting to the original formula. As professor Hermann Simon points out: '' And the real art of pricing is not so much in determining whether a price is high or low but to differentiate pricing across customers across value across space and time. That will be a big challenge for software and for everybody involved in this area.'' Effective product life cycle management involves continuously monitoring market dynamics, being agile in responding to changing customer needs and competitive pressures and adjusting strategies accordingly – for instance, by aligning markdown strategy with where a product is in the PLC. Folding stock markdowns into the PLC Markdown: A reduction in the original selling price of a product to stimulate sales, optimise inventory levels, attract customers or respond to competitive pressures. Markdowns typically involve lowering prices temporarily, either through percentage discounts, fixed amount reductions, or promotional offers. Markup: An increase in the price of a product above its cost in order to cover the cost of goods sold (COGS), expenses, overhead and to generate higher profit. This is typically expressed as a percentage or a fixed amount. Many retailers and brands think of markdowns as a loss centre that can’t be avoided. But while poor planning and product failures can certainly force markdowns, they can also be planned for in advance and used in combination with PLC strategy to manage assortment levels through their lifetime. The goal of this strategy has two parts: To ensure the site does not sell out of specific products too early and to avoid being left with a lot of overstock. This strategy is relevant for all e-commerce sellers who hold inventory, but it’s especially important for D2C customers. What do PLC markdowns look like in practice? Here’s a hypothetical scenario to illustrate this idea. The Fashion Store has a sweater for the spring collection, which they will stop selling in August. There are a few ways they can combine markdowns with the PLC strategy here: Tag the product based on its life cycle stage (introduction, growth, maturity, decline or simply new, regular, old) and markdown based on this tag Connect the age of the item in days to the life cycle stage and markdown based on this age Use the stock level as an additional variable next to PLC in a markdown strategy Add Sell Through Rate as a variable to steer price increases Add average margin calculations to steer price decreases; for example, when pricing competitively Let’s say The Fashion Store defines its markdown strategies based on the life cycle stage. When the product is new and has a lot of stock left, they can keep the following position 3 in the market. If it is new and low on stock, they can continue pricing at the recommended retail price (RRP), as it’s better to price less competitively to achieve more margin and avoid selling out. As the product hits the next life cycles, The Fashion Store can slowly decrease the price based on current stock levels of the sweater. In the last stage (decline), a competitive price (match, undercut or follow cheapest market price) should be set – particularly if the product still has high stock at the end of its life cycle. Using additional variables in the strategy like margin calculations, Sell Through Rate and stock gives them the ability to dynamically switch between higher and lower prices, between highly competitive and minor discounted prices. Results: This strategy helps The Fashion Store avoid having high stock leftover by the end of the product’s lifetime. Because of this, they also can avoid a situation where they must significantly decrease the price all at once, by perhaps 50 – 70%, and instead have marginal, healthier decreases over time. Strategic markdowns can actually increase profitability Research from US retail think tank Coresight and inventory optimisation firm Celect found that retailers were missing out on significant revenues – 12% of total sales – due to markdowns. The “senior retail decision makers” who were surveyed blamed more than half (53%) of those unplanned markdowns on “inventory misjudgments.” But when sellers have proper inventory management and plan ahead to use markdowns as part of the PLC, it positively impacts sales and profitability. Let’s go back to The Fashion Store example and consider hypothetical prices: If the sweater we discussed has a cost of goods sold (COGS) of €25 and a retail price of €50, and the company has ten of them, then they would need to sell at least five at full price to break even. However, if The Fashion Store was able to choose the right level of markdown and sell all ten at the lower price, then they would achieve three objectives: Reach break even point Increase profits with each item sold Avoid unsold stock In this example, the right markdown price would be €40, as this would lead to a profit of €110. How to implement markdowns using Omnia This example is just one of the countless ways markdowns can be used to optimise stock at each stage of the PLC. But it doesn’t stop there – along with stock levels, a number of other data points can be used in Omnia to determine pricing throughout a product’s life cycle: Below are some use case examples of how Omnia customers have combined the PLC with metrics like time since launch, stock levels, seasonality and promotional dates to set pricing rules. To learn more about how you can incorporate markdowns as a part of your pricing strategy, click here.

How to use markdowns to manage stock throughout the Product Life Cycle

Omnichannel dynamic pricing: Competition, comparison and consumer behaviour

Think back to the last expensive product you purchased. Maybe it was a wearable like the newest Apple Watch, a pair of running shoes, or a new TV. How did you go about making your purchase? Did you just buy the item in...

Think back to the last expensive product you purchased. Maybe it was a wearable like the newest Apple Watch, a pair of running shoes, or a new TV. How did you go about making your purchase? Did you just buy the item in one click? Did you see it in-store and immediately hand over your debit card? Or did you first research online via social media and comparison sites, then experience the physical product in-store, then research prices online to decide where to buy? As consumer behaviour evolves and the younger, more tech-savvy generation gains more experience in maximising their value for money, brands and retailers must evolve to meet these shoppers where they are and win the sale. These changes, amidst a wider shift toward omnichannel selling, call for a more thoughtful approach to the interaction and synchronisation of online and offline pricing. Businesses are spending more time and resources on building omnichannel pricing strategies that can succeed – and be implemented – across all points of sale. In this article, Omnia explores the evolution in consumer behaviour and price comparison and how omnichannel brands and retailers can use dynamic pricing to bridge the gap. How does a consumer make their decision to buy? Today’s consumer is investing more time and effort in the research stage before making a decision about if they should buy, and if so, when they should buy and from whom. 44% of consumers say they are spending more time planning their shopping trips to brick-and-mortar stores, while about half say they’re spending less time just browsing in physical stores. The retail analyst, Natalie Berg explains: "There's just so many different ways to shop today. And as shoppers, we don't think in channels. We just want to shop and we want a seamless experience across the many touchpoints that exist today. But we're channel agnostic and we're device agnostic. Retailers have had to work really hard behind the scenes to make this a seamless experience." Google Trends has found some compelling insights on these omnichannel consumer behaviours since 2023: About one-third of consumers are spending more time on their decision-making, considering more brands, stores and retailers in the process 65% of consumers are more likely to research a product online, even if they plan to buy in the store And vice versa: 59% are more likely to go to stores to physically see or touch a product, even if they intend to buy online The trend is even stronger around the holidays: Consumers used online search before 96% of in-store holiday shopping trip It’s clear that online and offline are colliding, and as the data above shows, the buying journey can take many paths. Some consumers might research online first – watching unboxing videos from their favourite influencers, searching the product on social media or comparison sites – then go in-store to experience the physical product. Even after all that, they might conduct more price research online to decide whether to buy online or in-store, or whether to buy from a different seller altogether. Others might browse in-store first to get a feel for what they like, then research reviews, prices and other factors online before deciding if or where to buy. There are countless paths to purchase, and shopping behaviour is influenced by a number of factors: Price: The higher the investment, the more likely it is that the consumer will invest more effort and take the time to research Complexity: If a product is more complex, it is more challenging to get a full picture. A technical description does not always reflect the experience; for example, do you know offhand how loud 48 dB will sound in a pair of headphones? Experience: The five senses contribute to emotions, which can lead to consumers making a purchase. Experiencing a product and all its sensory information first hand can be a significant factor in the shopping journey. Returns: How easy is it to return a product? For example, consumers might be more likely to research items that are fragile or those cannot be returned due to hygiene reasons, versus something like a sweater that can easily be sent back. Brand: If the experience and association with the brand is exceptional – for example, the in-store service – a number of shopping behaviours could be impacted. The consumer might be more likely to want to shop in person and to go through with the purchase, and they are likely to be willing to pay a bit more. Competing in the price comparison stage Once a decision is made to purchase the product, the modern consumer is savvy enough to compare prices online. This means sellers across channels are competing on price, and if you’re an omnichannel brand or retailer, you’re essentially competing with everyone. In these highly competitive environments, dynamic pricing is an effective strategy to capture more sales and take control of your assortment. Omnichannel brands and retailers benefit from dynamic pricing in a number of ways, including: Competitive pricing advantage: Dynamic pricing adjusts prices in real time based on market conditions, competitor pricing and predetermined pricing rules. This ensures that prices remain attractive to consumers compared to other options in the market, which is particularly important when a shopper starts researching prices online. Maximising revenue: By dynamically adjusting prices at a higher frequency, retailers can set prices that reflect current demand, customer behaviour and other market variables, boosting revenue over time. Inventory management: By adjusting prices based on inventory levels, retailers can promote products that need to be cleared quickly or maximise profits on high-demand items. This is especially helpful when managing stock for both brick-and-mortar stores and online sales. Seasonal and promotional pricing: As mentioned previously, merging online research with brick-and-mortar shopping is even more relevant during holiday events, with consumers using online search before 96% of in-store holiday shopping trips. Dynamic pricing gives omnichannel retailers and brands the flexibility to respond to seasonal trends, demand fluctuations and promotional events. Real-time market changes: External factors, such as changes in the economy, weather conditions or geopolitical events, can impact consumer behaviour and market dynamics; changes that retailers can more quickly adapt to using dynamic pricing. Agility and flexibility: As online and offline become more intertwined, omnichannel sellers need to adapt and respond quickly to new information and competitor pricing updates. Bridging the pricing gap in omnichannel Omnichannel brands without a cohesive dynamic pricing strategy can face unnecessary losses and fractured pricing between channels. The challenge is this: How do you match your offline store to your online store while still competing with your key competitors? Consistency across online and offline channels is crucial. Omnichannel sellers have to find ways to synchronise both pricing strategies in order to provide a seamless experience for consumers and avoid losing sales or loyalty if a consumer or price comparison site spots a discrepancy. This is a common challenge. Many retailers struggle to align pricing: Their online prices change frequently, while their offline products are far more static. It’s easy to change an online price any time, but the retailer doesn’t want to change in-store prices every time if they are simply printed on signs, tags or stickers. There are a few ways to mitigate this challenge with the help of Omnia Retail dynamic pricing software. Electronic shelf labels (ESLs) This is the easiest way to match online and offline pricing. It requires more financial investment and IT infrastructure, but saves on costs by decreasing the labour and time needed to update prices. Image source If the cost of purchasing ESLs is too high, retailers can rent them (which tends to be far cheaper than buying), either for the whole assortment or just high sellers. One thing to consider with ESLs is timing. You don’t want a price to change on an ESL if a customer is standing right next to it. Imagine you’re shopping in a store, and the price on a product suddenly jumps from €100 to €110. The product hasn’t changed in the last five seconds, so it’s unlikely you’ll think it’s fair that the price has suddenly increased by 10%. To mitigate this, retailers might choose specific hours to change prices, either when the store is closed or during slower hours for foot traffic. Other retailers offer a discount if a customer comes to them after having found a cheaper price online compared to in-store. Fixed price adjustment days Another option is to decide on fixed days when you will align online and offline pricing, and adjust your repricing frequency to match. Compared to the ESL option, this is suboptimal, but it will allow you to synchronise prices at a level that does not exceed your shop floor staff capacity. This option will also decrease the chance of consumers walking out after checking online and discovering that either 1) your prices don’t match your own website or 2) your competition sells it for far cheaper. While providing great in-store service and experience adds value that consumers may be willing to pay more for, they are still likely to leave if the price difference is too large. Gaining clarity first on the following questions will help retailers to set this process up: Which key assortments are your revenue/margin drivers? How can you segment the online competition toward this assortment? Is there a pattern of which days the segmented competition is repricing their products? Answering these questions will tell you which assortments to prioritise, as well as which days your segmented competition is adjusting prices so you can do the same. Dynamic pricing made simpler with Omnia As consumers become more research savvy and the lines between online and offline shopping continue to blur, retailers and brands – especially those operating in an omnichannel environment – will need to adjust pricing strategies to win over the competition. If shoppers are researching on multiple channels, then those retailers and brands must be consistent and competitive across all points of sale. Omnia’s dynamic pricing software enables retailers and brands to bridge the pricing gap in omnichannel. Our customers who utilise ESLs use Omnia’s dynamic pricing software in a number of ways to make this strategy more effective: Understanding which products are more competitive in the market and which are not. For brick-and-mortar sales, only the competitive product prices need to be changed more frequently. Setting up the frequency at which Omnia sends data for their brick-and-mortar products, according to their ESL pricing strategies. This can be done in three different formats: CSV, XML and JSON. Omnia's output can be placed automatically to an (s)ftp location from where your ESL system can pick up the latest pricing data. Using Omnia’s filtering capabilities to decide which parts of the assortments you want to include in the reports used to change the products' prices on the ESL. This means that you can make a differentiation between the fixed-price products and the products that you want to change dynamically. Aligning online and offline pricing (where relevant). Omnia data enables customers to remove discrepancies. For example, one Omni customer used to do their offline repricing manually – a tedious and time-consuming process. Now, they use ESL software connected to the Omnia output, making it faster, easier and more accurate.

Omnichannel dynamic pricing: Competition, comparison and consumer behaviour

Omnia’s work on company culture takes centre stage in Frankfurt, Germany

“Even if you don't manage company culture, a specific culture will emerge. Although it probably won't be the culture you envisioned,” says Omnia Retail’s COO Vanessa Verlaan who presented on the topic of building a...

“Even if you don't manage company culture, a specific culture will emerge. Although it probably won't be the culture you envisioned,” says Omnia Retail’s COO Vanessa Verlaan who presented on the topic of building a strong and healthy workplace culture at the annual World Class Workforce Transformation conference in Frankfurt, Germany in January. In sharing Omnia’s experiences, failures and successes in building a healthy company culture, Verlaan shared that it is not something that can be achieved if only one part of the company is actively trying to enforce it: “I am convinced everyone in the company should be responsible of company culture. Not just HR. It starts with the leadership team and then it can be scaled.” Covid-19 has upended how leaders interact with employees and how coworkers connect with each other," a Harvard Business Review article by Denise Lee Yohn says. "Culture has become a strategic priority with an impact on the bottom line. It can’t just be delegated and compartmentalised anymore,” says Yohn. In many cases, a company’s core values are used to attract and hire top talent and remain a calling card on a company’s website. But what happens when the experience does not match the initial expectation? “People have certain expectations when they start at a company and then when faced with the reality, they are disappointed, and then leave. That’s when companies have to rehire for the same positions. This is why core values need to be implemented from the leadership team and throughout each department,” shares Vanessa. Using this simple yet effective system, Verlaan explains how the expectation-reality gap can be closed if culture plays an unconditional role in every step of the employee life cycle: Professionals from DHL Express, Siemens, Allianz Global Investors and Celltrion Healthcare also shared presentations on upskilling, digital transformation in the workplace, employee engagement, and other interesting topics that affect teams across the continent, making this one of the most innovative and forward-thinking events dedicated to the employee experience. In addition to the case study presentation, Verlaan also participated in a roundtable discussion with professionals from other private companies which further unpacked the topic for employees at corporations, scale-ups and start-ups. In talking to one of the fellow speakers who experienced that her previous leadership team was not supportive of implementing a specific workplace culture throughout the company, Vanessa believes that there are further opportunities regarding the practices for companies that want to achieve a strong and positive corporate culture. “Culture persists only because people act in ways that uphold its principles and codes,” says a Stanford Social Innovation Review paper, echoing the sentiment that Vanessa shared in her presentation. As Omnia has grown over the years, expanded in locations and developed each department, one thing has stayed the same - its core values. “We don’t update our core values because they are the foundation. However, they have become more clear and implemented in various steps,” says Vanessa. Omnia Retail's COO Vanessa Verlaan enjoyed snapping some photos at the event with fellow speakers in between interesting discussions on company culture.

Omnia’s work on company culture takes centre stage in Frankfurt, Germany

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