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.

31.05.2019

The History of Dynamic Pricing in 7 Minutes (Or Less)

Dynamic pricing is nothing new. In fact, it’s been the norm for many years. But what's the story behind this pricing trend, and how did it come to define modern retail and e-commerce? In this post trace the path of dynamic pricing and learn how we came to be where we are today. The historical origins of dynamic pricing Historically, prices have been mostly dynamic and consumers have haggled with shopkeepers to find the right price for a product. That price could vary a lot: if the product was in high demand and limited in stock, shopkeepers could raise the price on the spot. Conversely, if a shop owner wanted to get rid of an overstocked item, they could decrease the price to increase the volume of sales. Shopkeepers could also change their price depending on the person who was buying. If someone looked like they were willing to spend more money on a product, the shopkeeper would set the price higher than if the shopper appeared to have less money. But this system was inefficient, to say the least. And it quickly became too complicated and time-consuming to keep track of prices as businesses grew during the Industrial Revolution. For one, shopkeepers were key parts of the sales process, and businesses needed to train them accordingly. As Jacob Goldstein says on a fascinating Planet Money episode about the invention of the price tag, Set up Dynamic Pricing for your business? Contact us “If you are running a store, if you’re working in a store, you need to know a lot to haggle. You need to know how much you paid for the stuff, how much your competitors are selling it for. You need to know how much different customers are willing to pay... you couldn’t just hire some kid on summer vacation to come and sell stuff at your store.” Retailers often had apprentice shopkeepers who learned the art of haggling over a longer tenure, and it was a profession that required years of training. The “negotiation market” was also time consuming for everyone involved. Lines would grow long as shoppers waited for determine prices, and consumer resentment grew if someone two people ahead of you in line got a better price for the same product. In other words, it became too complicated to keep track of all the prices, and the system wasn‘t scalable for the industrial revolution. Retailers needed to find a new way to manage their prices…so they turned to the price tag. Invented in the 1870s, the price tag allowed companies to scale their pricing out to more complex assortments and meant that shopkeepers didn’t have to remember the price for every single product in the store. It also made checkouts faster and more fair for all. All retailers needed to do was decide about how much to charge for a product once, then apply that price to a price tag in-store. It was a return to an old Quaker model where stores would charge the same price for every product, regardless of who the buyer was. This model quickly became the standard model in retail, and it’s hard to imagine a world before price tags. For the last 150 years, they‘ve almost universally dictated how much we interact with retail stores. A post-price tag world Today, price tags are still relevant, at least the minds of consumers. Price is still the most important “P” for many shoppers, and many people don’t care which retailer they buy a product from, as long as they get the product at a good price. They also still serve a purpose in terms of scalability. But that doesn’t mean that the price tag isn’t changing, literally and figuratively. E-commerce and new technology is changing retail, and the traditional paper price tag is quickly becoming obsolete. As modern technology shapes how we buy and sell, it also has opened up the floodgates for increased price changes. Airlines were the first industry to transition from a fully price tagged world to one where the price can shift throughout the day and week. Before the 1980s, the American government heavily regulated airline prices. But that changed during the 1980s when the industry took over price-setting. At the time, former ticket clerks spent their entire day making this these price adjustments manually on computers. by former ticket clerks who spent all day changing ticket prices on computers. The price of a seat depended on a number of factors: what time of day the flight was, how close to the flight someone booked the seat, how long the flight lasted, and more, but it ultimately was the clerk who decided what the price would be according to their “gut feeling.” It was a wildly inefficient system, and the airlines lost huge amounts of money. But eventually the airlines realized they were using computers to make these changes…computers they could modify to change seat prices automatically based on known information about a flight path, not just gut feeling. So the airlines took the plunge and did what many retailers are doing today: invested millions of dollars in software to automatically update ticket prices based on a variety of factors. And it works well. This automated dynamic pricing helped pull companies like Delta out of a financial downturn. Shortly after this success, the rest of the travel industry, from hotel chains to cruise lines, followed suit. Dynamic pricing in retail When the internet made its debut in the 1990s, it started a revolution in the way we live and work. Companies invested in new technologies that would allow them to send and receive commercial and information electronically — technologies that became known as “e-commerce.” Several new companies sprang up to meet these new e-commerce demands, but folded with the collapse of the Dot-com bubble in 2000. But by 2000, the term “e-commerce” had morphed to mean the ability to purchase anything online...and retailers had noticed the obvious advantages of an online marketplace. Retailers could now expand their assortments beyond their physical store and reach entirely new audiences. Shoppers were also quickly taking to the convenience of online shopping. Amazon and eBay were the first two companies to truly push this idea of an electronic marketplace to an entirely new level. Each company found wildly innovative ways to capture the power of the internet in retail. Amazon, for example, created its Prime membership program and an affiliate marketing system to push products even further. As e-commerce grew, software technology co-evolved with it. And in some ways, e-commerce made price tags important again, albeit in a completely different way. As the e-commerce market has flattened, price has become, in many cases, the only thing consumers care about. As a result, retailers now need to battle to offer competitive prices at all times, and the market price for a product changes several times a day. Pre-internet, retailers needed to make about 4,000 pricing decisions every quarter. It wasn’t worth the energy to change prices multiple times a day to follow the market. And the market didn‘t change that often. But today, price changes happen several times a day for millions of products across an entire marketplace. And they happen instantly. (In case you’re curious, we did the math for you. It’s around 60 million pricing decisions every single day.) So this puts retailers in an awkward position. Like the airlines of the past, retailers are currently updating their prices manually. Entire pricing teams spend 2-3 hours a day simply following a competitor’s prices just to understand the market for every product in their assortment. Those pricing teams then need to calculate new prices based on their company’s strategy, then update their own web shops to stay competitive. They then need to start this process all over again to stay relevant. Physical stores also suffer from the fast pace of e-commerce, and without the proper technology retailers can easily offer two totally different prices for the same product depending on if it‘s online or in a physical store. There‘s no real way for retailers to keep pace with the new market without the help of technology. Manually managing prices requires a ton of time, effort, energy, and money…and it is still inefficient. Assortments are too big to manage, and the price changes happen too fast to keep up. That’s why they turn to a dynamic pricing software like Omnia — to get control of the assortment again. Dynamic pricing in today’s retail environment We’re unlikely to return to an era where you haggle with a storekeeper to get the best price, but we are shifting into a time where computers dictate the price through dynamic pricing softwares. Just like the airlines of the past, many retailers realize that there is an easier and more efficient way to manage their prices, and are making the necessary investments in the software technology. Sometimes retailers invest their time and energy into their own dynamic pricing method, but in other cases they outsource the work to a third party like Omnia. Omnia can help you on both sides of this. If you want to develop your own in-house solution, we can help you get the data you need for your dynamic pricing machine. If you want a complete end-to-end solution, our Dynamic Pricing module takes care of data collection, price calibration, and price adjustments for you. Other relevant links: 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 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.

Dynamic Pricing, Retail Trends & Research

23.05.2019

Meet the Team: Nathan Johnstone

This week in our Meet the Team series, we’re featuring Nathan Johnstone, Omnia’s Chief Architect and Oceania continent expert. A proud Kiwi with an entire closet’s worth of New Zealand-themed t-shirts, Nathan’s in charge of taking the Omnia technical architecture to the next level. We sat down and chatted about Nathan’s work, what he looks for in new hires, and where he wants to take Omnia in the future. Want to work with Nathan directly? We’re hiring. Check out our Careers page to see our open opportunities. Hi, Nathan! Can you introduce yourself a bit? I’m Nathan Johnstone, and I’m the Chief Architect at Omnia. So, what exactly do you do at Omnia? My job, in its most basic form, is to build the future vision for Omnia’s technical architecture. To do that, I work with a team of architects, engineers, and developers to determine what the priorities for the platform are and how we can improve the Omnia ecosystem. We are currently in the process of migrating high value pieces of the system to an entirely new architecture. All this hard work will help the Omnia system scale and grow, while also pragmatically improving and future-proofing the existing architecture for continued growth. So it’s a lot more than just tapping on a keyboard? It’s definitely a lot more than tapping on a keyboard! What’s your vision for the Omnia platform? Good question. When I think about the future of the platform a lot of different types of “-ilities” come to mind, mostly “stability,” “reliability,” “maintainability,” and “evolvability.” We also want to have “scalability” in there of course, but the bulk of my job right now is making sure we have a solid foundation that allows us to build amazing features for our customers. How did you end up at Omnia? Before joining Omnia, I worked on a variety of domains and systems ranging from distributed real-time control systems running aluminum smelting processes, embedded agricultural automation systems, document collaboration and large ecommerce environments. I was originally working for another company in the Netherlands, but after two years I felt like I needed something different. I wanted more responsibility for a complete system, harder technical challenges, and the ability to define an engineering culture within a company. As I was starting to feel this way I met Herman de Jager, one of the co-founders of Omnia. After chatting with him it seemed like Omnia’s needs matched what I was looking for, so I made the switch. This was in April of 2018. And what do you like about working at Omnia? To start, I got exactly what I was looking for: freedom. This was a step up in terms of scope, and I have tons of freedom to do what I want and think is best for the platform. There’s also lots of other freedom such as the ability to work from home whenever I want or even from New Zealand when I go back to visit. I also entered a new challenge at Omnia. We’re working in a legacy code base, so most of my day isn’t spent writing new code. Instead, we’re sorting through 8 years of old code to determine what works, then rewriting small parts of it and finding better ways to use what’s already there. I think the ability to take a legacy code base and safely morph it a better state is where developers find out how good they really are. Lastly, though not unimportant, I am really happy with my colleagues at Omnia. It’s fun to work in an international office and with so many different viewpoints. I think we’ve done a good job of hiring smart, capable people, and it’s cool to learn from everyone else. What do you think has been the key to your success I think there are two things, to be honest. The first is the fact that I’m gritty and tenacious. I don’t give up, and even when I get what I want I’m constantly applying those learnings to reach a higher skill level. Software development is kind of like being a doctor. It’s a profession that is always changing, and we have to keep learning to stay relevant. So I spend probably 6-10 hours each week on my own open-source projects. Second though, is the fact that I don’t actually come from a software background. I started my career as an electrician at an aluminum smelting plant owned by Rio Tinto, and a manager there realized I was pretty good with computers. They asked me to do some software work for them to help out with Y2K, and then from that point on I've been firmly on the path of software development.I think this gives you a broader set of metaphorical tools to use when you approach a problem. What do you look for in new colleagues? To me, the most important things are problem solving and critical thinking skills, and my advice to anyone applying for any role at Omnia, though especially for technical roles, is to come with examples of these skills. We’re at a scale up stage and everything changes, so anyone on the team needs to be able to think fast and break problems down in a systematic way that lets anyone else understand it. I also look for people who will do everything they can to solve a problem before they come to me. We’re all extremely busy here, so it’s nice to know that someone takes initiative before they ask me to help. It’s respectful of my time and also presents the best learning opportunities for the person involved. Do you give a technical assignment? Yes, we ask someone to come in for a day and do an assignment. We like to see how they interact with the team and what sort of code they come up with. We then use that as a starting point for a conversation, and in follow up interviews will discuss someone’s choices. Do you have any advice for people who might be applying to a development role at Omnia? I’d say come prepared with examples of your critical thinking skills. I like to hear about experiences in the past where you figured out how to solve a problem that seemed impossible. Now for fun questions! What do you like to do outside of work for fun? Oh man. I'm a sports loving kiwi, so growing up for me it was rugby, then boxing while I was at high school until my earlier 20s. After boxing came ice hockey, and I played ice hockey back in Christchurch before we came here. I didn’t bring any of my gear over to the Netherlands though. That's what I used to do, but these days I'm still involved with a lot of my kid’s sports. So this means I spend a lot of time practicing rugby and field hockey with my 3 boys, as well as going running and parkour. Admittedly with parkour I watch more than I participate! I also love board games and computer games with my kids. So we play a lot of Catan, Zombicide, Minecraft, that kind of thing. I’m teaching my kids to code as well so they’re building their own games now. Thanks for sitting down with me, Nathan! Happy to have you here. No worries! It was my pleasure. Want to work with Nathan directly? Head on over to our Careers page to see our open opportunities.

About Omnia

16.05.2019

What is Charm Pricing?

When I was a kid, I used to love weekends because I didn’t have a bedtime. Instead, I’d stay up as late as I wanted, and it wasn’t uncommon for me to fall asleep on the couch with the television still on. But I grew up in the United States, the land of direct-response marketing. And I’d often find myself jolted awake in the early morning hours by the still-blaring TV. At some point in the night, the channels would have switched from traditional programming to late-night “infomercials.” Infomercials, if you’re not familiar, are long-form sales commercials. They could last as long as 60 minutes, and typically followed a “tell-sell” format: someone would stand on a set and demonstrate the product for 50 minutes, typically shouting loudly about the features and benefits of the item. The most famous of these hosts, by far, was Billy Mays, and it was a national tragedy when he died unexpectedly in 2009. These demonstrations were also adopted to shorter 2-minute time slots for regular television hours. Here you can watch Billy Mays’ most famous commercial. These commercials were memorable for many reasons, most notably their outlandishness. But their prices were also catchy...so catchy that they could grab your attention from across the room and stick in your head for a few days after. Inevitably, almost every product you could purchase through these programs cost anywhere between $9.99 and $69.99. And each price always ended in either 99 cents or 95 cents. These companies were using a tactic called charm pricing (also known as "psychological pricing"), a style meant to elicit an emotional response in their consumers and drive them to action. Charm pricing relies on the belief that an odd-numbered price can trigger emotional reactions in people. It's a powerful pricing tool that isn't limited to cheesy American commercials. In fact, almost any retailer can use charm pricing to their advantage. So what is charm pricing, and is it right for your organization? Keep reading to learn more. Setting up a winning Charm Pricing strategy? Request a free demo What is charm pricing? Charm pricing is also known as psychological pricing. It’s the belief that a price can have a psychological impact. Retailers can then use that psychological influence to sway customers to buy their products or perceive them a certain way. Odd numbers are the foundation for charm pricing. The most common ending numbers are 9 and 5, according to a 1997 study, which found that these cents endings accounted for 90% of the 840 prices they analyzed (60% ended in 9, 30% ended in 5). Why does charm pricing work? Nobody is quite certain. There are a number of theories, including: Specificity: Charm pricing offers a degree of specificity, which psychologically triggers an idea that the product is priced at the proper value. This is especially true if the product is priced fractionally, meaning that the charm price appears as a cent value. Perceived loss: Consumers value a product based on loss rather than gain. And since most consumers in the Western world read a price from left to right, they are more likely to latch onto the first number they see as an anchor point. This means that €699 can feel like significantly less than €700 from the first impression, even though there is just a €1 difference. Perceived gain: The opposite of perceived loss could also be true, and consumers could use charm pricing as a way to feel like they’ve saved money. The higher, rounded price serves as an anchor point (€700), while the lower price represents savings (€699, which means you save €1). This follows a theory that a .99 or .95 price ending triggers a “sale” cue in the consumer, who might believe the price is discounted. Are consumers immune to charm pricing? Charm pricing is ubiquitous. As a consumer you see it everywhere you go, whether it’s at the drugstore, the supermarket, or a clothing giant or gas station. Just yesterday I bought a book in the train station on my way home from work that cost €16.95. But does this omnipresence of charm pricing make consumers immune to the price? Likely not, otherwise retailers wouldn’t continue the practice. And although it’s a small difference between €16.95 and €17.00, chances are I wouldn’t have bought that book if it were going to cost me €17.00 in total. And evidence suggests psychological pricing still works, despite its high amount of usage. In a 2003 pilot study conducted by researchers from the University of Chicago and Massachusetts Institute of Technology, 3 different test groups received different prices for 4 different dresses. The control groups all had a price that ended in a 9, and the researchers tested whether pricing the dresses $5 higher or lower had any effect on the rate of purchase. The researchers discovered that the products displayed with a price ending in a 9 tended to outperform the other prices, even if the other price was lower. So a price of $39 resulted in more dress sales than the cheaper price of $34! Who should use charm pricing? The effectiveness of charm pricing depends on a number of things, but by far the largest consideration is the buyer and type of good sold. And while there are many factors that go into your price, the easiest way to get started is to ask yourself one question: do you want to be known for your prices, or your products? If you want to be known for your prices, then charm pricing might be a perfect strategy for you. This is especially true if your products are elastic, and consumers don’t necessarily care about where they buy the product. So if you have a lot of products and want to be known as the cheapest option on the market, charm pricing will work well for you. Charm pricing might also fit your strategy if you have products that people buy on impulse. The specificity of the price appeals to the “logical” side of the brain, and helps consumers justify their decision to add that small item to their cart at checkout. When won't charm pricing work? If you sell luxury goods you probably won’t want to use charm pricing. That’s because you want people to value the product itself, not the price. And in many cases, people won’t want to feel like they are getting a deal. As Nick Kolenda writes in The Psychology of Pricing Strategies, If you sell luxury products, you WANT people to base their decision on your product qualities. You DON’T want them to consider the economic value. Thus, for luxury items, show the product, and THEN show the price. Take a look at these Louis Vuitton handbags below. Notice that none of the prices are even remotely close to the typical “19.99” infomercial style. Nor will they ever have a price like that. Instead, Louis Vuitton uses nice, round, whole numbers, and draw your attention to the product before you see the price. Louis Vuitton has a high brand value, and their price perception is equally astronomical. When someone purchases a Louis Vuitton bag, they do so for the status of it. They don't care about whether they saved €10, and might even shy away from the discounted bags. So before engaging with charm pricing, you should think seriously about how you want people to perceive your company, then mold your pricing strategy around your goals. Additionally, charm pricing does require a bit of nuance and market knowledge. Comparison shopping engines are sorted based on price, so you may want to use the exact same price as the lowest one listed. For example, if 5 retailers use 49.95 and you use 49.99 you will be number 6 on the list. You'll also stick out to consumers as overpriced. You'll need to watch your market carefully, and adjust your prices often to stay relevant with charm pricing. And while this is time consuming if you manually update your prices and track the market, you can also use a software like Omnia to follow the market and adjust your prices for you. In Omnia, all you need to do is make a difference between prices <100 (.95 or .99) and >100 (no decimals). Then the algorithm will automatically adjust to that price whenever it updates. Final thoughts Charm pricing might seem like something restricted to bad American infomercials. But the reality is that it’s a powerful tool to have in your arsenal. Charm pricing helps draw attention to your products, and can give hesitant purchasers the small push they need to click “buy now." Maintaining your charm prices, however, does require some work. And that's where a dynamic pricing software (or even a competitor pricing insights software) can make all the difference. Either of these softwares will help you save hours of time and capture more profits.

Dynamic Pricing, Pricing Strategies

02.05.2019

New Case Study with Profile

How do you build a stable pricing strategy in an industry that's rapidly changing? That's the challenge Profile faced when they first approached Omnia. The tire and auto parts service had a strategy that had grown organically over its 30+ years in operation. But as the industry shifted and online pure players emerged, Profile needed to change its operations. Profile took the process of adopting Dynamic Pricing as an opportunity to dive deep and improve its internal processes. With the help of Omnia partner Johan Maessen of Commercieel Verbeteren, Profile improved its margins, centralized its pricing decision making, and improved its overall understanding of its pricing mechanisms. Interested in learning more about the process? Click here to get your free copy of the case study.

About Omnia

26.04.2019

How to Get Your Company Ready for Dynamic Pricing

So you’ve decided that you want to use a dynamic pricing software... But what happens next? It’s a reasonable question to ask. And it usually comes with countless more. What do I need to do besides install the software? Who do I talk to? How long does it take to get started? What is the process? If these questions are swirling through your head, don’t worry. In this post we’ll walk you through the “Roadmap to Dynamic Pricing,” a 5-step approach to organizational dynamic pricing success. Step 1: Define your goals for dynamic pricing Before you implement a dynamic pricing software, you need to have a clear idea why you want to use the software. Do you want to reduce the amount of time you spend updating your prices? Or just start updating your prices with the market? Do you want to build strategies at the category level? What about the product level? Gather all the stakeholders involved, and discuss the reasons why you’re bringing dynamic pricing software into your organization. You might realize you have more than one goal, which is fine. One of our customers, for example, wanted to: Optimize prices for margin Improve their price perception Reduce time spent on manual labor The more specific you can be with these goals, the better. They should also align with your overall commercial objective. Want more insights on how to define your pricing goals and build a strategy? Check out Five Steps to Successfully Implement Dynamic Pricing. You can also take a look at our Partners Page to see who we trust to help you define your goals and build a strategy around them. Step 2: Establish dynamic pricing responsibilities When you introduce a dynamic pricing software, many of the responsibilities on your team will change. Your teams will need to work together in new ways, and when you get the software up and running you’ll likely experience a reduced workload — meaning more time for your employees. So how do you manage all of these responsibilities and changes? And what happens to accountability when responsibilities change? Your organization is unique, so finding the right balance of responsibility will also be unique. In general though, the goal should be to have your buying, category, and pricing teams share responsibilities and the execution of price changes. Our advice? Start small with rolling out, beginning with just one product category or market. This way you can learn more about how your organization needs to change, and apply these lessons to future roll outs. Step 3: Build dynamic pricing strategies When you begin using a software to manage your pricing online, it’s an opportunity to dig deep into your pricing strategy, evaluate what’s working for your company, and discover areas for improvement. If you don’t take time to organize and plan your strategies, your pricing can quickly become complex when automated. Take some time to review pricing strategies, and make sure everyone in your organization knows your planned strategy. You can ask a consultant to help you with this step, or you can also subscribe to the Omnia blog to get free advice on pricing methods and strategies. And when it comes time to actually set up the strategy in your software, do it together with all relevant parties. This should also be a repeatable process: define your objectives, strategy, method, and rules for every product or category. Most importantly though, keep your strategies and pricing methods transparent across your organization. All involved parties should be able to clearly explain your strategy, and any changes should be easily accessible for all levels of the company. Step 4: Prepare your systems and data for dynamic pricing Before implementing dynamic pricing, most retailers have a pricing strategy that’s grown organically over time. And while you might still want to use the same basic strategy after implementing the software, chances are your current pricing system is spread out across different departments and owners. Just take a look at the question we got from one of our clients: “The process of changing prices takes about 3 days and data is scattered and not owned by any department. How can we be dynamic and accurate in this environment?” Dynamic pricing software lets you centralize this information into one, easy-to-use location. But it does take time to do this. We advise customers to start small with this part of the process. Much like we mentioned in Step 2, it’s useful to start small, learn from mistakes, and improve as you scale. Begin by focusing on one channel or part of your assortment, and invest in the system, process, and data during the pilot phase. Then apply those lessons to your next roll out. Step 5: Test and monitor your dynamic pricing methods You’re tuning the most important profit lever and investing heavily in both people as well as tools. How do you know if starting dynamic pricing was worth it? To answer this question, you need to test and monitor your results. One simple way to test is to establish a baseline before you fully implement Dynamic Pricing. You should look at all aspects of your business, including revenue, gross margin, logistical cost, marketing cost, FTE, and price image. Another option is to do some A/B tests against control groups. However, A/B testing does have some significant downfalls, so we suggest a slightly more sophisticated way of testing your online pricing’s effectiveness: compare across products within similar categories. Testing will ultimately help you build a business case for the software. Final thoughts Getting started with dynamic pricing software is a journey, and it’s never bad to have a little help. That’s why at Omnia, we invest heavily in customer success. When you use our software, you automatically will get a dedicated onboarding manager, solutions consultant, and customer success manager to help you navigate the road to dynamic pricing. Ready to try Omnia free for two weeks? Click the button below to get started.

Dynamic Pricing, Implementation

19.04.2019

Meet the Team: Haiko Krumm

Today we continue our Meet the Team series with Haiko Krumm, Omnia's Vice President of Customer Success by day, and adrenaline-fueled daredevil by night. With more than 12 years of experience in the world of Customer Success, Haiko's our go-to expert for making sure our customers get as much value out of their Omnia software as possible. We sat down and asked Haiko about his career path, why he believes so deeply in customer success, and where he wants to take the company in the future. Want to work directly with Haiko? We're hiring! Check out our Careers page to see our vacancies. Hi Haiko! How are you? I’m doing well, thanks! Let’s get started with your role at Omnia. Can you talk a little bit about what you do here as the Vice President of Customer Success? No problem. I think it’s helpful to start from my overall goal in the company, which is to help the customers get results with our product. To make sure customers achieve the results they want, we employ a Customer Success team that’s dedicated to helping customers reach their goals. My daily job is to lead this team and infuse a “customer success” philosophy into our thinking. So I’m responsible for coaching and supporting our Consultants and Customer Success Managers, as well as hiring new people to care for our customers. What did you do before coming to Omnia? Right before I came to Omnia, I took a 10-month long sabbatical to relax a bit. I spent most of my time renovating my house, hanging out with my son, and spending time with my father, but between that I took a week of holiday each month. I also got my boating license during this time and my wife, son, and myself spent the whole month of August in Croatia, part of which was on a rented boat. But before that my real job was at inSided, a SaaS platform I co-founded that helps companies scale their customer service teams and ensure customer success. Tell me more about inSided. How did that start? Before inSided, I was a marketing consultant doing customer contact, multichannel, distribution, customer experience, and digital transformation projects for larger enterprises. It was a nice job, but I was getting tired of my role. I wanted something that was more entrepreneurial and challenging than working for a large enterprise. You have to remember though this was back before “startups” were a thing, so it was harder to find that! While on vacation in New York my fiancée gave me some insight and helped me realize I needed to start looking for a new job. And a week after we got back from New York, I saw a job opening for a “community manager” on LinkedIn. And while the job itself wasn’t a great fit for me, I decided to get in touch with the CEO of the company, Robin van Lieshout, to learn more about what the value was of a “customer community.” At the time, “customer communities” were this new idea. Nobody really knew what to do with a customer community and while many companies liked the idea of a customer network, all the projects they ran to build and maintain them were unsuccessful. Everybody wanted to start a community, but nobody knew how to do that successfully. But Robin saw differently. And he met me for lunch one day and explained how he used communities to grow. During that lunch I instantly understood the value of online communities, especially with a peer-to-peer service purpose, so, for example, customers helping each other with WiFi and mobile internet settings. And I learned that it only takes a small group of 'super users' to actually make a huge community with millions of visitors work. Robin told me he wanted to shift his business model from managing his own community (and earning money with affiliate/bannering model) to facilitating communities for larger companies. He asked me to join some brainstorm sessions, and after the second brainstorm session he asked me to be part of this journey! I said yes, and I joined Robin and the other founder, Wouter Neyndorff, to build the company from scratch and make inSided a reality. Over the course of 7 years I grew to be Vice President of Customer Success. You’ve been involved in Customer Success for a long time! Why do you care so much about this field? Oh man, that’s a big one! I'm a huge customer advocate for a couple of reasons. First, from a business perspective, customer success makes sense, especially in SaaS. SaaS customers don't buy your tool up front. Instead, they pay you to use the tool. And your company’s sales and marketing costs to get a new customer can easily cost as much that customer’s first year subscription fee. So a new customer only starts to contribute to your company and product growth after they’ve been a customer for a year. But if a customer doesn't get value out of your product, they’ll cancel their subscription and stop paying for it. So if someone cancels after a year, you’ve basically only made back the cost of acquiring them, but not really any profit. If your customers get value out of your products, they stay customer and become brand advocates with great success stories that will help bringing new customers in. They’re also perfect candidates for cross sells and upsells, since they know your company and trust your product. So it’s not about making your customers happy, though we want our customers to be happy, of course. Instead it’s more about making sure they find your product to be a valuable addition to their lives. Second though, I also think it's just who I am as a person. I like to see people succeed. If I can help them along that journey to success, then it’s a good day, but it makes me happier to empower them to reach those goals themselves. I don't work for companies, I work for and with people. How do you define customer success? Like I said, Omnia is a subscription service, and we will only get value out of our customers if customers get enough value out of our product. So we need to make sure that customers achieve their goals with Omnia. And that’s the core of the Customer Success philosophy or mindset. It starts with our product, which is the core of Omnia and only really scalable value driver. But everyone can contribute to customer success. Marketing, for example, can contribute by targeting the right customers with content that’s really helpful for prospects and related to our product. Operations is probably the team that contributes less directly, but also helps in hiring people with the right mindset and facilitating the basics like the office and administration. What do you like about working at Omnia, and what’s your vision for the future of Customer Success here? I like the phase we are in at Omnia because there are clear proof points of success, but also a lot to prove and improve. It’s an exhilarating stage in a company’s growth because there are so many things happening at once. I also like the culture at Omnia, and everyone who works here is smart, social, and 150% dedicated to their specialty. It’s nice that the team is still small enough to really get to know everyone else. In terms of my vision for what we’re going to do here, I really want to make more information about how to build pricing and marketing strategies in our knowledge center, as well as more information on how to get the most out of the tool. As a whole, Omnia wants to be the place retailers come to for questions about pricing and marketing, and I think empowering our customers to better understand the platform is a big part of that. Next to knowledge, I’m also focusing on proactive customer success management. So that means really tracking customer health metrics like product usage, and also having periodic strategy sessions and executive business reviews to define the goals of the customer, track the results and give them insights and inspiration. As the Vice President of Customer Success, you lead the consultants, onboarding manager, product specialists, and, of course, the customer success managers. How do you define your leadership style? I follow a "serve first, lead second" mentality. I do my best to make sure that I'm helpful to everyone on the team and that everyone has the tools and support they need to succeed. I also try to get to know everyone on a personal level, because I don't think it's possible to truly separate your personal life from your work life. I want to be able to connect with my colleagues on a personal level and understand who they are, not just what they do at work. What do you look for when looking for new teammates? I think the biggest thing I look for is a willingness to learn from mistakes. One of the greatest things about Omnia is that we operate fast, and we hire for expertise. As a result, we trust our colleagues to do their best work, make informed decisions, act quickly, and be forward-thinking. This means there's a lot of responsibility on all of our shoulders, but it also doesn't mean that we can't make mistakes. We're all always making mistakes because we're human! Instead of pretending we're infallible, we should welcome those mistakes as an opportunity to learn and grow. Along these lines, I also really value honesty. I want people that I can give honest feedback, but who will also return the favor. I tend to fit the mold when it comes to Dutch honesty, so I won’t embellish something or pretend that something’s okay when it isn’t. Now for the fun part! What do you like to do outside of work? I love to do sports, especially anything that really gets the adrenaline pumping! Some of my favorites include skiing, kite surfing, mountain biking, and motorcycling. Besides that though, I also love spending time in Amsterdam and relaxing with my wife and son. I've lived in the city center for the last 15 years and there's no place in the world I'd rather be. Last question. Do you have any book recommendations for people interested in Customer Success? For sure. There are three that stand out to me. From Impossible to Inevitable by Aaron Ross and Jason Lemkin is great, and so is Multipliers by Liz Wiseman. But if you want my “Bible” you should check out Customer Success by Nick Mehta, Dan Steinman, and Lincoln Murphy.

About Omnia

12.04.2019

Everything You Need to Know About the ROPO Effect

It’s no secret that the internet has changed the way we shop. And for the most part, retail has done a great job of adapting to the online space. But despite adopting online stores and advertising, many retailers overlook one key component: the modern customer journey. In this post, we’ll discuss way the ROPO effect, which is reflective of a larger seismic shift in how consumers get their information about products, then carry that information into their buying decisions. Curious? Read on to learn more about how your online presence impacts your offline sales. What is the “ROPO” effect? “ROPO” stands for “Research Online, Purchase Offline.” It’s a consumer phenomenon where shoppers will find all of the information they need about a product online, but will make the final purchase in-store. Traditionally, there hasn’t been any “online” part of the consumer journey. If you wanted to buy something, you needed to get in touch with a salesperson to discuss the features and benefits of the products, as well as the market-ready options. You’d likely have to go to a store to find this information, or book an appointment for a sales person to come to your house. You’d also probably search out some reviews, of course, but they might be harder to find. But that’s not the case anymore. Now all a consumer has to do before buying a product is search “[product name] review” on Google or YouTube and tap “enter.” They’ll instantly go to a new page filled with reviews and comparisons of different products. The majority of these reviews — the ones trusted by viewers — will be from independent channels, not from a company itself. In other words, consumers now do all the research online for themselves. So much so that Bazaarvoice reported 56% of online shoppers read at least one review before making a purchase. Many consumers will then take that research and purchase a product online. But, depending on the product, consumers might still need to go in-store for one reason or another. And this is where the “Purchase Offline” half of the ROPO equation comes into play. Talk to one of our consultants about dynamic pricing. Contact us Why retailers should care about the ROPO effect If you don’t consider the ROPO effect in your sales, marketing, advertising, and pricing strategies, you aren’t really considering your entire assortment. Say your online marketing team wants to boost online sales. If they don’t consider the ROPO effect, they’ll probably discontinue advertising on all products that don’t result in a high volume of sales online. When you consider the ROPO effect though, you might notice that certain products — like running shoe — might perform poorly online, but drive a high number of in-store visits. Let’s imagine a more concrete example. Take a look at the graphic below, showing the number of online and in-store sales for a television and a pair of running shoes. You can see that the television is making multiple sales online, but is under-performing in-store. But you can also see that the shoes perform poorly online but sell like crazy in-store. If you were a marketer and you only looked at a product’s online performance, you’d probably redirect your Adspend toward the television. But if you look at your online and in-store sales holistically, you’d see that the shoes drive more overall sales. In this situation, consumers might know exactly which shoes they want to buy, search for the pair on a comparison shopping engine, then go to the nearest store that says they carry these shoes. So while the online sales are low, the advertisement drives people to the store to make their purchase. And there’s an additional benefit to this scenario: once someone enters your store, the chance for cross- and up-sells increases significantly. If this were the case, you’d probably want to continue advertising on this product, even if the online sales were low. The returns on ROPO Adjusting your strategy for the ROPO effect opens up a new world of possibilities because it allows you to see your entire assortment as one interconnected channel. Your online store becomes an extension of your offline store and vice versa. And optimizing for ROPO can have an enormous impact on your overall sales. What's the secret behind the ROPO effect? And how can you use technology to get more traffic and better, more profitable sales? Download your free copy of Why Pricing and Marketing Go Hand-in-Hand to learn more. Which categories are influenced by the ROPO effect? When it comes to ROPO, not all categories (or products) are equally influenced. In general, high-ROPO categories will contain products with a certain “feel” quality. Here’s a collection of high-ROPO categories, though this list is by no means exhaustive. Fashion Fashion is a category that’s extremely susceptible to the ROPO effect. That’s because unless you know your exact size and fit, most people want to try on clothes before they buy. Even though online fashion retail is booming, physical stores will still always be high-traffic areas for a few reasons. One is because consumers want to see (and feel) their clothes before they buy them. Consumers also want to avoid the hassle of returning clothes through the mail system. Beauty Beauty is another interesting retail space that has a high ROPO effect. Similar to fashion, there are wide swaths of consumers who simply enjoy going into a store and buying their beauty products. This is category also relies heavily on sales consultants and industry experts. Many makeup stores, for example, will have promotions in-store where you can get your makeup done for free by a professional makeup artist. The artist then uses that opportunity to educate consumers on the different products and demonstrate how the product works. Sports retail As we previously mentioned, sports equipment (and clothing) is heavily influenced by ROPO. Whether it’s running shoes or a new bike, consumers will research before they buy. And if it’s their first time purchasing, chances are they will go to a store to test out the product before purchasing. Household items Household items large and small are responsive to ROPO as well, especially small items like kitchen utensils, light bulbs, batteries, and the like. These are the kind of products that most consumers won't necessarily need (or even use) every day. But when the need arises, it's likely a pressure that needs to be filled immediately. If you decide to make a soup, for example, but realize you don’t have a ladle, you might look online at the nearest home goods store to see if there are ladles in stock. For most of us it doesn’t matter if the price is €8 online compared to €10 in-store — if you need it that day, you’ll pay for the convenience of an in-store pickup. Furniture and lighting The last high-ROPO category we'll cover is furniture and lighting. Whether it’s a couch or a standing lamp for the corner of your bedroom, it’s difficult to evaluate the look and feel of these pieces based on an online photo alone. This is especially true for high-ticket, pre-assembled items that are large and bulky. The cost and hassle of getting these pieces delivered is great enough to drive consumers to a store before they purchase. How to optimize for ROPO To optimize for ROPO, you need to do a few things: 1. Determine which products are most influenced by the ROPO effect Think about your customers. What is their journey through your store? Why are they purchasing your products? Your marketing teams will have some great insights into your consumers and be able to help you figure out what categories are susceptible to ROPO. But beyond marketing insights, which will only help you make an educated guess, you can also use hard data to better understand your customers and their buying habits. Here are 5 ways you can extract that data from your daily operations. 5 ways to measure the ROPO effect Here are 5 simple ways to measure the ROPO effect on your products and your store. 1. GPS tracking GPS tracking is the ideal way to measure the ROPO effect. That‘s because it‘s the most accurate way to see how your online advertisements influence physical store foot traffic. With a few Google tools, you can clearly see how many people view an advertisement online, then use GPS data to follow how many people enter your physical store after viewing the ad. 2. Soft Conversions “Soft conversions” let you estimate the influence of ROPO on your assortment. Place a button on the product page that allows the visitor to check your brick-and-mortar location and stock levels. If the visitor clicks on it, you can treat this as a “soft conversion,” which helps you know that the visitor is interested in your store. 3. Statistical analysis Perform an easy statistical analysis to experiment with the ROPO effect on your in-store sales. Simply take the amount of traffic on a product on your website then match it to the number of sales in-store. If you alter your marketing strategy to double the amount of traffic on a product listing and the number of in-store sales also increases, the ROPO effect might be the reason. 4. Link offline data Customer information like email addresses is extremely valuable to analyze the ROPO effect. Use this data and online customer profiles to generate insights about earlier steps in the customer journey. You can also link that data to your AdWords and Facebook profiles to connect your sales and advertising clicks. 5. Surveys Surveys are an effective (but expensive) way to measure the ROPO effect in real time. Ask customers at a cash register what prompted them to come to the store and buy the product. You need the data from 200-500 customers to generate a proper analysis. Here's an inforgraphic that shows you all the different ways you can measure the ROPO effect: 2. Find the optimum online price for those products After you’ve discovered which products are heavily influenced by the ROPO effect, you need to determine the optimal price for them. Your new price needs to be lower, or in-line with, your biggest competition on the market. The goal is to have these products proudly displayed on comparison shopping engines so customers can see that you carry the product. Even though you offer a discounted price, however, that price should still align with your overall commercial objective. 3. Adjust your online marketing efforts The final step to ROPO optimization is to adjust your Google Shopping bids and Adwords spend to ensure your competitive edge over your competition. The goal is for your product to appear at the top of search results to let interested shoppers know that you carry the product they are looking for. This step requires cooperation and coordination between your pricing and marketing teams. These two teams will need to work in tandem to find the right balance between a low price and high marketing spend. They will also need to monitor these products to make sure they are always competitive. If a competitor decides to drop their price, for example, you will need to adjust yours to match the market. Use software to optimize for ROPO If you want to optimize for ROPO — and other omnichannel strategies — the easiest way is with a software. So, instead of asking one person from the marketing team and one person of the pricing team to constantly watch your products and update bids and prices, you can just let the software take over this tedious part of the manual labor. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: 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 Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. 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. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.

Omni-channel, Omnichannel Retail, Featured

08.03.2019

How Retail Seasonality is Changing

The seasons have always been a powerful influencer of retail, but do they still matter with the rise of e-commerce? In short: yes, the seasons still influence retail. Though the type of influence is changing drastically. In this post, we’ll explore this “new” seasonality brought in the rise of e-commerce, and examine how you can adjust your strategies to match these changes. Two types of seasonality in retail Not all seasonality is the same, and it’s important to illuminate the different drivers of consumer spending. Seeing seasonality as two separate categories (holiday-driven seasonal shopping and climate-driven seasonal shopping), will help you understand your sales data and optimize for the next year. Seasonality and the holidays “Holiday shopping” is something that retailers can safely count on, regardless of where they are in the world. As long as you’re tuned in to your market’s holiday calendar and understand the history and traditions of a place, you can somewhat accurately predict high-traffic times of year. Some examples of holidays that drive traffic across Europe include Christmas, New Year’s Eve, and Valentine’s Day. You can plan on consumers shopping around these holidays, and can prepare your assortments accordingly. You can also go down to the local level and look for holiday traffic there. Here in the Netherlands, the weeks leading up to King’s Day are a great time to sell anything orange. Regardless of what the weather forecast says, the vast majority of Dutch people will celebrate on April 27th in full orange regalia. While a rainy day might mean celebrations move inside, the weather has little-to-no influence on how consumers prepare and shop for the holiday. Some categories are more influenced by the holidays than others. For example, you can almost guarantee that jewelry and chocolate sales will rise in early February for Valentine’s Day, regardless of the weather outside. Depending on the holiday, themed products are a great way to drive extra sales. Retailers can safely bet that reindeer-themed products will sell in December, heart-shaped boxes will trend in early February, and pumpkin-themed items will be popular around Halloween. Seasonality and weather Even though retailers can count on a certain amount of holiday traffic, the type of products people buy at different points in the year can vary greatly depending on the climate. Take, for example, the Christmas holidays. Here in Holland (and in most of Northern Europe), we associate Christmas with cold weather, warm fireplaces, gluhwein, cozy sweaters, and snow. The reason is obvious: the weather in this part of the world is typically cold around this time of year. This isn’t true for much of the world. Consumers in the southern hemisphere are in the middle of the summer when Christmas rolls around, so shoppers can have completely different associations of the holiday. If you’re in Auckland or Sydney, you might spend your Christmas Day on the beach, not tucked away under blankets with a steaming mug of hot chocolate in your hand. A side effect of this climatic difference is that you’re far more likely to find a Christmas-themed swimsuit in Sydney than in Stockholm or Oslo. You also don’t have to travel all the way to Sydney to see a change of climate, and even within Europe seasonal temperatures and weather patterns vary. Holiday-themed items aren’t the only products swayed by global weather differences. Certain categories are especially susceptible to weather changes, and are in fact even driven by the change of seasons. The most obvious category affected by this “climate seasonality” is fashion. Traditionally, a store‘s physical capacity limited what products brick-and-mortar fashion retailers could carry. They sold swimsuits in the summer, then as the season tipped over into the colder weather for fall and winter, they’d swap out swimsuits for cozy socks, thick sweaters, and heavy coats. But this seasonal cycle, much like retail itself, is changing in the 21st century. Talk to one of our consultants about dynamic pricing. Contact us How retail seasonality is changing The seasons are still a major driving force in retail, especially for calendar holidays. And while they won’t disappear from your sales cycle calendars, the idea of a retail season is shifting for several reasons. Rise of online shopping Online shopping has changed retail in more ways than one. However, what’s notable for the discussion of seasonality is that retailers are no longer limited by the four walls of their physical store. This has an impact on the notion of ‘seasonality’ – particularly when applied to weather. Because online is naturally more nimble than brick-and-mortar, it is far less reliant upon the traditional “seasons” to drive sales. The online model means that retailers can react almost instantly to changing market conditions and fluctuations in supply and demand - which can occur daily, if not hourly. Today, no matter the season, retailers can sell any kind of product they wish. As long as they have a warehouse to hold and process products and orders, there are no limits on what they can sell. Now, a consumer can buy a swimsuit in the dead of January and get it shipped directly to their home in just a few days. Changing consumer behavior As retailers have become less concerned about limits on their products, so have consumers. Today’s shoppers won’t even bat an eye when it comes to ordering something “out of season” online. Instead, consumers expect to be able to find whatever they want, whenever they want. This is especially important for retailers to know as out-of-season shopping rises. One of the drivers behind this change is the fact that travel has become significantly less expensive in the last 25 years. There’s been a 300% increase in the number of overseas trips taken since the mid 1990s, and you can now book last minute flights to warmer destinations for just a few hundred Euros. Round-trip flights from Amsterdam to Los Angeles for as low as €333 This means consumers can now visit sunny or snowy places at any time of the year, and will order products out of season as they prepare for their vacations. Retailers should be stocked and prepared with any product a consumer might need, no matter the season. Unseasonable weather Consumer behavior and technology itself aren’t the only things changing seasonality: unseasonable weather can also seriously affect your retail sales. This past summer, Europe was hit by the 2018 European heat wave. The whole continent experienced an uncharacteristically hot summer that began earlier and lasted longer than we could have expected. A recent study found that unseasonably warm weather can cost retailers £40m per week for each degree that the temperature rises, and this was easy to see during the summer. Demand for summer clothes skyrocketed for much longer than retailers expected or were used to. In October, Superdry announced a 49% drop in their shares — part of which they blamed on the hot summer and their inability to sell jackets and coats. Uncooperative weather only underpins the reason retailers need to stay agile in their pricing and marketing. If the temperature soars unexpectedly, the demand for warm-weather clothing, for example, will also rise. The reverse is also true, and if the temperature plummets, consumers will search for more cold-weather clothes and indoor activities like board or video games. How retailers can adjust to the new seasonality There’s no point in trying to fight these changes: the world will only continue to morph and shift in the coming years. That’s why a pricing strategy is so important; it can help you navigate the rocky seas of changing society and new innovations. Pricing strategies are paramount to today’s success. Without one, you’ll get lost in the sea of e-commerce and can quickly veer off-course. But how are retailers supposed to execute any strategy across assortments with hundreds of thousands, if not millions, of products? Pre-internet, the average retailer had to consider around 4,000 pricing decisions per quarter to stay ahead of competitors. This number has now risen to more 60,000,000 daily decisions that you need to make in order to stay competitive. Dynamic pricing makes staying on top of your pricing strategy a possibility, and helps you stay agile in the face of a new seasonality. Omnia’s Dynamic Pricing software helps you manage your pricing strategy across an entire assortment. But what really makes our software different is our advanced tooling, including our weather API. With Omnia, you can combine your strategy with each product’s unique price elasticity...then factor in how its sales respond to changes in the weather. Interested in learning more? Try Omnia free for two weeks and see how Dynamic Pricing helps you take control of your assortment and stay agile in your pricing strategies.

Dynamic Pricing, Pricing Strategies, Shopping Holidays

25.02.2019

4 Categories Where Dynamic Pricing is on the Rise

As mobile shopping, the demand for omnichannel experiences, and the number of products increases across retail categories, so does the need for dynamic pricing to manage it. With roughly 20% of all retail purchases in the UK made online, it’s obvious that the retail landscape is becoming more digital. Curious about which industries can benefit the most with dynamic pricing? Keep reading. In this post we’ll examine 4 different categories where dynamic pricing is on the rise and give insights on how companies can harness the power of data for better prices. 1: Fashion Fashion continues to grow significantly online, and is a category to watch in 2019. This shift is largely driven by a few major factors: The connected consumer Traditionally powered by in-store sales, the fashion industry is currently struggling with the shift towards online. In particular, the industry has a hard time grappling with the fact that consumers are always “on” — they can buy products whenever they like, wherever they like. Technology makes consumer shopping unpredictable, which makes it hard to please customers. The result is that retailers slash prices without strategy, which drives a (perfectly avoidable) race to the bottom. Vanishing seasonality Additionally, the concept of seasonality is changing within retail. In the past, consumers could only purchase whatever products were in-store at that moment, most of which were dictated by the season. Sundresses and swimsuits were typically sold in the summer, while coats and parkas were sold in the winter. In an online store though, consumers don’t need to wait for a change of season to buy a product. Instead, consumers expect retailers to have every product available at all times. Rise of sports fashion Finally, the trend towards “athleisure” means that the entire fashion marketplace is shifting as the definition of “fashion” changes. New players can now enter the market with a bang, and sports retailers can edge further into a realm that’s traditionally eschewed “sporty” looks. Shifting dynamics Fashion brands and merchants are losing the power to set the prices on their products outside of their own stores. Instead, retailers are taking control and working within the market to set a price. Zalando, for example, use price as one of its spearheads to achieve their exponential growth. The company forgoes the traditional pricing strategy of sale (for example, a 50% discount on swimsuits at the end of the summer). Instead, Zalando, and other retailers with huge footprints online, continually adjust prices dynamically. Major fashion retailers have a first-mover advantage if they act fast enough in adopting dynamic pricing. And if you have a brick-and-mortar store, you have an opportunity to create a unique omnichannel experience for consumers in an industry does still command a lot of footfall. 2: Health and Beauty Health and Beauty is another category that’s growing rapidly online in 2019. In the UK alone, this category is set expected to grow at 16.5% each year until 2023, and this mirrors similar growth in the Netherlands as well. But the larger, traditional players are shrinking in their market share. This is because there is a new wave of Health and Beauty retailers on the rise: pure online players who offer the same products as brick-and-mortar stores through an internet shop at a dramatically reduced price. This pulls price-sensitive shoppers away from the more expensive retailers like Boots or Tesco. Like Fashion, the introduction of new players on the Health and Beauty market means that price cuts, and the resulting race to the bottom, are a very real threat for retailers. The market is now ripe for fluctuating prices, and as consumers become more aware of price differences, retailers need to be able to respond accordingly. Dynamic pricing allows you to plan for these changes and gives you control over your assortment in a market that is in a constant state of flux. It also lets you set a strategy at the product level, so you can protect your brand’s price perception while also meeting consumer demands for different prices. 3: Home and Garden Home and Garden is our third category that’s ripe for dynamic pricing. Historically, garden and do-it-yourself articles were advertised in leaflets. However, just like with the previously mentioned categories, the shift to an online store has opened up a new, unpredictable consumer market online. However, Home and Garden consumers are limited by locality. If someone is renovating their kitchen, for example, they might buy the tools they need online, but will purchase lumber at their local hardware store. This means that home and garden retailers can count on a certain level of in-store footfall, and use that traffic to drive more sales. The easiest way to optimize for both offline and online sales is by connecting your offline and online sales data in one portal, then using the insights to create a strategy. 4: Food While it sounds surprising, GFC figures show that in the Netherlands, food is the fastest-growing category in terms of consumer online spending. The days of visiting your neighborhood grocery store are quickly eroding as more and more companies offer online purchasing and grocery delivery. Several supermarkets already apply dynamic pricing: Jumbo mainly determines the price through close competition and uses the pure player Picnic the lowest price guarantee. In this respect, the UK is ahead of the Netherlands, where it is already possible to compare the price of a shopping basket between different retailers. This is a trend that many industries follow as dynamic pricing becomes more mainstream: as the frequency of price changes increases, consumers begin comparing prices online. Comparison shopping engines like those previously mentioned spring up. Conclusion The growth in online spending and the increasing frequency of the number of price changes means dynamic pricing is more relevant, and sometimes even necessary, in an increasing number of product segments. And while it might seem scary to switch to a dynamic pricing model in the beginning, the reality is that dynamic pricing gives retailers a first-mover advantage. Omnia can help retailers set up pricing strategies for success with our Dynamic Pricing module. Curious about how software can help? Reach out today, and get a two week trial of Omnia for free!

Dynamic Pricing, Retail Trends & Research

07.02.2019

Our Year in Review: 2018 at Omnia Retail

It's a month into 2019, but things are moving fast here at Omnia. This is set to be a year of immense growth — and for you that means new features, better usability of the tool, and even more insights into your pricing and online marketing data. However, none of that would have been possible without the foundations we laid in 2018. Check out what we did in 2018 to support these new developments for the product, and learn more about what's coming this year.

About Omnia

31.01.2019

3 Ways Retailers Can Prepare For Valentine's Day

It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love, experiences, and gifts. The holiday is changing rapidly though, and if you’re wondering how to change your retail business with it, you’re not alone. How can retailers prepare for Valentine’s Day 2019? This year, the key is to focus heavily on customer experiences — both in your store and offline. In this post, we’ll give you 3 practical tips on how you can prepare for the holiday. Consumer Valentine’s Day trends Many consumers are tired of the over-commercialization of Valentine’s Day. In a 2018 survey, 77% of UK consumers said they thought the holiday was too focused on consumerism. When paired with changing social structures, many consumers feel that the holiday is outdated in some ways. However, that won’t stop consumers from spending. The same survey found that even though consumers felt Valentine’s was an artificial holiday, UK spending for the holiday in 2018 was up 3.2 points compared to 2017. The same was true in the US, and this year alone the National Retail Federation expects Americans to spend over $20 billion on the holiday. 3 ways retailers can get ahead on Valentine’s Day These two opposing forces (changing consumer attitudes but overall increased spending) means there is a lot of opportunity in Valentine’s Day. There is a growing shift toward experiences and personalization in Valentine’s shopping, as well as an overall broadening of the market. So how can retailers get behind these trends? Here are our top 3 tips to get ready for Valentine’s. 1. Think omnichannel experiences As a retailer, this shift toward experiences should trigger “omnichannel” in your mind. Instead of simply selling to consumers, create an experience they can buy into — one that extends beyond their screen and into the real world. One way to create these experiences is to partner with other companies that complement your assortment. If you’re a jewelry retailer, for example, you could partner with a local restaurant to include a complimentary 3-course Valentine’s Day dinner with each purchase. Want to know more about building a better omnichannel strategy? Check out our recent blog to find out how to win at omnichannel retail. 2. Expand beyond romantic gifts It’s true that Valentine’s Day has traditionally been about romance, but this has shifted in recent years. A great example? A 2015 report found that over 21% of Americans planned to buy Valentine’s Day gifts for their pets. And while they were only planning to spend an average of $5 on their animal, that added up to over $700 million in additional sales. There is also the growing trend for women to buy “Galentine’s Day” gifts for friends, and many retailers have noticed an uptick in the number of self-care purchases that people make for themselves for the holiday. Consumers now see Valentine’s as a day to celebrate love of all types, which means you now have multiple audience primed to spend. Embrace this and adjust your marketing and advertising accordingly. The easiest way to manage this is with an intelligent marketing automation software that can follow the market, then adjust your bids on Google Shopping and other channels automatically as opportunities arise. 3. Know which products are popular To properly prepare for Valentine’s Day, you should plan your marketing ahead of time. This means knowing which products are going to be most popular is crucial. Historically, categories like jewelry, flowers, candy, and clothing have performed exceedingly well on the holiday, and these trends are expected to remain stable in 2019. If you haven’t started campaigns yet though, there’s no need to worry. Most people procrastinate on their Valentine’s shopping. As many as 32% of consumers purchase gifts the same week as the holiday, and the number of online searches for Valentine’s-related terms peaks on February 12th! While there is still time to prepare profitable strategies, the small shopping window means that the process of managing prices and marketing will take a heavy toll on your staff. Like on Black Friday, tracking and adjusting your prices manually in the few days before Valentine’s Day is a waste of time. Many teams devote huge amounts of energy to chasing competitor prices, adjusting your own prices, then updating your marketing to reflect this new pricing. When prices change multiple times a day, this becomes a full-time job for many people on your staff. You can use automation software to give your team hours of their time back: time which they can then focus on strategy. A pricing insights software like Pricewatch is the easiest way to get started, and it delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your strategy. Automation can save even more time with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. Final thoughts Whether you want to experiment with a new omnichannel strategy, collaborate with local partners, market your new feline fashion line, or more, use Valentine’s Day as a chance to try something new. However, it’s important to think carefully about what the customer wants, then build tailored, personalized experiences to drive sales. However, none of these creative pursuits are possible if your team is wasting time manually tracking and adjusting your Valentine’s marketing and pricing. That’s why you need automation tools to liberate your team so they build the experiences that consumers are actively seeking. Interested in automation tools? Don’t wait. Get in touch today to set up a free demo of Pricewatch before Valentine’s Day, and see for yourself what’s possible when you aren’t chasing competitor prices. Click the button below to get started.

Marketing, Pricing Strategies, Shopping Holidays

24.01.2019

How to Build a Pricing Strategy

This week we have a guest post from Johan Maessen, owner of Commercieel Verbeteren. Johan has over 10 years of experience in strategy consulting, and works tirelessly to help businesses grow with deliberate, strategic goals in mind. In this post, Johan talks about the importance of a commercial pricing strategy and how you can build your own framework for commercial success. Over the last 5 years as a commercial advisor, I've met dozens of companies with historically-founded pricing approaches. Born out of their traditional way of setting prices, their pricing is based on costs or follows a competitor who seems to have a pricing strategy. Read more: The Ultimate Guide to Dynamic Pricing Additionally, instead of documenting their strategic choices, many companies’ pricing strategies are stored in employee heads. This means it’s difficult to share the strategy with (new) colleagues. But imagine if you had your pricing strategy on a single sheet of paper, ready to implement, share, and iterate. It might seem like a far-off dream, or even unimportant, but the reality is that a practical pricing strategy helps you take control of your business. The remainder of this article describes the benefits and steps involved in setting up such a practical pricing strategy, specifically for retail companies. What is a pricing strategy, and why is it important? Without a steering wheel, controlling the direction of a car is impossible. You can end up anywhere, and the impact could be disastrous. The only thing you know is the outcome is highly unpredictable, and that there is an increased risk of accidents along the way. I like to think of the pricing strategy as the steering wheel to your business: it helps you direct where you want your business to go and gives you full control. At its core, a pricing strategy takes your company’s commercial strategy and turns it into a more actionable pricing objective. With a pricing strategy, just as with a steering wheel, the chances that you’ll veer off-course are significantly reduced. It delivers commercial peace of mind, as different scenarios are thought through and incorporated in the direction up front. In addition, the pricing strategy includes the different levers you’ll use to keep your business on track. When something changes in your market, you can adjust the business rules around each lever to maintain stability. Let me illustrate how a pricing strategy will work out in practice with an example. Imagine your main competitor drops prices of products in a certain customer segment. What do you do? Here are two possible scenarios: 1. No pricing strategy After some stressful ad-hoc meetings and internal escalations, your company decides to respond with a price drop. In fact, to prevent volume losses, you give an even steeper discount than your competitor for all of your affected products. How do you think your competitor reacts, and what does it do with your margins? This could easily be the start of a price war, which will always have more losers than winners. 2. Practical pricing strategy in place Instead of following the competitor all-in, your company looks to your pre-established pricing strategy before making any decisions on how to proceed. This strategy, which considered your positioning in relation to this competitor, has a clear framework for what to do. You just need to apply the business rules of your framework. Here you determined a percentage price bandwidth towards this competitor. In addition, you determined up-front a minimum margin per customer segment/product category. It appears that the majority of the affected products remain within the competitor bandwidth, so no action is required. The products that do go below the competitor price bandwidth are still above your minimum margin threshold, and will be adjusted according to the business rules in place. This leads to price changes for a reduced set of products and keeps margins constant for the remaining products. This way of working enables you to stay in the driver’s seat of your pricing. You stay ahead of competition by iterating the initial pricing strategy along the route and making your business rules more specific. At the same time, you probably realize an uplift in your margins compared to the initial situation. How to set up a pricing strategy There are two ways to determine your pricing strategy: from the top-down or the ground-up. Top-down, you can extract a pricing strategy from the commercial strategy. Bottom-up, you can construct it from your transaction and customer data. A pricing strategy should be practical and contain at least the following two elements: A framework The framework element means that your pricing strategy has a structure that includes all the relevant pricing levers required for your business. An example of such a lever is seasonality. For hotels this implies that the price for a hotel room could go up a bit during holiday seasons. Having such a framework gives you piece of mind, because it helps you visualize the different instances where your prices might need to change. Often this structure is missing, and with my company ‘Commercieel Verbeteren’, I often help customers create this framework for a comprehensive overview of their pricing. Business rules When the framework is ready, my customers often feel like the pricing beast finally got tamed. But to build a true pricing strategy you need to go one step further. After the framework is set, you need to discuss how these different levers should work for your company through business rules. This means putting a minimum, maximum, and/or bandwidths to the different levers. In this way you, or your pricing software, can act upon them. Together, the framework and the business rules provide you with a practical pricing strategy ready for action. The 3-step approach to a pricing strategy Ok, I get it. I also need a pricing strategy! But how to proceed? Well, there are three steps involved in setting up your pricing strategy. 1. Assess your place in the market Much like the previous blog post in this series on defining your commercial objective, developing your pricing strategy begins with self-reflection. I call this step the As-Is Situation. Before you start building a new pricing strategy, you need to understand what you are already doing for pricing. Gather the relevant stakeholders and try to answer the following questions during your review phase: What does our current price model look like, and what are the pros and cons of this model? Where do you stand in the market? Is your company the leader or the challenger? What is the current commercial focus of your company? Are you more concerned with volume of sales or the overall profit? There are certainly more questions you should ask yourselves, but these will help start the conversation. 2. Build your pricing strategy framework Subsequently, involve relevant internal stakeholders in solution sessions. The first goal of such a session is to share the common understanding of the As-Is situation. In my experience, this is often regarded as “known” information — meaning it’s a step that many clients breeze over or ignore. But in reality, it’s not safe to assume that everyone has the same understanding of your existing pricing tactics. That’s why I encourage clients to use this time to go over the findings of the As-Is analysis and refresh everyone on the existing pricing strategy. The second goal of this solution session is to create the first draft of the previously mentioned framework. This requires good knowledge of your business from sales and segment managers, combined with pricing knowledge on options and viable alternatives. Use all the talent in your organization to develop a strategy that matches your commercial objective and consumer expectations. 3. Set business rules When you know the levers of your framework, you can work on the business rules and create what I call the To-Be situation: how should your pricing work in the future? This involves setting the levers of your framework and finding the right calibration based on all the information you have available. Start iterating and testing After you’ve set your business rules and are internally aligned, the fun really starts. You can take those rules and put them into a tool like Omnia to start testing what works and what doesn’t. What does it bring me? Recent input from a case study If you have a large product assortment, it’s most practical to use pricing software like Omnia to implement your pricing strategy. Recently, I worked with Profile to set up their pricing strategy, which they implemented in Omnia. The pricing software helped them (dynamically) set prices, and save time by doing so. At the same time, it contributes to future iterations of the pricing strategy, based on realized data points and competitive behavior. In this case, it led to double digit margin improvements within a month of going live, with more potential to come based on the framework developed. You can grab your copy of the case study here. Final thoughts As the second step in the Five Steps to Successfully Implement Dynamic Pricing, your pricing strategy is extremely important to your company’s growth. A pricing strategy sets you up for success and gives you more control over unexpected changes in the market. Curious what a pricing strategy can mean for your business? Contact me directly on johan.maessen@commercieelverbeteren.nl, 0641369590 or discuss the possibilities with your Omnia consultant.

Pricing Strategies, Implementation

17.01.2019

What is a High-Runner Strategy?

How do companies like Amazon maintain such a huge market share and keep their prices low without losing profits? The answer is in their pricing strategy. Amazon — and many other organizations that seem to offer low prices while staying profitable — adhere to a special strategy called the “high-runner strategy.” So what is a high-runner strategy, and is it the right pricing strategy for you? In this post we’ll give you a short introduction to the high-runner strategy, then help you figure out if it’s the right option for you. What is a high-runner? A high-runner product is another term for the top-performing products in your store. These are the products that have the highest numbers of views, clicks, and purchases, and which are eagerly sought after by the public. They are generally highly elastic and extremely sensitive to market price changes. A great example of a high runner product is a top-of-the-line smartphone. A €50-100 difference between these products (a 10%-20% discount on a €500 item) will make a great difference in the number of clicks and purchases. The greater the discount, the greater the volume of sales Take a look at the example search for a Samsung TV— which listing do you think consumers will click on first? Most consumers will choose the cheapest option — in this case the €544 TV. The other retailers are severely overpriced for this product, even if they’re only priced 4.59% (€25) higher than the lowest competitor. The high-runner strategy With a high-runner strategy you discount heavily on these high-visibility products to increase the number of clicks to your site. This increases the amount of traffic on your site as well as the number of sales on that product. This is just the first step of the process though, and if you did this for every product in your assortment you’d end up losing money on margins. That’s why the beauty of this strategy lies in what you do with the increased traffic. Cross-sells and up-sells Once you have this traffic on your site, present consumers with up-sells and cross-sells on inelastic products at full price. This is where you make your margins. Going back to our television example, retailers could show customers a wall mount and an HDMI cable as add-ons during the checkout process. Many consumers who are already spending €544+ on a television won’t think twice about these products or stop to compare your prices to the competition. Instead, they’ll go ahead and add them to their cart and pay for the convenience of a packaged delivery. They’re also paying for the assurance that the products work well together so they won’t need to go through the hassle of returning a defunct product. Curious to see of a high runner strategy is the right pricing strategy for you? Contact us Price perception Another way to use the high-runner strategy is to drive consumer perception about your store. This is Amazon’s strategy, and it’s partially what’s responsible for the company's global growth. If you consistently advertise yourself as the lowest price on a variety of high-visibility items, consumers will associate your store with low prices but high-quality products. As a result, you’ll become their default store for any of their needs in your niche and increase their loyalty to your store. Amazon has asserted itself as a one-stop-shop for almost any product a consumer needs. But if you look at its actual prices, many of its products are competitively priced with the rest of the market. The same is also true in reverse, and it has an even bigger effect. If you’re consistently overpriced on high-runner products, consumer loyalty will shrink. Final thoughts The high-runner strategy is a powerful way to change your company’s price perception and capture more sales. When done correctly, it’s an effective way to drive customer loyalty and increase profits through cross-sells and up-sells. But it’s not the right strategy for every retailer. If you want the public to see you as a top-of-the-line retailer with high prices, then this is not the strategy for you. Instead, you might want to charge premium prices as a sign post for your product’s quality. If the high-runner strategy is right for your business, you need a tool to help you manage prices and ensure that you stay competitive. Omnia’s suite of pricing tools help you keep track of your products and automatically adjust prices and bids so you are always priced according to your strategy. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: 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. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.

Dynamic Pricing, Pricing Strategies, Popular

10.01.2019

How to Win at Omnichannel Retail

The rise of omnichannel is one of the most significant revolutions in the retail industry. But what exactly does “omnichannel” mean, and how should retailers adapt to this sphere of influence? Keep reading to learn everything you need to know about omnichannel and get tips on how to build the right strategy for your business. What is omnichannel retail? Omnichannel retail is an approach which gives consumers a unified, seamless shopping experience across all physical and digital sales channels. This means your store is connected on all fronts — from the app your customers have on their phone all the way to the checkout counter at your physical location. It’s important to distinguish a truly omnichannel experience from “multichannel” retail. Multichannel retail is selling through multiple channels, such as desktop and a physical store. But what separates multichannel from omnichannel is the unified experiences across your platforms. Having an app for your customers is an example of multichannel. Connecting that app to their in-store experience or the open shopping cart on their desktop makes the experience seamless across the board and makes it a unique omnichannel interaction. Omnichannel is increasingly important in retail, and the modern, tech-savvy consumer is the driver of the trend. Because of our increasingly interconnected world, consumers expect interactions from their phones to run flawlessly. And consumers will ditch the app at the first sign of friction in the process. We live in a “golden age of user experience” according to Jason Spero, VP of Global Performance Solutions at Google, and that demand for ease of use bleeds into our offline lives. Why does omnichannel matter? Omnichannel retail matters for one major reason: consumers demand the experience. In essence, omnichannel retail provides consumers with what they crave – convenience. Namely, omnichannel gives consumers reassurance they will receive the same seamless experience no matter where, when, or how they shop. However, just because consumers seek omnichannel experiences isn’t the only reason retailers should care. Looking at omnichannel data opens up a whole new world of opportunities for cross and upselling and illuminates a range of missed sales opportunities. In other words, by adjusting your thinking to an omnichannel mindset, you might uncover hidden opportunities for profit and margin growth. Some examples of omnichannel retail The phrase “omnichannel strategy” is an umbrella term, and, in truth, there is no single “right” way to optimize your business for omnichannel. Instead, there are numerous ways omnichannel expresses itself. The ROPO effect The “Research Online, Purchase Offline" (ROPO) effect is one of the shining examples of omnichannel retail. In the information age, consumers have access to everything they need to know about most products you sell from sources you do not control. As a result, by the time they get to your webshop, they likely know exactly which model they want. For many types of products though, many consumers won’t purchase online. Instead, they’ll visit your webshop (or see your Google Shopping advertisement), then go to your physical store to make the final purchase. The reasons why vary. Sometimes consumers want the product immediately, and they simply check your online store to see if you have it in stock at the nearest location. Another common reason is consumers want to see and feel the product before buying. This is particularly pertinent for fashion products where consumers want to check the fit before paying. Regardless of why a consumer does it, the effect of your online presence on your in-store sales might be extraordinary. That’s why you need to consider in-store sales data in your online marketing decisions on products where the ROPO effect is high. Even if you don’t sell a lot online, it might be worth investing heavily in the marketing to show consumers you carry a product in-store. Retailers can also embrace the “order online, pick up in-store” model that is gaining popularity. Crafting user experience through augmented and virtual reality Many retailers and companies are creating interactive omnichannel experiences for their customers with augmented and virtual reality. These experiences not only cultivate customer loyalty and interactivity, but they are also effective commercial sales points. A shining example of this is the IKEA Place app, which uses augmented reality to help consumers understand which IKEA products will look great in their home. This “try before you buy” concept reduces major consumer frustrations that are an inherent part of the furniture-shopping experience. Just check out their video below to see how it works. Pure online players opening physical stores A third example of omnichannel is the high number of traditional, online-only retailers who are opening physical locations around the planet. From Amazon to Warby Parker, “pure players” around the world are adapting their businesses to capitalize on the growth of omnichannel. This last example is interesting because it illuminates how mainstream omnichannel is: internet companies want to create physical experiences for their clients while brick-and-mortars strive to reach customers beyond their physical walls. Companies from both ends of the spectrum are adopting strategies to end up somewhere in the middle. Tips for developing your omnichannel strategy Omnichannel is the future of retail, but how do you build a strategy that meets your company’s goals? Let’s look at our top tips for winning at omnichannel: Tip 1: Think about your commercial objective Implementing an omnichannel strategy for the sake of joining the omnichannel sphere is a risky venture. Omnichannel can quickly become expensive if you don’t think about it strategically. Ask yourself why you want to implement an omnichannel strategy. Do you want to: Increase customer loyalty? Capture more sales? Solve a customer pain point? Drive more foot traffic to your store? Answering these questions should give you an idea of what kind of strategy you should implement. And as with all new strategies, use your commercial objective as a compass to guide your decision making. Tip 2: Ensure the same prices across all platforms One of the easiest ways to disrupt the consumer experience is to display one price on your app, a different one on your webshop for the same product, and a third price in-store. Since consumers are interconnected and research heavily before purchasing, they’ll notice these differences instantly. This rips them out of the experience you’ve crafted and leaves them with more questions than answers. Keep your prices are the same across all platforms so your customers stay captivated with the experience. An easy way to do this is with electronic shelf labels. Tip 3: Centralize and integrate your pricing and marketing data Omnichannel is an entirely new area in retail. So the historic ways of thinking about the industry won’t lead to a successful strategy in this new realm. The traditional silo mentality of pricing and marketing as two different departments doesn’t translate well into this new, 21st century model of retail. Instead these arms of your organization need to connect and collaborate. Click here to download your free copy of Why Pricing and Marketing Go Hand-in-Hand Software can centralize all of your pricing and marketing information in one place. You can then use this software to change your pricing or marketing strategy according to your omnichannel strategy. Software can also help you centralize all your data points, both in-store and online, so you can have all the information you need to make more strategic decisions. With Omnia you can include internal information like your stock levels or purchasing prices with external data to build a more informed omnichannel strategy. Final thoughts To execute a successful omnichannel strategy, you need the right tools. Without the ability to collect, store, and analyze data points on all of your products, you won’t be able to build the best strategy possible. Omnia’s tools give you the building blocks for your omnichannel strategy. By helping you organize and evaluate your pricing and marketing information, Omnia illuminates different opportunities that are useful metrics as you enter this new sector. Interested in learning more? Reach out today to request a demo of our software and speak with one of our consultants about your omnichannel goals.

Omni-channel, Omnichannel Retail

04.01.2019

How to Define your Commercial Objective

In our blog Five Steps to Successfully Implement Dynamic Pricing, we encouraged you to start by defining your company’s commercial objective. But how do you determine your business goals? And how do those goals relate to your pricing strategy? A good commercial objective needs work. In this post we’ll explore the process of defining this objective and give you practical advice on how to get started. What is the commercial objective? The commercial objective is an explanation for why your company exists and what customers can expect from your organization. In many ways, the objective is a compass that helps you make business decisions that align with your brand, goals, and consumer interests. Creating a commercial objective might seem easy at first, but it’s actually difficult to pin down exactly: Why you exist What makes you unique What your overarching message is Who you’re targeting But once you have the answer to these questions, you can make more strategic decisions that match your organization’s goals. An example of a commercial objective Home Depot has a great example of a commercial objective: “The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices.” This simple sentence clarifies several aspects of the company. They target consumers working on do-it-yourself projects around the home. It’s also clear what they want to achieve: quality service, numerous choices, and competitive prices. What does a commercial objective have to do with pricing strategy? A defined commercial objective is crucial for both your internal and external aspects of business. Internally, it helps to add measurable objectives for your departments. For example, Home Depot’s internal goals could include: Our service need a Net Promoter Score (NPS) of at least 8 (Operations team) We always offer 10,000 products per store (Category management) Our prices will never go above the market average (Pricing team) An important link with pricing already starts here: it’s hard to combine low prices with high service offering. Services cost money, so if a high quality of service is part of your objective, you need to factor these costs into your product prices. Looking back at Home Depot, you can see this in action. Notice that the company specifically keeps its language about prices vague with the words “most competitive.” This is because they need to factor in their high-level services, consumer perception, and more into their prices. If they promised to have the lowest prices, they could never provide the same level of service to their consumers. Since your commercial objective manifests in your prices, it also is crucial for the external aspects of your business. Price points act as signposts for consumers, and customers know what to expect from a service at every price point. If consumers see high prices for your products, they’ll assume that it includes a certain amount of service. High prices with low service offerings will brew customer resentment and be detrimental to your business. Your competition will either out-price you or offer a better value-for-money option for consumers. How to define your commercial objective There are two major steps in the process of determining your commercial objective: market research followed by business introspection. Both reach to the foundations of your business and serve as the base for your commercial decisions. Step 1: Analyze your market How do you want consumers to perceive your company? What is your ideal position and image? Before you can answer these questions, you need to analyze your market and see where you stand among your competition. There are numerous ways to do a market analysis, but for our purposes it’s important to drill down what you want to know about your competition. Consider the metrics you’ll use for bench-marking, and which companies you’ll analyze. At a minimum, evaluate your competition’s: Product prices Service agreements with customers Assortment size Specialization levels Use this information to evaluate different stores in your industry, then categorize them broadly. The graphic below is an example of how you can organize the data in a benchmarking map. This graphic looks at the number of products vs. price and service across a market: A matrix like this clarifies who your direct competition is and where there are gaps in the market. Step 2: Think about your goals After examining the market, it’s time to turn inward and focus on where your company stands in relation to the rest. Ask yourself what kind of company you want to be, and how you want to achieve those goals. Do you want to be a discounter with loads of products? Or a specialist in one product category (such as bags and suitcases)? Or somewhere in between the two? As a specialist you could have a higher price and a better value offering through services (such as fast delivery and product knowledge), but you will also make fewer sales. As a generalist you’ll make more sales, but you can only raise your prices to a certain point. Other good questions include: What are the opportunities in the market? Are their gaps in the above matrix? What are your current strengths and weaknesses? How do consumers perceive you now? How large is the gap between your current position and your ideal position? The answers will help you decide where you want to be in the market. Remember to write your goals according to SMART principles: Specific, Measurable, Achievable, Relevant and Time-bound. These principles help ensure your goals are actionable. Talk to one of our consultants about dynamic pricing. Contact us Mission Statement vs Vision Statement What is a Mission Statement? A business mission statement describes the purpose for existing. For example, a company may exist to solve problems related to education, healthcare, or society. Defining and promoting such helps educate investors, employees, customers, and the general public. Let’s examine Amazon to survey a mission statement example: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customers the lowest possible prices.” What is a Vision Statement? A business vision statement articulates aspirations and intended impact upon consumers, society, the globe, etc. It entails what a company is, yet is more interested in establishing what it aspires to become. IKEA’s is often among vision statement examples: “Our vision is to create a better everyday life for many people.” Difference Between Goals & Objectives Let’s first define a goal in a business context to distinguish a goal vs objective. A goal is a set outcome a business seeks to achieve. This could be more general, as to have a profitable year. Objectives seek to be more specific. For example, factoring a dollar amount and amount of time to define “profitable.” So, what is an objective? Business objectives are specific steps taken toward achieving company goals combined with a clear method of measurement. An objective is described in more quantifiable terms. Organisational strategic goals are more qualitative, such as aspiring to increase the quality of customer service. But, objectives can be measured, such as to reduce response times of customer inquiry to four hours by the end of the first quarter. Goal statement examples: We will maximise profits We will increase employee revenue We will be an industry leader Strategic objective examples: Increase profits by a minimum of 20% in the next fiscal year Average salary within the company will rise 15% in the next five years We will penetrate an additional 30% market share by the second quarter Move on to your pricing strategy After you’ve done the work of determining how you want the public to view your brand and what level of service you plan to offer, you can build a strategy that reflects your goals. We’ll cover this more in another post, but this is a good time to think about how your business goals translate into monetary needs. Conclusion Since your commercial objective should drive your pricing strategy, not the other way around, this process is an important foundational step towards automated pricing. As the overarching goal of your company, it should answer the question of how you want consumers to perceive your company and what they can expect from you. It’s an important step towards achieving your maximum profitability, and it’s the basis for everything to come. Have you defined your commercial objective and are interested in automated pricing management? Click the button below to request a free demo of Omnia today.

Dynamic Pricing, Implementation

21.12.2018

How to Test the Effectiveness of Your Online Pricing

“Testing” is a buzzword in the world of online work. If you have a company that interacts with customers in the digital sphere, it’s likely that you want to consider testing in some form. And that’s a good thing. Testing gives you insights into consumer behavior and helps you make smarter decisions on your webshop. Web developers and marketers often use A/B testing to experiment how different web layouts influence consumer behavior. When consumers land on a site, they are randomly redirected to an A or B page, each of which has the same goal in mind but which varies in messaging or design. Developers and marketers then evaluate differences in conversion or bounce rate between the two pages to determine which performed best. Just like web developers, retailers can use testing to learn how prices influence the overall conversion rate for products. You can then use these insights to optimize your display price for margins and conversions — a crucial part of your company’s marketing plan. But testing prices online is not as easy as testing a website design. To start, several factors influence the validity of your data, and testing at the product level is time-consuming and inefficient. As a result, A/B testing prices on the product level is a risky venture, and retailers should approach it with caution. So what’s a better way to test your pricing method? Especially since it's a crucial stage in the Five Steps to Successfully Implement Dynamic Pricing? Read on to learn everything you need to know about price testing and the best way to manage your tests. Testing pricing online is difficult Testing prices on a product level is difficult for several reasons, regardless of which method you use. Some significant barriers to online testing include: 1. Cross-elasticity Product prices don’t live in isolation; instead, they are part of a broader system of price elasticity. Raising prices of Product A can increase the demand for the substitute Product B. It could also decrease the demand of the complementary Product C. There’s no way to be certain that cross-elasticity didn’t impact your test. But if you don’t consider this effect, your results will skew to one side. 2. The marketing effect Pricing and marketing are interconnected in modern e-commerce, but many companies don’t treat them as two halves of a whole. Marketing teams and pricing teams have different KPIs and success indicators, so they ultimately have different goals when it comes to displaying the product online. If you want to test prices, you also need to consider the impact marketing will have on the product. For example, say your pricing team wants to test a price cut on Product A but doesn’t tell the marketing team. Without that knowledge, the marketing team might aggressively push that product on a platform like Google Shopping and generate a high volume of sales. However, in this case, it’s impossible to tell if that increase in sales resulted from the marketing campaign or the lowered price. 3. Statistical validity Testing hinges on one key component: you need a high volume of sales to gather enough information about the test. This is especially true for A/B tests, where the sample size for Price A and Price B need to be significant. There are also several other validity threats to account for in your testing, such as selection bias, the effect of seasonality, and more. Because of these factors, many small- and mid-sized retailers won’t generate enough traffic to make sure their data is valid. 4. Competitor pricing Much like cross-elasticity, your product’s price doesn’t exist in a vacuum on the internet. The uncontrollable factor of your competition’s price for the same (or a similar) product will affect your ability to test a price. If you are priced higher than your competition for a test, consumers will naturally choose the lower price. As a result, you miss out on both valuable sales and important testing data. Additionally, your price and its relation to your competition impacts your overall price perception. This is a massive driver of consumer action and one you should consider carefully. Why you shouldn’t use A/B tests to evaluate your pricing method Just because it is difficult to test your pricing doesn’t mean that you shouldn’t do the tests. Since price is one of the best ways to improve your overall earnings, it’s worth taking the time to experiment and determine the right spot for your products. However, A/B tests of prices offer a unique set of challenges, each of which makes the venture risky. 1. Consumer resentment Consumers see the act of charging different prices to different people as discriminatory, regardless of how the prices were assigned. This has been the case for years: in 2000 Amazon created a PR-nightmare when they tested optimal prices on different customers. Consumers were outraged, and the company ultimately refunded money to 6,900 customers. Today, consumers understand that prices will change throughout the day. But with social media just a few taps away, consumers will find out quickly whether or not their price for a product differs from someone else’s. Any discrepancy they find will embroil their resentment toward a company. This sentiment is the same reason personalized pricing remains unpopular among consumers. Many feel the practice is predatory and discriminatory. 2. Data privacy issues In line with consumer resentment, the general public associates price discrimination with the unfavorable usage of customer data. As an increasingly important topic on the global stage, and it‘s at the forefront of many consumers' minds. Data integrity is crucial to controlling customer resentment. And while you might be able to truthfully say that A/B tests and prices were assigned randomly, customers will grow to mistrust your organization. 3. Decrease in customer loyalty When consumers resent your company for price differences, and when they feel their personal data was somehow used to determine their display price, their loyalty to your organization will waver. And just like consumers communicate about price online, they also communicate about their satisfaction with a company through social media. In the age where customer experience is essential, A/B testing could tip the balance to create unhappy customers. Disgruntled customers are not only detrimental to your long-term business goals, but they can also harm your reputation. 4. Inefficiency Finally, A/B testing is time-consuming and inefficient. For an A/B test to be accurate, you need to monitor the tests on a product level. If you’re doing the tests manually, this will eat up significant amounts of time, energy, and money to the testing process. Additionally, if you run an A/B test on a product, but carry other similar products, your test results will skew. For example, let’s say you want to test a pricing method on televisions. You could carry out an A/B test on Model X television to see which pricing method works best. But if your store sells more than one model of television, consumers could just buy a different TV. They could even buy a tablet to use instead of a TV — the functionality is essentially the same. The better way to test your prices online Considering testing is already tricky, and that A/B testing has significant downsides, what’s a better way to evaluate your pricing method? The answer is to look broader than individual products and expand to categories. Instead of testing a price change across a single product, it’s better to test your price methods on different products categories. As long as these categories are similar in elasticity and customer perception, you can evaluate which pricing method works best for your store. Let’s take an electric kettle and a toaster as an example: both serve the consumer in a single functional way (a kettle serves boiling water, and a toaster serves toast - no more, no less). They are also both kitchen appliances, so they both serve the same customer segment. Even though they are entirely different products, consumers view them in the same regard, so they have similar elasticities and price points. This strategy helps reduce the general risks of online testing and eliminates the risks of A/B testing: Individual customers won’t receive different prices for the same product You can track the effects of marketing more easily You can better control for cross-elasticity Getting started with this testing method is pretty easy with a user-friendly tool: 1. Select the products to test Select two similar product groups, such as electric kettles and toasters. What’s important is that the products have similar functionalities, price perceptions, and elasticities. You can use historical pricing and conversion data to guess which products have similar elasticities, but an easier way is to use a tool to calculate the elasticity for you. 2. Implement the pricing strategy across these products There are several types of pricing strategies you can test. Once you choose the ones you’d like to test for effectiveness, you can apply the new prices to those products and market them as usual. It’s important to remember though that you can’t control your competition’s prices. As a result, when you change your price online, you’ll also change your relationship to your competitors. One way to control this aspect is to use automation that locks in your price position on the market. 3. Test, monitor and analyze After you’ve implemented the new pricing strategies, you can run your products normally and compare conversion data. It will take some time to see results and the data depends on the size of your assortment, but you should be able to evaluate the test after 2-3 months. A world without price testing Testing your pricing strategy across similar products gives you insights on which pricing method you should use. However, it’s also a time-consuming process and requires a significant investment to track manually. Software like Omnia can provide a solution that eliminates your need to test pricing strategy at the product level. Our Dynamic Pricing algorithm optimizes prices for every product and makes testing less relevant. Read more: The Ultimate Guide to Dynamic Pricing The algorithm looks at each product’s elasticity, historical conversion data, and competitor prices then combines that data with internal factors such as stock levels and your commercial strategy to determine the optimal price. It then automatically adjusts the product price online to reduce the manual labor of making price changes. Additionally, fully utilizing the Omnia algorithm enables your prices to fluctuate predictively based on market insights. Final thoughts When it comes to testing a pricing strategy, A/B tests won’t make the cut. To make sure your data is valid and reduce the risk to your company, you need a more complicated test. It's possible to create one of these analyses manually, but it costs a significant amount of time, energy, and money to execute correctly. Tools like Omnia make testing easier. By taking over the manual labor and helping you test more effectively, Omnia frees up time for you to focus on strategy instead of monitoring. Interested in learning more? Click the button below to sign up for a free demo of the software today.

Pricing Strategies, Implementation

13.12.2018

What's the Difference Between Dynamic and Personalized Pricing?

When it comes to automated pricing, retailers have several different strategies to choose from. Two of the most popular, however, are dynamic and personalized pricing strategies. Both capture the power of big data to provide competitive pricing on key products, but the difference between the two might be unclear to some retailers. In this blog post, we’ll highlight the key things you need to know about each of these methods, as well as the pros and cons of each. What is personalized pricing? Personalized pricing is the latest automated pricing model available to retailers. In essence, it uses automation to target each individual website visitor with a price that matches their personal buying threshold. A great example of personalized pricing is used by the hotel website Orbitz. The company uses data such as zip code, type of browser, and even type of device to determine the spending threshold of a website visitor. Then they display prices for each user depending on the data. For example, Mac users can expect to see higher prices for hotels on Orbitz than their PC-using counterparts. Personalized pricing is a growing trend in retail. By pricing for the individual and not for a broader demographic group, companies can earn extra sales that they might otherwise lose. Personalizing the shopping experience can also increase customer loyalty and happiness, and companies can reward returning customers with lower prices and other incentives. However, personalized pricing does have some downsides. This model is complicated to implement because it needs to use data from each individual shopper as well as the broader market. It also has some problems concerning publicity. When consumers find out that they might be paying more than their friends for the same product, overall trust in the retailer might drop. What is dynamic pricing? Dynamic pricing, on the other hand, looks at the broader market rather than the individual customer. Read more: The Ultimate Guide to Dynamic Pricing With dynamic pricing, the changes in price are not dependent on the individual customer at all. Instead, prices change because of outside variables, such as the weather, time of day, or available stock. McKinsey reports that retailers who use dynamic pricing report sales growth of 2%-5%, as well as margin increases from 5%-10%. These retailers also report higher levels levels of customer satisfaction. A fantastic example of dynamic pricing that you’ve likely interacted with is Uber’s “Surge Pricing.” During peak hours when the demand for a cab is higher, the company automatically creates a “surge rate” that everyone in a given city must pay. This surge rate applies to every user, regardless of whether they are a loyal Uber customer or a first-time rider. Dynamic pricing has numerous benefits, mostly derived from the fact that it synthesizes internal product and sales data with external market and consumer data. Retailers can choose how they want to price themselves, such as whether they want to match their competition’s pricing model or vary pricing based on the customers’ perceived value of the product. In fact, it’s even possible to combine multiple pricing methods into one algorithm to ensure that your pricing remains competitive at all times. However, there is one main drawback of dynamic pricing: retailers can’t use data to incentivize individual customers into action. Personalized pricing allows you to look at individual behaviors and characteristics and pinpoint promotions for that specific person. Final thoughts Both personalized and dynamic pricing use data to give online products a competitive edge, but personalized pricing methods are still in their early adoption stages. At Omnia, we use dynamic pricing to help retailers offer the most competitive and attractive prices in the marketplace. By using automation, the process of increasing profitability in a constantly-shifting marketplace becomes significantly easier. And with a clear 5-step implementation process, Omnia makes it easy for retailers to get started. To get started with competitive pricing, sign up for a free trial of our software. You can also contact us at info@omniaretail.com or call +31 085 047 9240.

Pricing Strategies, Retail Trends & Research

06.12.2018

New Report: Retail Pricing in the UK

What’s the state of pricing automation in the UK retail industry? Omnia surveyed 150 retailers across the country to uncover the answer to this question. We asked these retailers how they use technology in their pricing and market strategies, then analyzed the results to create a full Retail Pricing Wars report. The results were quite interesting. In all, the data suggest UK retailers struggle to keep up with the rapid pace of e-commerce, and many fight the tide without the proper technological tools. This reflects recent findings from Microsoft that UK retailers fall behind in integrating AI and automation into business. Notably, we found: 96% of the top UK retailers have a pricing strategy, but almost half base that strategy on their competition’s prices 88% of those surveyed carry out price checking, but less than 50% react when their competitor changes the price of a product 34% of retailers feel pressure to change their prices regularly, but only 15% make those changes frequently UK retailers lose roughly 1.97 million hours (that’s 246,000 working days) each week on competitor price checking Want to read the full story? Click here to download your version of Retail Pricing Wars for free.

Dynamic Pricing, Retail Trends & Research

28.11.2018

You're Invited to a Google & Omnia Webinar!

Today’s retail marketplace is chaotic, to say the least. Chasing product information and manually adjusting bids is time consuming and labor-intensive, not to mention inefficient. Pricing insights make the marketing process a little easier. By combining competitor price information with your own internal data (such as stock numbers and purchasing prices), your marketing team will gain new perspective for their strategic decision making. We’re excited to announce that we are hosting a joint webinar with Google on how to use pricing insights to ease the pains of online marketing. On December 12th, 2018 at 13:00 CET, Lisa Wedsberg from Google and Thijs Algra from Omnia will spend 45 minutes helping you understand how the retail marketplace is changing and how you can prepare for the future of omnichannel. Interested in learning more? Click here to sign up! Note, the registration form is in Dutch, but the webinar will be in English. Can’t wait to see you there!

Retail Trends & Research

26.11.2018

5 Benefits of Electronic Shelf Labels

Retail is one of the most innovative industries out there. In recent years, one of the most interesting changes to hit the industry has been Electronic Shelf Labels (ESLs). These “electronic” versions of price tags use e-ink to display a price and are connected to a computer database. This labelling technology makes changing in-store prices as easy as typing a new price into the software and clicking “send”. These digital price tags have numerous benefits for retailers. But ultimately, the greatest advantages of electronic price tags for retail are the ability to engage in real-time dynamic pricing in-store and build an omnichannel experience to enhance customer loyalty. Interested in learning more about the benefits of these price tags? Here are 5 reasons brick-and-mortar retailers should consider the investment in retail label shelf holders. 1. Accurate pricing across channels The internet has completely transformed how people shop, and it’s not uncommon for consumers to price check an item while they’re standing in a store. Shoppers lose trust in a company if the in-store prices don’t align with the online data display, and unfortunately this is often the reality they encounter. An electric labelling system, however, completely change that interaction. With one standardised pricing system, your customers won’t be disappointed by price differences anymore. Instead, your company can immediately reflect any online price change in-store. Digital shelves also allow you to align your promotion prices, audit trails for your headquarter to check changes, and fix any pricing errors. Each of these keeps your prices accurate across the board and ensures your customers see your optimal price. Image courtesy of DisplayData 2. Shelf edge influence The shelf edge is one of the most important sales influencers. Most purchases are made at this point — so you want to make sure your pricing information is accurate. A price label is prone to human error. It’s also a slow process, and by the time you finish re-labeling, prices might have changed again online. This is especially true in regards to pricing electronics in an attempt to compete with online and offline competitors. With ESLs though, these changes are easy, so you can capture more sales at the shelf edge. You can react competitively to price changes, enable instant promotions, track what promotions work, and protect margins on time-sensitive stock. You can even create offers based on where a specific customer is standing in the store with just a few clicks. 3. Enhance your omnichannel experience It’s no secret that omnichannel is the future of retail. According to Planet Retail, 56% of consumers feel that technology improves their shopping experiences. Image courtesy of DisplayData How do ESLs help you build a successful omnichannel experience? ESLs enable you to interact with your customers in ways that were previously impossible: Display stock levels so customers know whether the supply is limited Display online prices of competition so consumers can trust you when you say you have the best price Enable simple ordering with QR codes Display reviews of products, so shoppers can understand what others like or dislike about a product And these are just a few examples of the opportunities in using retail pricing tags! 4. It’s not as expensive as you think Here’s the thing: ESLs do require an initial investment. And if you’re unsure about whether you will use them, it’s understandable why you might be skeptical of moving forward with the technology. But with the shelf edge being the last — and most powerful — point of influence on a sale, the ability to control what a consumer sees at the push of a button is priceless. And the process of installing and configuring the electronic shelf labels isn’t as hard as you think: Minimal construction and installation: Electronic shelf labels are easy to install and can be set up with a simple screwdriver. They’re also easy to configure using the provided software High security with low maintenance: ESLs operate on an unused WiFi network for maximum security from interference at low maintenance for retailers Easy to use: Most ESL softwares are easy to use and learn. Just drag and drop the information you’d like to display and you’re done! After installation, your employees no longer need to monitor the price tags each day. The centralized system makes it easy for one person to control all pricing changes on the shop floor. 5. Payback is quick According to DisplayData, the payback for ESLs is high. The company reports in-store sales typically increase by 6%, with a typical margin increase of 2%-3%. The payoff in transitioning shelf labels is also fast. One of DisplayData’s customers, a major European retailer with over 800 stores, secured a payback on their investment in just 16 months and predicts over 170% ROI in the next two years. If you zoom out to 5 years, the retailer expects their ROI to increase by 400% Conclusion Creating an innovative omnichannel experience is all about connecting stores and online. And the shelf edge is no exception. Retailers should carefully consider this key moment in the omnichannel buyer’s journey and recognize that electronic shelf labeling is one of the easiest ways to connect the two domains. Read more: The Ultimate Guide to Dynamic Pricing Omnia can easily connect to ESL systems like DisplayData, which allows you to create a cohesive omnichannel experience based on the most up-to-date pricing and marketing information. Want to learn more? Get in touch with Omnia today. Click the button below to sign up for a demo and one of our consultants will be in touch.

Omni-channel, Omnichannel Retail

21.11.2018

How to Avoid a Price War on Black Friday

There is growing frustration among shops about Black Friday. This is most notable in the fashion industry, because of a consumer tendency to purchase several items of clothing at a discounted price, try the clothes on at home, then return 14 of the 15 pieces to the store. This phenomenon makes the holiday frustrating for several reasons: It clogs up the distribution network and overwhelms mail rooms around the world It fuels customer frustration when they need to wait for their products because of this pipeline error It falsely inflates retailers’ sales from the day and shows inaccurate stock levels Because of these frustrations, several retailers in the U.K. have chosen to forego the sales holiday this year. And since some evidence suggest that consumer trust in the holiday is declining, it might seem like Black Friday is a passing fad. So why should retailers continue participating in Black Friday? The reality is that the psychological impact of Black Friday on consumers is enormous. One of the most significant benefits of this holiday for retailers is the fact that consumers are primed - and ready - to purchase. McKinsey reported that over 70% of consumers in the U.S., Canada, U.K., and Germany are planning on participating in Black Friday this year. And in the Netherlands, the number of searches for “Black Friday” has increased from roughly 250,000 to almost 1,000,000 in the span of 3 years, according to BlackFridayDeals.nu. Those are high numbers, and shops would be ill-advised to dismiss these consumers who are ready to spend. Instead of avoiding the holiday because of the frustration and lackluster sales, shops should look at how they can optimize their pricing and marketing strategies to capture the increased consumer desire for Black Friday deals. In fact, many of the frustrations that companies voice over the holiday are easy to counteract with a smart pricing strategy. How to make Black Friday work for you If shops should participate in Black Friday, how do they make the holiday work for them? In this section, we’ll detail four steps to take to make the hype around the holiday do the hard work of attracting ready buyers to your website while maximizing your profitability. Build a promotional strategy around your commercial strategy Black Friday is largely a day about price perception. As a result, your promotional strategy for the day should reflect your overall commercial strategy. To get started with this, you should ask yourself two questions: 1. Do I want to do promotions? Depending on your corporate strategy, you might not want to participate as heavily in Black Friday as other organizations might. If your overall commercial strategy is to be seen as a premium store, then you might not want to compete with companies that pride themselves on always having lower prices. Listen: Which categories have the highest price pressure on Black Friday? A great example of this (though not related to Black Friday) is the Dutch department store de Bijenkorf. For many years they had an extremely successful promotional sale called “Drie Dwaze Dagen” (“Three Crazy Days”) - three days of steep discounts across the assortment. However, a few years ago the company changed their corporate strategy. They wanted to cultivate a more prestigious price perception among consumers. So the Bijenkorf got rid of Drie Dwaze Dagen, despite its popularity and success. The lesson: if steep discounts don’t align with your overall commercial strategy, don’t waste time trying to compete with companies that will discount on everything. Instead, you need to be more strategic, which brings us to Question 2. 2. Which assortments will you discount...and by how much? Since Black Friday is all about price perception, you need to be smart about which products you discount. And even though many consumers will participate, many are also questioning whether or not they are actually receiving the best deal. That’s because in many cases, they aren’t. A recent article from the Telegraph pointed out that for nine out of top 10 product categories, there were lower prices on other days of the year. This isn’t because retailers are trying to “rip off” consumers. Instead, it’s because they don’t have the proper data to know whether a product’s price was lower in the last month than what they advertise on Black Friday. Historical pricing data gives you the insights you need to decide which products you’ll discount and by how much. By understanding a product’s fluctuations over the course of three months across your competition, you can see who has offered the lowest price and then use that as a starting point from which to build your discount. This data then allows you to offer consumers some amazing discounts on great products while also optimizing your margins. Leverage the power of price elasticity Price elasticity measures the change in demand of a product with changes in price. Products can either be elastic, where a small change in price will lead to a great change in demand, or inelastic, where a small price change won’t significantly impact demand. The example we like to use at Omnia to illustrate this idea is a TV and a TV wall mount. Televisions are highly elastic products, and a discount on a TV will typically result in increased sales. A small change in price on a wall mount, however, won’t see the demand change. Price elasticity is a powerful tool to use on Black Friday, especially if you combine it with a high-runner strategy, where you discount heavily on a few popular items to draw traffic to your site then price the rest of your assortment regularly. Once you have traffic on your site, you can then cross- and upsell more effectively and drive profitability - all without discounting your entire assortment. Don’t forget about omnichannel experiences Though the vast majority of consumers plan to participate in Black Friday online, shops shouldn’t forget about the omnichannel experience. According to the previously-mentioned McKinsey report, roughly one-third of all consumers across the U.S., Canada, the U.K., and Germany will expect some online retailers to also have in-store offers. Amazon is already capitalizing on this by opening up several “pop up” stores around Europe this holiday season. This is especially true for fashion vendors where consumers prefer to test the product before buying. For example, you might research a pair of running shoes online and know exactly which pair you want to buy, but you’ll make your final purchase in-store after trying the shoe on to find the right size. The increasing influence of the “ROPO Effect” (“Research Online, Purchase Offline”) means retailers need to think about how to measure sales across both channels. Use dynamic pricing Finally, one of the easiest ways to make Black Friday work for you is to use a dynamic pricing software. There are four main reasons shops should consider this investment. Dynamic Pricing helps you: Focus Black Friday on strategy, not on manually chasing and adjusting prices throughout the day. Analyze historical data to evaluate which products you’ll discount and by how much. Track and optimize your online marketing. Reduce the manual labor involved in pricing and marketing. It’s also the best thing to prevent a pricing war to the bottom. Dynamic Pricing allows you to set limits based on your commercial strategy, so your products will never go below a comfortable level. Conclusion Black Friday is a day all about price perception. Shops should use it as an opportunity to reinforce their overall commercial strategy through calculated promotion discounts on key products, not arbitrary price slashes on an entire assortment.

Dynamic Pricing, Pricing Strategies, Shopping Holidays, Black Friday

08.11.2018

4 Ways Omnia Helps You Get the Most Out of Black Friday

Black Friday is growing in importance around the world. In the Netherlands alone, interest in the retail holiday grew 2,000% from 2012-2017. And with over 70% of shoppers in the U.S., U.K., Germany, and Canada aware of Black Friday and planning to take part, retailers and brands are under pressure to slash their prices to stay competitive, both online and offline. But with thousands of products and hundreds of competitors, how can shops know what the best discount is for each product? Better yet, how can they stay competitive on Black Friday itself when prices shift throughout the day? If you’re asking these questions, you’re not alone. Black Friday is stressful, but pricing insights and automation might be the solution you’re looking for to help you tackle the day with confidence. Curious to know more? Here are four ways Omnia’s products can help you get the most out of Black Friday. 1. Focus Black Friday on strategy, not chasing prices. On Black Friday itself, many shops waste time manually tracking and altering their prices. Many on your team will devote their entire day to following the market, including manually comparing prices for multiple products several times. Automating the process with a pricing insights software cuts the work in half. Instead of asking your team to crawl the internet looking for prices, the software delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your your strategy. Automation can even take this process a step further with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. 2. Analyze historical data to build a pricing strategy. For most shops, a backlog of pricing data is not necessary for much of the year. But this information is useful for establishing a pricing strategy around the holidays, and especially for Black Friday. Historical pricing insights allow you to monitor products over the months leading up to Black Friday. This data reveals an abundance of information about the product market, such as the price ranges offered by yourself and your competition and the lowest price over the last few months. Your pricing team can then use this data to determine the best promotional price for key products. Instead of arbitrarily discounting every product by 20% just to give a discount, your pricing team can determine which products your company has an advantage over and what they should price in relation to the competition. This way you offer the best price on the market for a consumer on Black Friday, not the same price another store charges on any other day. This practice not only reduces the risk of a competitor undercutting you on important products on Black Friday; it also helps maximize your profits and margins overall. 3. Track and optimize online marketing. Retail automation doesn’t have to stop at prices. Instead, you can use pricing data to make informed online marketing campaigns. Notably you can use pricing data ensure your online advertising budget isn't wasted on out-priced items. By combining competitor pricing insights with your own internal product information (such as purchasing price), your marketing team knows which products are competitive and in-stock, and can ensure that they advertise competitively as well. This connection between pricing and marketing is important, because one small miscommunication between the two channels — especially on a high-profile day like Black Friday or Cyber Monday — can lead to a product appearing significantly overpriced compared to the competition. This can dramatically affect the price perception of your company, though it can be used strategically to sway public opinion. Additionally, automation can help your team track keywords in the weeks leading up to Black Friday itself. This then gives your organization a better understanding of where to advertise online and how you should allocate your resources. In other words? Automation helps your team focus on marketing the products that will have the biggest advantage for your business. 4. Reduce manual labor. Ultimately, one of the most significant benefits of retail automation software is that it reduces the overall manual labor for your team, both on Black Friday itself and in the weeks leading up to the event. By taking over much of the “grunt work", automation gives your team more freedom to create high-impact Black Friday promotions. Final thoughts Automation tools like the ones offered by Omnia help your teams make faster, smarter pricing decisions. And while the tools give your organization superpowers every day of the year, those powers are especially pronounced on Black Friday. Interested in testing out retail automation this Black Friday? Don’t wait. Get in touch today to set up a demo of Pricewatch and see for yourself how pricing insights help you get the most out of the day. Click below to learn more.

Pricing Strategies, Implementation, Black Friday

26.10.2018

3 Lessons on Innovation from the First-Ever Omnia Reinvent

Last week we hosted the first-ever Omnia Reinvent—an exciting afternoon of conversation and networking at our Amsterdam headquarters. The highlight of the event were three different presentations from Omnia, Google, and Nextail. Each speaker opened a discussion about how retail is changing in the 21st century and left us with plenty to think about. In case you missed it, here are 3 major takeaways from Omnia Reinvent. 1. Get excited about innovation Artificial Intelligence has a negative public image, but this technology will transform our world in ways unimaginable to most of us. Sander Roose, CEO of Omnia dedicated an entire presentation to this and convinced us to be excited about this new wave of innovation. The first Industrial Revolution liberated people from dangerous work and increased global productivity exponentially. In short, the 19th century’s widespread adoption of machines gave people superpowers. By adopting innovation, humans could devote themselves to more creative pursuits and enjoyable work. Sander believes artificial intelligence will have the same global impact. In fact, he wholeheartedly considers this moment the second Industrial Revolution. Instead of fearing AI and the changes to come, we should recognise and seize the opportunities it offers. 2. Embrace automation in business To succeed like Google, you need to think big. For Google, “big” is a factor of 10. According to Floris van de Peppel’s presentation at Omnia Reinvent, Google credits their success to a constant drive to “10x” whatever they do. This “dream big” attitude, combined with a focus on the end-user and high employee freedom, catapulted the company from a search engine to a technology leader. 10x growth isn’t easy to achieve, but Floris confirmed that rapid adoption of technological innovation makes it possible. Automation is one of these technologies that propels your company forward in two ways. First, automation frees your employees from boring repetitive work and allows them to take on more creative pursuits. You can then use this recovered time for making your business more profitable by focusing on strategy. Second, automation allows you to meet a growing consumer demand for instantaneous and personalised experiences. As consumers demand more and the retail ecosystem changes, the only way for retailers to keep up is to include automation in their operations. 3. Start small, but start now Embracing automation is easier said than done. No matter your industry, making the switch to automation involves a significant investment of time, energy, and money at all levels of the organisation. However, the longer you wait to innovate, the more difficult it becomes to catch up. That’s why it’s critical to get all executives on board for a business overhaul. At Omnia Reinvent, Nextail’s Jos Mulder detailed his own journey in successfully convincing Blokker Holding to adopt automated pricing. His advice? Start small, get results, and then re-discuss the level of investment. Final thoughts Overall, we loved the first ever Omnia Reinvent. We left feeling inspired about innovation in retail, and we’re filled with ideas for next year’s event. Thank you so much to everyone who joined us, and we can‘t wait to see you again next year! Can’t wait for next October? No need! Check out the after movie here.

About Omnia

04.10.2018

5 Ways to Measure the ROPO Effect

In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not strange when you understand more than half of the offline sales are preceded by an online point of contact: according to Accenture, 88% of orientation processes leading to a physicial sale involve at least one online point of contact. An omnichannel retailer, therefore, needs to have good estimate of the ROPO effect in order to engage in effective bid management, and more. Learn how to measure the ROPO effect and how to take action in this infographic.

Marketing

20.09.2018

Improve Your Buying, Supply Chain, and Marketing with Pricing Insights

As a retailer, the only way to reach your full potential is to apply data-driven pricing. Otherwise you’ll be paying too much for your products, holding too much stock and wasting money on marketing. Using three examples we can illustrate how pricing software can give different departments the insights they need to take the right decisions.Many companies (particularly the bigger ones) have a silo mentality when it comes to pricing, procurement, supply chain and marketing. Although pricing is a crucial factor in optimising profit, departments rarely share pricing data and insights. 1. Buying: conduct data-driven negotiation with suppliers In many retail organisations the buyers negotiate with suppliers once or twice a year. Traditionally buyers have tried to obtain a small percentage discount on purchase prices for full ranges. Using pricing software creates room for improvement in two areas. In the absence of pricing insights, a buyer will attempt to obtain the highest possible discount percentage, but will be unable to explain why such a discount should be given. Pricing data can be used as a trump card: the buyer can base the proposed discount percentage or amount per product on the lowest price in the market. Rather than sitting down with suppliers once or twice a year, the procurement department can align the frequency of negotiations more closely with daily or weekly changes in market prices. Pricing software can provide the buyer with a daily or weekly report on all products whose minimum price in the market is below the zero-margin price. This report can then be used as the basis for data-driven negotiations with suppliers. 2. Supply chain: estimate sales more accurately In the absence of data, most retailers and their buyers don’t take the price position of a product into account when deciding how much of it they want to stock. With pricing software reports that provide insights into the price position of each product, your buyers will be able to make more accurate estimates of the number of products that will be sold. For instance, such a report may show that you’ll need to negotiate on a better purchase price before buying new stock. 3. Marketing: only advertise for competitive products It may seem strange, but at most major retailers there’s no communication between the marketing department and the pricing department. As a result consumers may see adverts in which your products are more expensive than your competitors’ products. This results in lower conversion rates and negative price perception. Pricing software allows you to take pricing data into account in offers on Google Shopping. For instance, you can exclude products for campaigns where the price is more than 20 percent higher than a competitor’s average price. Another smart option is the possibility to reduce the offer when the price position in Google Shopping is higher than number 5. Conclusion Unless you’ve got a monopoly, you need pricing insights to make effective procurement, supply chain and marketing decisions. In practice, however, retailers’ departments rarely (if ever) exchange sufficient pricing data. Pricing software fills in this gap. It means that departments are no longer dependent on each other for information – they always have all the relevant pricing data on hand. Omnia Retail helps retailers and brands automate and optimize their pricing. Pricewatch gives you a 360° view of the entire pricing landscape. Dynamic Pricing automates your pricing for individual products. Want to find out more? Ask for a demo and try Omnia for two weeks free of charge.

Marketing, Implementation

04.09.2018

Omnia Retail Invited to Take Part in Leading Startup Accelerator

Omnia Retail has been invited to join the fifth batch of startups taking part in the prestigious Lafayette Plug and Play startup accelerator, as part of its ongoing international growth ambitions. Lafayette Plug and Play is the premier business accelerator for the retail and e-commerce industries and was born through a partnership between Galeries Lafayette Group and Silicon Valley based startup accelerator Plug and Play Tech Center. Taking place from September 3rd until November 22nd, the Paris-based event brings together the most exciting European retail startups, alongside top retailers, brands & e-merchants, in order to stimulate innovation, leads and high-growth partnerships. Following a rigorous selection process together with 213 other applications, which included pitching to a panel of judges in Paris, Omnia was selected to be part of the next “batch” of 17 businesses taking part in a collaborative ecosystem of startups, investors, and corporations. The programme includes 50 corporate events, and 150 mentoring sessions with VC’s, entrepreneurs, and retail experts. Hundreds of one-to-one meetings between startup CEOs and decision-makers at major retail brands are also arranged, in order to facilitate growth and business development. The event, which counts the likes of P&G, Carrefour, C&A, and Lagardère among its global partners, was founded with the goal of making the fashion and retail industries the most innovative in the world, aiming to stimulate the growth a business would ordinarily achieve in 12 months in just a three-month period. Sander Roose, founder and CEO of Omnia Retail, said: “We’re thrilled to have been invited to take part in the latest round of the Lafayette Plug & Play accelerator. The event is such a great fit for us because it’s a truly international programme, hosting businesses from all over the world. Considering our international growth ambitions, it made clear sense for us to be involved." “Many of the alumni businesses from previous Plug and Play incubators have gone on to see tremendous growth, and we’re hopeful that we’ll be able to count ourselves as yet another success story.” About Lafayette Plug and Play As the first innovative platform fully dedicated to retail and e-commerce, Lafayette Plug and Play is a startups accelerator created by the Galeries Lafayette group in collaboration with Plug and Play Tech Center. Located in the heart of Paris, Lafayette Plug and Play aims to support the development of French and international startups disrupting retail and e-commerce, by creating an innovative ecosystem around these industries. More information on lafayetteplugandplay.com. About Omnia Retail Omnia was founded in 2013 and is the leading SaaS solution for integrated pricing and online marketing automation. Omnia helps retailers regain control, save time and drive profitable growth. The out-of-the-box solution optimises pricing and maximizes returns from marketing channels like Google Shopping. Omnia services more than 100 leading retailers, including Office Depot, Decathlon, Samsung, Media Market, Tennis Point, Wehkamp, and Coolblue.

About Omnia

22.08.2018

Four Ways to Use Dynamic Pricing to Prevent a Race to the Bottom

As a retailer, you’d prefer not to see your competitors undercut your prices. But at the same time, you want to avoid a race to the bottom at all costs. In this article, we explain four ways that you can use intelligent dynamic pricing to protect your margins. More and more retailers are using intelligent dynamic pricing solutions to ensure that their prices are never undercut by competitors. This often prompts retailers to worry: if all companies start using dynamic pricing software, won’t this cause a race to the bottom, driving prices down so far that our margins will completely evaporate? On the contrary, this can be avoided, provided that you use an intelligent dynamic pricing solution. Unlike simple dynamic pricing, this intelligent software doesn’t simply follow the lowest price in the market. It also takes account of your commercial strategy and company-specific variables (such as buying prices and stock levels). 1. Implement your commercial strategy As the CEO of Coolblue, Pieter Zwart, said during the ING Business Boost: “In the end, there is only one thing that allows you to distinguish yourself online and that is the price. Since I have 60,000 competitors in the Netherlands alone, you can understand that this is a race to the bottom.” Despite this challenge, Coolblue is showing significant profitable growth. How do they realize this? “It’s not about the photo, the price or the buying button. It’s about the entire customer journey. It’s not only about the product that you offer, but about the complete need you are trying to meet with.” So for the purposes of your commercial strategy, it’s important to bear in mind that consumers don’t only look at prices. For instance, if you’re a retailer who offers fast delivery and payment after delivery, the consumer will be more willing to pay a premium price. Your market position within the product category also plays a role: if you’re the market leader or a niche retailer, you have more scope to charge premium prices. You can implement this kind of pricing strategy effectively if you use software for dynamic pricing. 2. Take advantage of the price elasticity of products Price elasticity is the extent to which demand for a product changes as its price rises or falls. For instance, a TV may be highly elastic, but a TV wall mount is not. When it comes to this kind of upselling product, consumers don’t generally compare prices. The same applies to articles that are relatively cheap anyway. This reduces the need to follow the lowest price in the market and enables you to widen your margin. 3. Make stock levels a factor in your pricing Many retailers currently adopt a reactive pricing strategy, reducing prices significantly once stock becomes unsellable. Dynamic pricing allows you to make stock levels a factor in determining the optimum price, so that you can optimise demand and supply. Is your stock at risk of becoming unsellable? Then cut the price to secure the lowest price position on Google Shopping, so that the product will start selling again. 4. Try the high-runner strategy The high-runner strategy is a clever strategy that has been used to great success by Amazon. It offers its biggest discounts on its most popular products, while making profits on less popular ones. Consistently low prices on the highest viewed and best-selling items drives a perception among customers that you have the best prices, taking advantage of the psychology of price perception. Another advantage is that you attract a lot of customers to your website because of these popular and competitively priced products, which provides the opportunity to cross or up sell other products with better profit margins. Intelligent dynamic pricing software makes it easy for you to configure the variables for determining your high runners, for instance the number of views or number of products sold. The algorithm of Omnia Retail’s Dynamic Pricing module determines your optimum prices based for instance on price elasticity, variables in your own system and competitor pricing data from Pricewatch. It then makes automatic adjustments. The flexible pricing business rules enable you to implement any pricing strategy that you want. Want to find out more? Ask for a demo and try Omnia for two weeks free of charge.

Pricing Strategies

07.08.2018

Boost Sales by Incorporating Weather Changes into Pricing Decisions

The effect of the weather on retail sales cannot be underestimated. The recent spell of hot weather in the UK and most of Europe has certainly had an impact on retail performance across various sectors. However, several marketing departments still poorly utilize links between marketing decisions and the weather. Understanding these links would give them a framework to take the weather changes into account, and thus potentially increase sales and profits. Omnia's algorithm includes input from a weather API in calculating optimal price and CPC bids so can easily incorporate weather changes into their pricing and marketing decisions. This blog describes examples of how incorporating the weather forecast in your commercial strategy can boost both your sales, as well as your profits. Increase Google Shopping bids for weather-sensitive products For some product groups, there is a correlation between weather changes and sales probability. As the probability of conversion depends on the temperature, a retailer wants to take advantage by adjusting Google shopping bids dynamically, based on the weather. Manually, it isn’t possible to do this for your complete assortment. Therefore, Omnia offers you the possibility to incorporate this automatically into your bid calculation. Read more: The Ultimate Guide to Dynamic Pricing The example below shows that you can increase bids when the weather forecast shows that the temperature will exceed XX degrees. Based on experience, we all know that when the temperature increases, consumers will, for example, start searching for air conditioners and are more likely to buy (e.g. higher probability of conversion). As a retailer, you can take advantage of this by using a business rule that increases your Google Shopping bid for this product group. Another case in which weather data could be valuable is as winter approaches. When the temperature decreases, and chance of frost starts to increase, search volume for ice skates will increase. The weather API allows you to not only adjust your bids and prices based on temperature, but also on for example chance of frost or snow. Increase prices for weather-sensitive products Weather data could also help to boost profits when it is incorporated to a retailer’s pricing strategy. Several retailers did not anticipate the recent spell of hot weather and as a result they run out of their inventory of for example air conditioners. Whenever there’s limited supply available, a retailer may want to optimize profit by using a combination of weather data and their inventory. In this scenario, a business rule could be: If: ‘# Stock months = (inventory / # units sold last 28 days) < 2’ And: ‘Temperature in 2 days is greater than 25 degrees‘ And: ‘Product group is equal to air conditioners’ Then: Take XX% margin This business rule ensures you won’t price too competitive when it’s not needed and optimize profits when demand exceeds supply. Concluding Weather can affect the sales of certain products. Omnia makes it easy for every retailer to boost profits by automatically adjust prices and cpc bids for weather-sensitive products. Are you interested to learn more about what Omnia’s software could offer for your company? Request more information or a demo here or give us a call at +31 (0) 85 047 92 40.

Marketing, Pricing Strategies

31.07.2018

Negative Search Term Automation for Google Shopping with Omnia

A while back, we introduced the 5-level Google Shopping structure. This structure is perfectly adapted to the major differences in performance between generic and specific search terms, as Lupko clearly explained in his blog post. This structure gets the most out of various search terms. It also takes just a few hours to setup, requires little maintenance and can be fully automated. Until now, negative search term lists could not be automated. Thanks to a smart combination of Google Adwords scripts, Omnia data and Google Sheets, this aspect can now be automated as well. In this blog post, we will deal with the way negative search term lists have been automated, and how it applies to the 5-level structure. Background To understand how the negative search terms can be automated, some background knowledge about the 5-level structure is needed - especially about the dynamic created between the five campaigns through an intelligent combination of the campaign priorities with the negative search word lists. Below is an overview of the 5-level structure and its various facets. If this information is new to you, it may be a good idea to read the blog post about the 5-level structure first. The 5-level structure is well-adapted to the difference in performance between the various types of search terms, and it requires very little maintenance. One needs to devote just a few hours to organise the structure, after which every aspect is fully automated. Ad groups: ad groups are created automatically based on the retailer’s category and brand structure (or the choice for another cross section), and can be paused or activated if the categories and/or brands in the selection change. Products: within the ad groups, the products are automatically added and paused/activated on an hourly basis, depending on the inventory. Bids: the CPC bids are calculated per product based on factors such as product margins, online product conversion rates, and the effect on shop sales (the ROPO effect). These bids are evaluated on an hourly basis, and adjusted if one of the parameters changes. Top X: the most popular products per category and/or brand are identified automatically based on historic sales data in Omnia, such as most profit or most page views in the past 4 weeks. These popular products are then added to the campaigns for generic terms (ex.: ‘LED televisions’), so that these generic terms automatically display the most popular products. The only aspect that has not been automated until now, were the negative search term lists. Maintaining these lists is very time-consuming, which makes it impossible to manually classify every search term. Now, thanks to a smart combination of Google Adwords scripts, Omnia data and Google Sheets, the negative search term lists have been automated as well. Maintaining the lists now requires much less time, and the various search terms are distributed better over the 5 campaigns, which further increases performance. Let us now elaborate on the structure in greater detail. The structure: automatic data analyses in Google Sheets, based on Adwords and Omnia data To identify the various types of search terms, a smart combination of Google Adwords scripts, Omnia data and Google Sheets is used. The results of the search term analyses are then automatically pushed to several negative search term lists in Adwords. These lists in Adwords have two functions: Negative search terms to split the traffic into different traffic types Negative search terms to (temporarily) exclude bad-performing search terms We will deal with both functions in greater detail below. Negative search terms to split search traffic into different traffic type In the 5-level structure, the search traffic is split into five different campaigns, which can be divided into two main groups: Specific terms: Product terms: all search terms related to a single specific product (ex.: ‘Samsung UE40KU6400’) This lets you know exactly which product should be displayed. Brand terms: all search terms containing a brand (ex.: ‘Samsung 40 inch LED television’). This lets you know that only products from that specific brand should be displayed. Other terms: all other unspecified terms (ex.: ‘40 inch LED television’). Generic terms: Category terms: All search terms for which an entire category may be relevant (ex.: ‘LED television’). Many products may be relevant for this term, but using the Top-X function, only the most popular products in the category will automatically be displayed. Category and Brand terms: All search terms in which the combination of category and brand may be relevant (ex.: ‘Samsung LED television’). Many products may be relevant for this term, but using the Top-X function, only the most popular products in the category and brand will automatically be displayed. The division into 5 levels can be generated automatically by maintaining only three different negative search term lists. The three types of lists that we use are: Brand terms Product terms Generic terms These lists are maintained automatically using three corresponding scripts, which are dealt with below. Brand term script The brand script is the easiest of the three. The ‘brand terms’ list should consist of a list of all brands that are added as ‘phrase’ negative. This can be achieved easily by constantly exporting all brands from Omnia and adding the new brands to the negative search term list. Adwords will then recognise whether a brand is included in each search term. For example, the brand Samsung can be added as the phrase ‘Samsung’, and all search terms that contain a brand will be recognised, regardless of the position of the brand in the search term: ex.: ‘Samsung 40 inch TV’ or ‘Black LED TV Samsung’. Product terms script The product terms structure is a bit more complicated. In this method, all search terms are exported to Google Sheets by means of an Adwords script. In Google Sheets, these search terms are then cut into pieces, and each piece is analysed separately. The script recognises the word type for each piece. This can be a text, brand or product number (MPN), an EAN, dimension, specification, or number. If the search term contains an MPN or a specific combination of words, then it is identified as a product term and automatically added to the ‘product terms’ list. Search term Text analysis Product term Samsung led television Brand + text + text No Samsung UE40KU6400 Brand + MPN Yes 40 inch LED television Spec + spec + text + text No Sonos sound system Brand + text No Sonos play 1 Brand + text + number Yes The types of words or word combinations can be adjusted per client. This makes it possible to adjust the product term recognition precisely to your branch. For car tyre sellers, for example, it is important to recognise whether the search term includes the tyre size. A tyre size always includes a certain standard alphanumeric combination. The product term definition could then be: Brand + number + tyre size. Search term Brand + text + tyre size + tyre size Yes Pirelli cinturato 215 55r17 Brand + text + text No Pirelli tyre 18 inch Brand + text + spec No Generic terms script In this method, the search terms are also copied to a Google Sheet by means of a script. There, the search terms are compared to the brand and category tree for the product on which they are displayed. If all of the words in the search term correspond to the words present in the brand and category tree, then it is identified as a category term. Search term Brand Category tree Generic term Samsung led television Samsung Audiovisual > Televisions > Led Yes Samsung UE40KU6400 Samsung Audiovisual > Televisions > Led No 40 inch LED television Samsung Audiovisual > Televisions > Led No Sonos sound system Sonos Audiovisual > Sound systems > speakers Yes Sonos play 1 Sonos Audiovisual > Sound systems > speakers No The three scripts above split the traffic into five campaigns, allowing for targeted bids corresponding to the type of traffic. With clearer differentiation between more specific terms, such as ‘Samsung UE40KU6400’, and more generic terms, such as ‘Samsung television’, the return on ad spend (ROAS) of the campaign will increase. As a result, higher bids will be profitable, and more traffic can be generated, resulting in more revenue. However, some search terms still will not perform well. You can (temporarily) exclude them from the 5-level structure. We will deal with this topic in the next section. Negative search terms to (temporarily) exclude bad-performing search terms Despite the neat division into five campaigns, some search terms still will not perform well, for example because of a very low click-through rate (CTR). Another scenario could be that visitors click on a product but do not complete a purchase. You want to exclude both situations. A low CTR is bad for your quality score in Google Shopping, and is a sign that your advertisement probably is not relevant for the specific search term. A low conversion rate will probably be unprofitable, as it requires too many clicks - and therefore higher costs - to result in a purchase. These terms can be excluded by using a bad-performing search term script, and they can eventually be reactivated using a ‘retry’ script. Bad-performing search terms Based on the ROAS and traffic targets, the retailer can determine which search terms should be excluded from the 5-level campaigns. The retailer is free to determine these criteria, and the limits can be set for example as follows: Displays > 200, and CTR is less than 1% Clicks > 100, and conversion is less than 1% Search terms that meet these limits will automatically be added to the ‘bad-performing’ negative search terms list, and excluded. Retry script Neither a low conversion rate nor a low CTR need necessarily be permanent. For example, a product may have temporarily been out-priced, with the result that the clicks and conversions for the related search term during that period went to the competitor. Once the product is priced competitively again, then the same search term may finally become profitable. It is therefore crucial that search terms which could potentially be interesting in the future are not permanently discarded. This ‘retry’ option is often overlooked, causing traffic to be gradually squeezed out and putting pressure on the revenue. With Target ROAS strategies, you frequently see that all of the traffic that does not meet the target is switched off, with the result that the revenue will also start to drop off as well over time. For the ‘retry’, Omnia uses a 6th campaign; the ‘bad-performing’ campaign. This campaign serves all of the search terms that are not profitable in the other campaigns. This is done for a low bid, so that the retailer can see if search terms can become profitable again with lower costs. If the terms then reach above a certain threshold, they are removed from the ‘bad-performing’ negative search term list and displayed for a full bid. First results We ran a pilot with the scripts at various customers and the results have been impressive. The scripts continuously analyse all the search terms and keep improving the traffic split based upon their performance. This makes the Google Shopping campaigns more effective and over the first 2 months both the daily revenue and ROAS have increased by respectively 66% and 39%. Conclusion The 5-level structure gets the most out of the various search terms, and with the automation of the negative search term lists, the last remaining aspect is now fully automated. This is a self-maintaining mechanism, in which the search terms and their performance are constantly evaluated. The scripts for the ‘brand terms’, ‘product terms’, and ‘generic terms’ ensure the proper division by traffic type. This makes it possible to make more targeted bids, which in turn makes it possible to realise higher ROAS and/or revenue targets. The scripts for bad-performing search terms improve the ROAS for the remaining search terms, which in turn allows for higher bids and increases the traffic for the terms even further. The Retry script prevents traffic from gradually decreasing by reactivating potentially interesting search terms. The entire structure is constantly balancing on the edge of profitability, which allows you to always get the most out of the search traffic.

Marketing, About Omnia

04.07.2018

Product Announcement: Omnia University

Exciting news here at Omnia! We’ve just launched a new module: Omnia University. Omnia University is created with the goal to help everyone in using Omnia to its full potential and to provide our customers and partners with in-depth knowledge and expert opinions about everything related to retail, e-commerce, pricing, marketing, and technology. What’s new in Omnia University? E-learning resources: Find information about Omnia and how to get started with Omnia. Training courses: Find elaborate training material for pricing, marketing, and reporting. FAQs: Get quick answers to your questions as you search in the most frequently asked questions. Product announcements: Stay up to date about the newest features. Webinars: Gain in-depth knowledge with webinars created by experts. Where can you find Omnia University? Log in to your Omnia console to find Omnia University added to the main menu. By clicking the button you’ll be taken to a Zendesk environment where Omnia University is hosted. Will anything change within the current customer support options? No. Omnia University is a complementary feature that has been added to the current customer support options. You can still reach us as usual by phone, email and chat for any questions you have. Next steps We’re excited to help our customers and partners to get the most out of Omnia, and this is an important first step towards that vision. In the upcoming months, we will develop a complete e-learning environment with an elaborate course library for all users, from beginner to expert.

Product Update, About Omnia

22.06.2018

Discover Wasted Spend on Google Shopping with Omnia

John Wanamaker (1838-1922) - marketing pioneer - famously coined the phrase: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Surely, you must be thinking this phrase is outdated. Today’s marketers can track just about anything with cookie data, attribution models, and Google Analytics. With those vastly improved analytical capabilities, you would expect marketing budgets to be mostly spent where it makes a positive return. Not quite. Especially on Google Shopping, many of our new and prospective clients are not beating the 50% effectiveness hurdle. Not having insights and tools beyond AdWords has made Google Shopping management a gamble for them. With the ever-growing importance of Google Shopping as an acquisition channel, gaining control is vital in maximizing profitability. After several years of working at the intersection of pricing, marketing, and technology, we've learned a few things about how to maximize profitability on Google Shopping. In this post, we'll cover our top 3 tips that have doubled the effectiveness of Google Shopping for our customers. 1. Increase profit by looking beyond AdWords ROAS To make a profit, you need enough margin to carry the marketing cost. Let’s say you pay 50 cents per click. If you need 40 clicks to get a conversion (conversion rate of 2.5%), your marketing cost per sold product is €20 (€0.50*40). If your margin on this particular product is €15, you'll lose €5 for every sold product. When using AdWords to manage your shopping campaigns, you are probably trying to maintain profitability by using a ROAS (Return On Ad Spend) target. The goal here is to maximize sales as long as the ROAS is above or at the target. If the average margin percentage over all products is 20%, the ROAS needs to be at least 5 (100/20). You might even use Google’s Target ROAS or Goal Optimized. They both automate bids based on AdWords ROAS. This might seem desirable, but there is a catch. The problem with this approach is that you are treating all products as though they have the same margin. Take the example below. Both products are at the minimum ROAS of 5, and should thus be profitable. Accounting for the actual product margins, however, shows that Product A incurred a loss of €50. So, no matter how much you spend on these products, Product A will always result in a loss of profit. This doesn't necessarily have to be a bad thing. In fact, it could be a strategic move to incur a loss on Product A. But if Product A is a popular product at a competitive price (which is a likely case, considering the low margin), it could take over the majority of the marketing budget. This means more of your marketing budget would go to a product that loses money, and less could go to a product that is more profitable for your business. Of course, knowing the difference in margin between these products would prompt bid change by any marketer. However, doing this manually and daily for all products is not feasible. Having the right data - accurate, complete and real-time margins - for all products, and incorporating this in your bids automatically, therefore, presents an enormous improvement opportunity. 2. Move marketing spend to the most valuable search terms Let’s say you are a coffee machine dealer. Two people cross your shop. One is interested in ‘espresso machine’. You don’t know if he’s in a buying process or just looking for information. The other is interested in ‘Philips 3100 EP3550/00’. In this case, you know he is interested in buying the exact model you have in stock. Who is worth more to your shop? Naturally, you would put in more effort for ‘Philips 3100 EP3550/00’. With Google Shopping ads. But you are likely paying more for ‘espresso machine’. Without an ‘intent-segmented campaign structure’ (more on that later), you will have no way of knowing, nor will you be able to change it. With Google’s Text Ads, you bid specifically on keywords. With Google Shopping Ads you bid on products. You have no direct control over who sees the ads and to which consumers the marketing spend goes. This means that the majority of your budget could go to broad ‘espresso machine’ type traffic, while it is the undervalued specific ‘Philips 3100 EP3550/00’ traffic that actually brings in the conversions. More often than not, this is exactly the case. Take the example of an anonymized client’s old Google Shopping results below. The graphic above shows a breakdown of the client’s Google Shopping results by search term (what people who clicked the ad searched for), before using Omnia. The cost and revenue are shown by search term specificity (Type). More than 50% of the cost goes to Generic search terms. However, they only bring in 11% the revenue. With a meager ROAS of 1.8 (€5,600/€3,000), it looks like they are losing money in this area. On the other end, only 9% of the budget goes to Product terms, yet they make up 50% of the revenue. Here, an astounding ROAS of 44.93 is realized (€24,600/€550). Anyone can see it makes sense to spend more on Product terms and less on Generic terms. The problem, again, is that marketers do not have the required data/tools. First you need a system to automatically recognize and classify search terms, and second, you need a campaign structure to adjust your bids for each search term type. When both are in place, tremendous performance improvements are made. 3. Include the number 1 factor in online marketing: pricing It might sound incredible, but the current price of a product is not always used as an input for marketing decisions. It makes sense when you place yourself in the marketer’s shoes. As a marketer, one of your tasks is adjusting bids (max. CPC’s) for products on Google Shopping. You see the performance of Product X below, for the last 7 days. The solid conversion rate of 5.1% prompts you to increase its bid. The underlying assumption is that the conversion rate is constant. You expect the past average conversion rate to be indicative of its future performance. In fact, it is necessary in order to make decisions based on the data provided in Google AdWords Still, it can be very costly. When you factor in pricing insights you can see that a product’s conversion rate depends a lot on its pricing. Especially on its Price Position (1 = the cheapest price in the market, 2 = second cheapest, etc). Take a look at Product X’s performance by day this time, including its Price Position. Over the previous seven days, the product’s price position changed multiple times. It went from 3 to 6, to 1 (cheapest in the market), back to 3. These changes can be due to the subject company changing the price of X, but it does not have to be. It could also be because the company’s competitor’s price changed, while the price of X stayed the same. Clearly, we are dealing with a ‘price elastic’ product here. Its volume is sensitive to price changes, as most high traffic products are. It sells like hotcakes at position 1 (15% conversion rate), barely sells at position 3 (2%), and doesn’t sell at all at price position 6. See the changes and accompanying conversion rates again in the graph below. Basing your bids on the average 5.1% conversion rate, therefore, makes you lose money on all price positions. You are overspending and throwing away budget at price position 3 and 6, while you are underspending and losing conversions at price position 1. Having access to competitor pricing data is therefore tremendously valuable. It allows you to attach conversion rates to pricing, so you know what is expected at the current price (position). Conclusion Don't let Google Shopping (bid) management be like gambling. Make sure you have the right data and tools to know where your budget is wasted, and adjust your bids accordingly.

Marketing, Pricing Strategies

13.06.2018

Doing ETL Process with Azure Technologies

Introduction Omnia processes millions of retailer’s products information each day to deliver the best prices according to their needs. To gain advantage from machine learning techniques Omnia began a new project to backup and utilize its data to improve its business analytics and explore machine learning. The project has two main objectives: Backup data (about 38 GB per day, with expected growth in the coming months); Ability to create multiple ETL (Extract, transform, load) processes to make data available for diverse purposes a. This project ETL process is to transform unstructured data into business report data. Alongside that, we add the following technical requirements: Progress traceability and monitor the backup and the ETL; Facility to recover if something goes wrong in the process; Ability to scale the speed linearly to the amount of data; Flexibility to create multiple distinct ETL processes. As for constraints: Internet speed from our datacenter to Azure (about 50 MB/s); Couchbase version (3.0.0), cluster size and specs – to retrieve that for backup. Development The first step was to choose the technology stack and since Omnia is primarily a .NET shop we investigated Azure. This seemed reasonable due to the current offers and easy team adoption. To satisfy the backup requirement, Azure Data Lake Store (ADLS) seemed the appropriate choice, due to the facts: Unlimited storage capability; Backups with redundancy on the fly; Created based on HDFS and supports big files (talking hundreds of gigs). Omnia currently has its infrastructure designed around Hangfire to allow easy scheduling and monitoring of background jobs, so the backup to ADLS was created as another Hangfire job. We used the Dataflow library to be able to have a good degree of parallelism when inserting documents into ADLS. We decided to zip them (with a 4 MB size cap) because text documents have a good compression rate, we use less bandwidth between our datacenter and azure and file sizes have an impact of Azure Function processing time (this is constraint since Azure functions have short lifespans). For the ability to create multiple ETL processes with ease, Azure Functions seemed the best fit due to their serverless characteristic. Azure Functions are implementations of serverless architecture. The serverless architecture allows one to execute a business logic function without thinking about the underlying infrastructure, i.e., the functions run and live in stateless compute containers that are event-triggered. Moreover, Azure functions scale on demand, have automatic failover and business logic written in C# which promotes flexibility for business requirements. To trigger Azure functions, we selected Azure Storage Queue as it provides a reliable way to transmit information between applications. These characteristics met the non-functional requirements of scaling and availability to allow the transformation of hundreds of gigabytes of Omnia data. As for the business reports requirement, Azure has SQL Data warehouse (SQL DW) seemed a possible fit due to: Ability to manage large volumes (terabytes) of information; It distributes data across 60 databases (by default) and enables more partitions; Has column store indexes – enabling fast returns for every database column; T-SQL has aggregation function to summarize data; Ability to connect with Azure Analysis services; Combability with other Azure components is easy to establish - SQL DW also has a tool to connect ADLS called PolyBase. PolyBase parses files from ADLS and map them into SQL tables. Complete Process The process to perform the backup and the ETL process is represented by the sequence diagram in Figure 1. Figure 1 Backup and ETL (simplified process) The process starts with a Hangfire job batch that inserts data into ADLS. Every time a file is added onto ADLS, a message is inserted into unzip message queue and the Unzip function is triggered. After the file is extracted into ADLS another message is inserted on transform message queue to trigger the Transform function that splits the file into several CSV files. When all files are converted to CSV, PolyBase is then manually triggered to insert data into SQL DW. This process has a central information point, ADLS, and a good scalability due to the use of Azure functions. Traceability is achieved by using the paths as the file name of the file. An important aspect to organize the ETL’s information was folder structure. Each ETL phase has a specific folder identified by a date folder structure and the file unique name. The folder structure is: Backups Year/Month/Day/Guid_N_Total.zip Unzip Etl/Unzip/Year/Month/Day/Guid_N_Total.json Final Files Etl/Csv/Year/Month/Day/BusinessFolder/Guid_N_Total.csv Etl/Csv/Year/Month/Day/BusinessFolder2/Guid_N_Total.csv ... To monitor all these functions, we used Azure’s application insights and found it easy to understand if something went wrong. Although, a single monitoring system needs to be set up to enable an overall monitor of the three different resources, and an automatic verification system to assure if all the backup files were transformed and inserted. Tips from our development process Don’t build Azure functions with more than one objective. Keep them short and precise, otherwise, they will fail and terminate midway through; Keep in mind that if the same message might be caught by multiple azure functions and your process must predict that same behaviour; Think about the process with monitoring in mind and the ability to execute specific parts; Have a correlation identifier to represent the entire ETL process. That will allow you to aggregate all the data regarding that specific run and monitor it; Use PolyBase to upload data to SQL DW instead of SISS. PolyBase was made to work with ADLS, and Microsoft as a lot of documentation on how to use it; When adding data to SQL DW, use CTAS (Create table as select) – it makes the data insertion faster and you can it to merge two tables without duplicates; To fully achieve the full SQL DW potential you need at least 60 million rows evenly distributed across all the 60 databases that it provides. Be aware of it, when developing your solutions. When creating SQL DW database study the data carefully; think how you are going to use, how you are going to partition and distributed across the database. Conclusion This project is still underway, but so far, we are happy with the results achieved. This process allowed us to backup and transform, 38 GB - about 10 Million Couchbase documents, in 1 hour and 40 minutes. Our prominent bottleneck lies on our on-premise infrastructure where hang fire batch jobs run. However, this runtime suits fits our current need, and it can be scalable by increasing the number of job slots available to perform the batch. The Azure functions occurred in parallel with the backup and that time is encapsulated by our thought-put into ADLS. PolyBase’s ingestion time to SQL DW is another project itself because it’s related with other factors such as the process units chosen for the database, the data model designed and the amount of information already stored. The next steps will be achieving a way to monitor all 3 components and assure that all backed-up data was indeed transformed and automate the PolyBase ingestion.

Technology, About Omnia, Omnia Tech

28.05.2018

Unlocking the Pricing Data Potential: Make Better Buying and Marketing Decisions

Well-managed companies recognize the critical role pricing plays in driving performance. A foundation (e.g. organization’s structure) that underpins excellence in pricing is key to realizing its full potential. However, large corporates usually have teams that work separately on topics such as pricing, buying, marketing, and supply chain. Based on Omnia’s experience there is a missing link between those teams that could add a lot of value when fully exploited. Since the marketing and supply chain department usually do not have access to pricing data, they might advertise and purchase different products than they would do if they would have access. This blog explores three examples how Omnia could facilitate the bridge between those teams, thereby enabling them to make better, data-driven decisions and realize pricing data’s full potential. 1. Pricing & Buying In a lot of organizations buyers will have supplier negotiations once or twice a year. Traditionally, a buyer would aim for a few percent purchase price improvement on the complete assortment they offer. With the increased frequency of price changes and price transparency, this traditional set-up of the buying process has two cons: 1. The purchase price improvement % or amount a. Traditional situation: without access to pricing data, a buyer would aim for the highest % as possible b. Ideal situation: data-driven % or amount per product based on lowest price in the market instead of a random number 2. Frequency a. Traditional situation: negotiations once or twice a year b. Ideal situation: frequency of negotiations in line with pricing dynamics of the market (e.g. daily or weekly) In Omnia, both cons can be solved quite easily by setting up a report. This report contains all products for which the minimum price in the market is below your zero margin price (e.g. you’re not able to match that price due to your purchase price), can be sent daily or weekly to the buyer’s e-mail (or directly to the supplier) and this can be used to start data-driven negotiations with suppliers. 2. Pricing & Supply chain We typically see that most retailers do not take price position per product into consideration when deciding what and how many products to stock. This is not because they not want to, but due to lack of data. Usually, first, a buyer decides what products to buy. At that moment it would be helpful to know your price position per product (e.g. will it be competitive), as it enables supply chain to give a more accurate estimate of how many products you will approximately sell. In Omnia, you can easily set-up a report that shows price position per product, which can be used as additional input for supply chain. This report can, for example, show an alert that advises negotiating a better purchase price before you take it on stock. Once you have a product on stock, it might happen that competitors decrease their price and you’re not competitive anymore. In Omnia, you can set-up a report that shows products with a lot of views but low conversion, which might be due to the price position. This report can be used by: Buyers; to get compensation for those products Supply chain; so they won’t order those products until the buyers managed to get compensation 3. Pricing & Marketing In large corporates, we typically see that the marketing department, who decides what products to advertise and what advertising budget will be allocated per product, do not communicate with the pricing department, who know the margin and the price position of those products. Without access to price position data, marketers might spend advertising money to show they are outpriced versus competition. Those ads obviously result in low conversion rates and negative price perception. In order to avoid this Omnia enables clients to incorporate pricing data in bid calculation, thereby enabling them to for example exclude products to marketing channels for which their price is more than 20% above the competitor average price or decrease the bid when price position is greater than position 5. Read this blog to learn more about the added value of using pricing data as structured input for online marketing decisions. To conclude Every business that offers branded products, offered by more than one retailer, needs pricing input for both buying as well as marketing decisions. Therefore, there should be communication (e.g. share data insights) between the people who are responsible for pricing, buying, marketing, and supply chain in an organization. By sharing those pricing insights on a frequent basis, the pricing data potential could be fully exploited by using it as structured input for buying, supply chain, and marketing decisions. Omnia enables retailers to automate this communication process through the set-up of reports and built-in features to use price position in bid calculations for marketing campaigns. In case you’d like to learn more about what Omnia’s software could offer for you, request more information or a demo here or give us a call at +31 (0) 85 047 92 40.

Marketing, Pricing Strategies

08.05.2018

Five Steps to Successfully Implement Dynamic Pricing

Getting started with dynamic pricing can feel overwhelming. There are loads of options and functionalities, which can lead to choice overload. A successful dynamic pricing setup relies on 5 core steps: Define your commercial objective Build a pricing strategy Choose your pricing method Establish pricing rules Implement, test, and evaluate the strategy In this post we'll cover each step briefly, but for more information be sure to check out the corresponding blog post for each element. Step 1: Define commercial objective To start, define what you want to achieve with your company or category. This is called your commercial objective, and it’s an explanation for why your company exists and what customers can expect from your organization. Some shops have a clear market penetration strategy to capture market share as their company objective. Other shops offer value-added services such as free quick delivery, great customer support, or long payment periods. Regardless of what your offer is, you should understand it thoroughly before starting dynamic pricing. The commercial objective is, in many ways, a compass for your business, and will help you form a dynamic pricing strategy that helps you reach your specific goals. Take time to develop your commercial objective, and make sure all stakeholders have the same understanding of your goals. Read more: How to Define Your Commercial Objective Step 2: Build a dynamic pricing strategy The second step towards dynamic pricing is to determine your pricing strategy. A pricing strategy uses your commercial objective to make smarter pricing choices. In other words, it makes your commercial objective possible through the power of your product pricing. For example, if your commercial objective is to increase visibility but also capture profits, you might want to follow the “high-runner” strategy commonly used by Amazon. In this strategy, you draw traffic to your store through extremely competitive prices on a small selection of your most popular products while capturing margins on your less-competitive products. It’s counterintuitive, but once visitors are in your store for one specific product, they’re less likely to navigate away for a smaller, less popular product. At Omnia, we advise users to have a clear pricing strategy before fully implementing Dynamic Pricing for two reasons: Easier to implement. When you know what you want, and how you want to achieve it, it’s easier to get started with dynamic pricing. Easier to evaluate. If you know your goal, you can keep track of how your dynamic pricing strategies move you towards that goal. Think about what you want to achieve, and how you want the public to view your company, and how it’s linked to your prices. Read more: How to Build a Pricing Strategy by Omnia Partner Johan Maessen Step 3: Choose pricing method(s) As a third step, you should choose how you will achieve the formulated pricing strategy. There are a multitude of methods to choose from, but three of the most basic are: Cost-plus pricing, in which you take the cost of producing a product then add the desired margin on top to find the sale price Competitor-based pricing, in which you follow your competition’s prices Value-based pricing, which considers the consumer perception of the product in the pricing process These pricing methods aren’t mutually exclusive, and it’s likely you’ll use a combination of these methods to create your own unique strategy. Choose what is necessary to implement the chosen pricing strategy. For instance, with a price penetration strategy you could undercut certain competitors (competitor-based), while staying above a certain margin level (cost-plus). Read more: 3 Dynamic Pricing Methods and How to Implement them in Omnia Step 4: Establish pricing rules Following on from selecting the pricing methods, we now create implementation ready pricing rules. If you choose to price based on elasticity, you let the algorithms make most of the decisions and there is less to set up in the pricing rules. In general, there are two steps involved: 1: Choose the products: Choosing the products can be anything from a category, stock, or whatever data you have. For instance: “for OLED televisions with a stock >10, apply pricing rule X”. 2: Formulate the pricing rule Now that we have the products, we can make an applicable pricing rule, which would fill in “Pricing rule X” in 4.1, for example: “follow average of competitor X & Y” or “price based on price elasticity”. Step 5: Implement, test, and monitor dynamic pricing On completing steps 1 to 4 for all products under your management, you are ready to implement them into your pricing system. For validation purposes, be sure to ask colleagues to check the implemented pricing rules and make sure they match the pricing strategy and methods. Before going live, you should go through a robust testing phase to verify you have implemented the correct pricing settings. It is important to check whether your pricing strategy is applied correctly, so you can be sure the system is actually doing what you intended to do. A good automated pricing system should never be a black box, all decisions should be transparent in order to trust the system. After going live, it is important to monitor the pricing strategy and evaluate if it is helping you reach your objective. If your goal is to capture more market share, but are not able to increase your volume of units sold or your overall sales, it might be time to re-evaluate the objective. Read more: How to Test the Effectiveness of Your Online Pricing Final remarks To conclude, a clear commercial strategy and objective is essential input for a good Dynamic Pricing implementation. It helps setting goals and keeping track of reaching those goals. We recommend a five-step approach to go from your commercial objective to a successful dynamic pricing implementation. However, it’s worth noting that you should create different dynamic pricing strategies for different categories because the nature of consumer shopping changes across products. This is where a software like Omnia is useful: it helps you manage every product in every category and intelligently adjusts prices when the market changes. Want to try out dynamic pricing for free? Click the button below to sign up for a free two-week trial of Omnia.

Implementation

25.04.2018

Omnia Retail Expands Executive Team: Andrea Lamelas Puga Joins as COO

Amsterdam - April 25, 2018. Omnia Retail, leading supplier of pricing and online marketing automation software for retailers, today announced the appointment of Andrea Lamelas Puga (39) as Chief Operating Officer. From March 15th, she directs Service Delivery & Operations and the company’s finance and HR functions. Lamelas Puga aims to prepare the Omnia team for rapid growth and international expansion. She will professionalize and digitize internal processes, while at the same time ensuring that the company's culture, which makes Omnia unique, is maintained. Before joining Omnia, Andrea acted as Operations Director for Backbase. During her six-year tenure, she has shown remarkable growth, holding positions from Business Analyst to Operations Manager before assuming the position of Operations Director, heading a team of 200. Beyond operations, Andrea developed new services within Backbase as Tribe Director and set up offices in Bogota. “Andrea brings a wealth of operational experience to the table," said Sander Roose and Herman de Jager, founders of Omnia Retail. “We are thrilled to have a steady hand at the helm of operations, as we continue to move forward, growing our team and customer base.” Andrea Lamelas Puga: "At Backbase I had the opportunity to turn challenges into possibilities for growth. With the Omnia team, I am taking on the challenge to embrace growth and creating internal and external opportunities. By improving internal processes, we aim to improve the way we service our customers, both in terms of product and in support." Herman de Jager, Andrea Lamelas Puga, and Sander Roose (from left to right) About Omnia Retail Omnia is the leading B2B SaaS solution for integrated pricing and online marketing automation software. Omnia helps retailers regain control, save time and improve their results. The out-of-the-box solution automates optimal pricing and maximizes returns from Google Shopping. Omnia services more than 80 leading retailers, among which Bol.com, Wehkamp, Blokker, and Decathlon. For her clients, Omnia scans and analyses more than 500 million price points, and makes more than 7 million price adjustments daily.

About Omnia

14.03.2018

Price: The Most Important P in the Marketing Mix

In school, we learn that there are 7 Ps in the marketing mix: product, place, people, process, physical evidence, promotion, and price. Traditionally, each of these P’s has been an important way to differentiate your company from the competition. Whether it was the quality of your product or the location of your store, these P’s served as sign posts telling your customers why they should buy from you. But do each of these P’s still hold up in the 21st century? The short answer is yes, but the importance of each is changing. Today’s retail market differs vastly from the 1990s and the 2000s, and the internet has fundamentally changed the retail sector. Consumers now have the power to comparison shop instantly. The rise of online shopping also eliminates the need for physical stores and opens up competition to the entire internet, not just the physical locations nearby. These changes have a huge impact on the way shops should manage their marketing — and which P’s they should pay attention to in the marketing mix. As the internet has levelled the online playing field, one P has emerged as the clear focus for most consumers: Price. In fact, price is so important, McKinsey found that just a 1% improvement in pricing raises profits by 6%. That's more influential than a 1.0% reduction in variable costs (which increased profits by 3.8%) or a 1% reduction in fixed costs (which yielded a 1.1% increase in profits). In this blog post, I’ll explain how price became the most important factor in the marketing mix, and how shops can use pricing data to increase their marketing ROI. Click here to download your free copy of Why Pricing and Marketing Go Hand-in-Hand The 7 P’s in Marketing Let’s look at the relevance of the 7 P’s in today’s online marketing context: Product is less of a differentiator to consumers as shops broaden their assortment and more shops offer the same products Place is less of a differentiator as consumers order from their computer or phone People are less of a differentiator as there is no interaction with people online Process is less of a differentiator as most shops offer 24 hour home delivery Physical evidence, or store quality, is less of a differentiator as the web shop becomes the most important “store.” The quality of the web shop is equally important, but it is easier to maintain Promotion, or online marketing itself, is more important as the number of marketing channels has increased Price is a bigger differentiator as prices are transparent and easily comparable As you can see, the internet has made all but two of the 7 P’s less important: Pricing and Promotion. How a person finds your product online, and how much the displayed price is, are the most crucial checkpoints for shops to make a sale online. Considering this, it might seem like Pricing and Promotion share equal importance in the marketing mix. But the reality is that Pricing stands far above Promotion because Pricing controls Promotion. In fact, pricing is the single most important factor to consider while managing your online marketing product ads on platforms like Google Shopping. Talk to one of our consultants about dynamic pricing. Schedule a demo How pricing and marketing work together To show how important pricing is to marketing, let‘s look at a real-life example of the relationship between the two. In the graph below, you can see two metrics over the course of two months: a shop’s pricing and the number of units sold. The line graphs represent the price and the bar chart at the bottom shows the number of units sold. As you can see, this store applies two different pricing strategies in this period: A margin-focused strategy from the beginning of July to the 24th, where the shop is priced higher than the market average. An aggressive strategy from the beginning of August until the end of the data where the shop is priced lower than its competition. Looking at the number of units sold during this period, it’s obvious the aggressive pricing strategy resulted in more sales. All other conditions staying the same, the simple change in price led to a dramatic change in sales. It’s important to note that more sales do not necessarily lead to more bottom-line margin. Although there might be a high volume of sales, the prices (and margins, as a result) might be lower. But you can use this information strategically to decrease prices on select items and draw traffic to your website. How pricing affects marketing Now that we’ve shown the importance of pricing in today’s marketing mix, let’s dive deeper and examine their interactions. There are two ways pricing influences marketing performance: budget and efficiency. The following graphic illustrates the relationship between the two silos: In this illustration you can see two things: 1. Pricing strategy determines the marketing budget The price of a product online determines how much margin that product will make, a portion of which can be used for marketing. If the product has high margins, marketers have more money to market a product. However, if a product has lower margins, there is less money for a marketing strategy. 2. Pricing strategy affects the marketing effectiveness When you are priced lower than your competitors, the chance customers will click on your ad and buy your product increases. These higher click-through rates (CTR) and conversion rates are signs of healthy, effective marketing campaigns. So if a higher price creates a bigger marketing budget, but a lower price increases the effectiveness of your campaigns, there is a clear challenge. How do you find the right price that it optimal for both your marketing budget and efficiency? This question gets more complicated when you consider that this balance is different for every single product on the market. That’s because consumers value items differently and respond accordingly to price changes. This is called the price elasticity, and it is a phenomenon that shops need to consider in their pricing strategies to optimize margins. For example, an increased price for a popular TV will most likely lead to a significant decrease in CTR and conversion rate but an increased price for a TV wall mount (often sold along with the TV) may have negligible effects on click through and conversion rates. You can use this information to pair items together strategically and maximize profits. As a result, you will need to adjust your marketing bids with each price change. Each time you — or one of your competitors — changes the selling price of a product, the CTR and conversion rate will also change for that specific product. But doing this manually is nearly impossible, which is why you need to find an integrated way of managing pricing and marketing. Marketing vs Promotion There’s no way to properly plan how to market a product without eventually discussing promotion. Preliminary research helps bring a product to a new market, yet the process necessitates subsequent implementation. Discussing and planning promotion helps further define a marketing plan and marketing mix strategy. Customising marketing mix elements creates a unique marketing model for each product. What is the Marketing Mix? The marketing mix consists of a number of factors under the control of a brand that influences customers to buy products. Some use the term, “marketing mix” interchangeably with the P’s of marketing. The P’s have evolved over the years, growing in number. The 7 P’s of marketing builds upon the traditional 4 P’s of marketing, product, place, price, and promotion. Let’s further explore “place” in context as to provide a 4 P’s of marketing example. Twitter is a popular social media platform. And, though it’s not a physical place, it serves as an example of a place to study, find, and build rapport with customers. Identifying places where a brand focuses energy and resources is among the elements of a marketing plan. For, it may be more successful and profitable for one brand to focus energies on Twitter while a competitor uses another platform or decides to neglect social media altogether to meet its marketing goals. Marketing mix variables should be defined per product; a strategy for selling smartphones is independent from one associated with canned fruit. However, methods, marketing channels, and messages may overlap. Similarly, a retail mix should differ from a marketing plan for wholesale goods. A product mix analysis helps differentiate and customise individual marketing plans for each product. Some companies refer to sales history while others analyse the performance of competitors before developing a marketing plan and promotional strategies. 3 methods of pricing and marketing integration So, now that we’ve established the impact of pricing on marketing, let’s discuss how to take advantage of this phenomenon. Typically, shops use one of the following three methods of integrating their pricing and marketing information: 1. No access to pricing data for marketing management: Although pricing is the #1 factor impacting online marketing results, it is still rarely used as input for marketing management. Without pricing context, it’s hard to evaluate the performance of online marketing campaigns. Let’s take another look at the earlier graph of historical pricing data. The online marketing department will probably be satisfied with the performance in the periods of aggressive pricing strategy, but wonder why conversion rates dropped during the margin-focused periods. If they had access to pricing data, they’d be able to understand why these changes occurred: during the aggressive pricing periods, there were more clicks on the product because the price was low, but during the margin-focused periods the online marketing was less effective because of a higher price. They‘d be able to use that input in future marketing campaigns and prevent wasted ad spend on out-priced products. 2. Pricing information as fixed input for marketing: If you manage your pricing and marketing strategies separately, you can still use the pricing data as fixed input for the marketing department. In the above examples of margin-focused and aggressive pricing strategies, the historical data shows how this product reacts to price changes. With this information, the marketing team can change bids to match new price levels, which will increase your ROIs. For example, if the price ratio (which is your price vs. your competitor’s prices) changes, the marketing team can proactively change bids marketing to match the expected performance at the new pricing level. But this strategy isn’t foolproof. Marketing can only work with the pricing information they’re provided, a data set which requires a significant amount of work to find. 3. Integrated management of dynamic pricing & marketing. When you fully integrate your marketing with Dynamic Pricing, the data becomes powerful. At this point pricing is not just a fixed input for marketing. Instead, the selling price itself is also adjustable. With this dynamic input, you can find the perfect balance between pricing, marketing budget, and marketing efficiency. This ensures marketing is effective, but also creates enough margin to ensure a healthy marketing budget. So, is this the full answer to pricing and marketing integration? Unfortunately, it isn’t. The above example is a simplified situation, and it doesn’t fully cover all the intricacies of the relationship between pricing and marketing. To uncover that answer, we need to go one level deeper. It will get a little murky at first, but all becomes clear soon. The full interaction between pricing and marketing performance The combination of your marketing budget per product (the CPA) and the marketing effectiveness predict which CPC bid is still profitable to sell a single product. However, it does not yet predict the amount of traffic you expect to generate for a specific product over a given period. Without that traffic information, you can’t predict the overall bottom-line results your marketing campaigns will generate. In terms of overall turnover and profit of the online campaign, you are still in the dark. Adding traffic information illuminates this information and gives you a better decision-making framework to use. Below, we've added 3 different traffic KPIs to the model: Cost-per-click (CPC): the amount you are willing to pay for one click. The higher the CPC, the higher the chance is that Google Shopping (for example) will display your ad Impressions: the number of times your ads are displayed Clicks: the number of times a customer clicks on the ad and visits your website Now that this information is available, let’s go through it from the left to right in five steps and examine the interactions: The pricing level determines the maximum marketing budget per product (max CPA) and predicts the conversion rate of that product at that specific pricing level The combined conversion rate and maximum CPA roughly determine the maximum profitable CPC. If you have a CPA of €10 and a conversion rate of 5%, you are willing to pay up to €0,50 per click (a max CPC of €0,50) The maximum CPC determines how many impressions you can buy The impressions and the click-through rate determine how many clicks you can generate. It’s important to remember that the display price also affects the CTR. The clicks, together with the conversion rate and pricing level, lead to the overall bottom-line performance. Finding the right balance between all these parameters is an enormous challenge. Conclusion When you integrate your pricing data with your online marketing strategy, you can find the perfect balance between price, marketing budget, and marketing efficiency. The pricing insights, combined with a number of other KPIs and metrics give marketers the information they need to make smarter marketing choices and bids. That‘s why, out of all the 7 P’s, pricing has the largest impact on online marketing. But many online marketing management teams still don’t recognize the power of pricing data or use it to its full potential. And for those who do recognize the possibilities, there isn’t an easy way to execute the strategy manually. Read more about interesting 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.

Marketing, Pricing Strategies, Featured

22.02.2018

Dynamic Pricing: Relevant for Every Retailer?

Prices from large retailers are rarely static anymore. More often, retailers make use of dynamic pricing: they use intelligent software to adjust prices multiple times a day. Prices may be automatically adjusted when, for example, stock levels at competitors are decreasing, when there is shown more interest in a product or when the weather forecast changes. Large retailers such as Amazon change their prices as often as every ten minutes. The success of industry leaders like Amazon shows that Dynamic Pricing is critical when organizations want to succeed in the e-commerce and omnichannel retail industry. But how does Dynamic Pricing work? And is Dynamic Pricing equally relevant for all retailers, big and small? Using a dynamic pricing strategy is not a new thing. It became popular in mainstream business years ago when the travel industry adopted the practice. Today, dynamic pricing is also common practice in the retail industry. Some of the largest retailers in the world, including Amazon and Alibaba, all employ the strategy in their e-commerce online stores. Dynamic pricing is also being used more and more in physical stores. Mediamarkt, for example, was one of the first retailers in the Netherlands to introduce digital shelf labels. How does it work? In short, dynamic pricing is a pricing strategy which applies variable prices instead of fixed prices, with the aim to increase a companies profit and margins. New, optimal prices are calculated and recalculated periodically, up to multiple times per hour. Dynamic pricing uses multiple sources of data, including internal and external data variables to find the optimal price. Internal variables, such as stock levels and sales data are enriched with external variables such as competitor pricing and Google Analytics data by dynamic pricing software. As more data is analyzed, the right price at the right time can be calculated for each product. Before starting with dynamic pricing, it’s important to have set a clear pricing strategy. An intelligent dynamic pricing software will combine your chosen pricing strategy with all the described data sources, to find optimal prices that fit your business pricing strategy; whether that’s market penetration, maximization of revenue or something else. In general, dynamic pricing will yield a growth in contribution of 10-20%, compared to static pricing. However, there are notable differences in performance between the different types of dynamic pricing. A basic type of dynamic pricing is a rule-based pricing system. When dynamic pricing is used this way, prices are adjusted according to certain rules, such as: follow prices of competitor X. Another, more advanced method of dynamic pricing, is a value-based pricing system. In a value-based system, price elasticity of products is an important factor in calculating the optimal price. The latter, more advanced type of dynamic pricing often yields better results than the basic, rule-based dynamic pricing system. One basic way a rule-based dynamic pricing can add value, is to implement pricing rules based on stock levels. Such rules can help protect a retailers margins if a competitor should decrease prices, potentially caused by a surplus of stock. If stock levels are lower than the beforehand determined limit for stock weeks (stock / sales per week), it’s not necessary to follow the lowered price and thus lose margins. Conversely, the same is true: by implementing rules to decrease price as soon as stock levels exceed a set limit, a retailer can make sure they’re not losing sales. Who benefits with dynamic pricing? Whether Dynamic Pricing is relevant for a retailer is partly dependent on it’s competitors pricing strategy. Do competitors deploy a dynamic pricing strategy, but the retailer keeps its own prices static? It’s very likely the retailer is losing sales. An increasing amount of retailers, both large players and smaller niche businesses in different industries, are making use of dynamic pricing. In order to quantify the potential added value of dynamic pricing, a retailer can start with systematically comparing its own pricing to the pricing of its biggest competitors, in order to assess if and how many times a day competitors are changing their prices. A retailer can also track to what extent competitors react to its own price changes. This may lead to the conclusion that one or more competitors are using dynamic pricing. If that’s the case, the retailer can benefit from taking action in dynamic pricing too. An often-heard concern is that when all companies in the same industry would use the same dynamic pricing software, wouldn’t that result in a race to the bottom? Fortunately, this is not the case. Since both the commercial strategy as well as the input variables (e.g. purchase price, inventory) vary per company, there is no reason to end up in a race to the bottom. A retailer’s commercial strategy influences pricing, because the consumer is generally willing to pay a premium price for extra services such as fast delivery, customer service, or the possibility to pay by invoice. Often, the most optimal price is not the same as being priced the lowest in the market. To answer the question whether it’s interesting for the smaller retailer to start with dynamic pricing? It depends on their competitors pricing strategy, the industry and their commercial strategy. In most cases, we know from experience that retailers can achieve quick wins by gaining insights in competitor pricing, and by implementing a basic rule-based dynamic pricing system with rules based on stock levels. Do you want to learn more about dynamic pricing? Subscribe to our newsletter to receive our new blogs in your inbox, or request more information here. You can also give us a call at +31 (0)85 047 92 40.

Implementation

13.02.2018

How to Avoid a Race to the Bottom with Dynamic Pricing

With today’s pricing transparency, price has become one of consumers’ key purchase decision factors. Shops navigate a tricky path when it comes to pricing: they don’t want to be undercut by competitors and lose sales, but they also don’t want to get caught in a “race to the bottom” where price cutting gets so extreme that margins completely disappear. In a race to the bottom, competitors fight fiercely for the customer due to continuous price reductions. To escape this, shops are increasingly using intelligent dynamic pricing software solutions. An often-heard concern is that when all companies in the same industry would use the same dynamic pricing software, wouldn’t that too result in a race to the bottom? Fortunately, this is not the case. Since both the commercial strategy as well as the input variables (e.g. purchase price, inventory) vary per company, there is no reason to end up in a race to the bottom. Intelligent dynamic pricing, instead of very basic dynamic pricing by simply following the lowest price in the market, actually enables stores to avoid the race to the bottom. This blog post outlines four ways how to use intelligent dynamic pricing strategies that can help you avoid a race to to the bottom and protect your margins. 1. Use your commercial strategy As CEO of Coolblue Pieter Zwart stated during the ING Business Boost: ,,In the end only one thing remains with which you can distinguish yourself online and that is the price. Since I have 60,000 competitors in the Netherlands alone, you understand that this is just a race to the bottom.’’ Despite this challenge, Coolblue drives significant profitable growth. What is their secret? ,,It’s not about the picture, the price or the buy-button. It concerns the entire customer journey. It is not just about the product you offer, but the complete need that you are trying to satisfy with that.’’ A shop’s commercial strategy influences the price because the consumer is generally willing to pay a premium price for extra services such as fast delivery, customer service or the possibility to pay by invoice. Another important commercial factor that plays a role, is the market position within the specific product category: being the destination store or a specialist/niche store could allow for a bit of a premium price. Analysis by A.T. Kearney shows that retailers with a large market share and high contamination risk could use premium pricing. Price contamination occurs when competitors quickly match a company’s pricing moves and when consumers switch providers as soon as they learn about a lower priced alternative. In many cases the optimal price is therefore not equal to the lowest price in the market. Since the commercial strategy is essential for determining the optimal price, the commercial and pricing strategy should be clearly defined before starting the implementation of dynamic pricing. The company’s overall strategy should translate to pricing tactics per category, based on the roles of categories within the retail format. A store with a broad assortment, may for example want to use aggressive pricing in a new product category to get market share whereas they may use premium pricing in a product category where they already have established significant market share. Dynamic pricing software usually offers complete flexibility to automate the pricing strategy through the creation of pricing business rules. A shop offering a high value proposition with several free services can for example: choose the most frequent price in the market + XX% and set a target margin level per product group or brand (or any other level), making sure profits will be dynamically protected to competitor’s price reductions. 2. Use price elasticity The price elasticity of demand measures the responsiveness of quantity demanded to changes in the price of the product. Elasticity per product(group) provides insights in how competitive the pricing needs to be. For example a TV is usually high elastic, whereas demand for a wall mount is less sensitive to price changes. In practice, it means that increasing the price for the TV by 10% results in a significant decrease of volume while increasing the price for the wall mount by 10% may negligible affect volume and therefore the right thing to do. Typically non-elastic products are ‘add-on’ products for which consumers generally do not compare prices or products with a low absolute price point, for which doing pricing research isn’t worth the time for shoppers. For those products there is less need to follow the lowest price in the market. 3. Use your stock levels Next to price elasticity, inventory levels are another important variable to make better pricing decisions in order to optimize profits. Early adopters of dynamic pricing, such as the airline industry, are characterized by having a fixed short-term capacity and relatively low variable costs. In such settings, it is the available capacity, for example, the number of seats still available on a flight, that causes prices to change throughout time. For several other industries using capacity or stock levels based on business rules in pricing, it also helps to optimize supply and demand and to avoid obsolete inventory. Usually a shop would reduce the price by a significant percentage after a product has become obsolete. Business rules based on stock levels could help to protect a store’s margin in case a competitor decreases its price because of obsolete inventory. If your inventory for this product is below your set limit of stock weeks or months (#units in stock divided by #units sold last 4 weeks), there’s no need to adjust the price and give away margin. The example underneath shows that if your stock coverage is less than 4 weeks and your stock age (# days in inventory) is less than 30 days the minimum margin should be 20%. One could also use the most occurring price point. Business rules on stock levels could also help to optimize profits for your own stock levels. Instead of static and reactive price reductions, business rules based on stock coverage dynamically adjust prices to stock levels. You may for example need to reduce your price by only a few percent to take the first price position on Google Shopping, instead of the static X% on the complete obsolete assortment. Proactively managing your stock levels could lead to a significant increase in contribution margin. In combination with Pricewatch, Omnia offers the unique opportunity to incorporate pricing data in the bid calculation. If you already have the first price position in Google Shopping, it may be more interesting to increase bids instead of further reducing the price. 4. Use a high-runner strategy Amazon uses a clever strategy that makes it seem like it undercuts its competition more often than it does. It offers its biggest discounts on its most popular products, while making profits on less popular ones. In Omnia you could implement this by using a high-runner strategy. You can choose a variable to select high runners: number of views, quantity sold or anything else. Consistently low prices on the highest viewed and best-selling items drives a perception among customers that you have the best prices, taking advantage of the psychology of price perception. Another advantage is that you attract a lot of customers to your website because of these popular and competitively priced products, which provides the opportunity to cross or up sell other products with better profit margins. Closing remarks These are only a few examples of how Omnia’s dynamic pricing software could help to avoid a race to the bottom. More information about Omnia? Don't hesitate to get in touch, or give us a call at +31 (0) 85 04 79 240. Talk to one of our consultants about dynamic pricing. Contact us Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: 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 Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. 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. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.

Pricing Strategies

18.01.2018

How Blue Mango Interactive used Omnia to Win the Dutch Search Award

If you are a current user of Omnia, you know that pricing and marketing are two sides of the same coin. If a product is priced is too low, it cannot carry the marketing cost needed to sell - indicating the need to incorporate marketing cost in pricing. Additionally, the price of a product is one of the most important factors impacting its online marketing performance. As you can see, pricing and marketing influence each other greatly, which is why we build the first tool in the market that can manage both. But, even if you are a current Omnia user, do you know all ways in which pricing intelligence can bring your marketing performance to new heights? This article will showcase three cutting edge methods of online marketing management using competitor pricing, one of which recently earned - online marketing agency - Blue Mango Interactive a Dutch Search Award. Using competitor pricing to increase the effectiveness of text ads The great thing about having a flexible tool with a lot of possibilities, is that it becomes a breeding ground for cutting edge marketing and pricing strategies. Our customers and their marketing agencies frequently come up with ideas we have not thought of before. As was the case with Blue Mango Interactive, who increased the CTR (Click Through Ratio) and Conversion ratio, for the text ads of their client Saniweb. They were able to do this by using real time competitor pricing data from Omnia to decide how to configure ad content. This innovative approach recently won them a Dutch Search Award. Most serious retailers use some type of feed manager to create text ads and populate them dynamically with high engagement elements such as price. Blue Mango Interactive knew that to beat the competition they had to go one step further and incorporate also competitor pricing intelligence. How they did it In Omnia, you have the possibility to create custom feeds based on any internal data or external data you want. In this case, Saniweb used real time competitor pricing data to optimize their feed content. Blue Mango Interactive used this data to check whether the current selling pricing is higher, equal to, or lower than the minimum market price. The output is a feed, XML or CSV, showing for each product of Saniweb whether they are below, at, or above the minimum price. The Omnia output was then supplied to a tool that can automatically create and edit AdWords text advertisements. This tool decided for each product whether to highlight USPs or the product’s price. If the product was not outpriced by a competitor, the selling price was dynamically inserted in the title. If this was not the case, the ad would highlight USPs such as assembly services. The results? A substantial increase in performance when they did not show the prices for ‘outpriced’ products: CTR +71%, Conversion Rate +14%, and a lower Cost per Acquisition -20% and CPC -10%. Required Omnia modules: Pricewatch Feedmanager Bonus method 1: In Google Shopping, capitalize on buying stage elasticity and price ratio As you might know, Omnia incorporates price elasticity in the Dynamic Pricing module. This means that, rather than always having the lowest price in the market, always following specific competitors or always having X margin, Omnia tells you exactly how the product should be priced based on the variable cost, current competitor pricing, and the price elasticity of the product. You can learn more about this value based pricing method in this article. You might also be aware that we are using a 5-level Google Shopping structure to effectively adjust bids based on the specificity of the used search query. Read more about the 5-level structure in this blog post. The structure consists of the following 5 levels. The first three levels serve all products on the long tail queries: Product terms campaign Search query example: “Samsung UE40KU6400” Brand terms campaign Search query example: “Samsung 40 inch television” Other terms campaign Search query example: “Widescreen TV 100cm” The last two levels serve only the top performing product on the short tail queries: Category terms campaign Search query example: “Led TV” Brand and Category terms campaign Search query example: “Samsung led TV” Such a campaign structure allows for higher bids based on the specificity of the query and makes sure that you are showing the most relevant products on the short tail queries. Now, the interesting thing is that, sometimes a product does not do as well as expected in the most specific queries campaign, the “Product terms campaign”. Why is this? Products not doing well in the Product terms campaign is usually due to it having a high ‘current selling price’ compared to the market average. We call this a high price ratio. Someone searching for a specific product using specific search queries knows what she wants AND will be exposed to competitor pricing for the exact same products. Therefore, Product terms queries are highly elastic: a small increase in price leads to a big decrease in volume. Accordingly, you should lower your Google Shopping bid when the price ratio - your price compared to the market average - of a product is high. Omnia allows you to do just that. Required Omnia modules: Pricewatch Feed manager Dynamic Marketing Bonus method 2: Using competitor pricing to gain a more positive public perception As a retailer, you are probably using comparison engines to advertise the products. Most of the time, clicks coming from these comparison engines convert well. This is because people will only click if your priced competitively , which translates into a high conversion rate . But did you ever think of the non-monetary consequences of being listed with a price that is too high? In the example above, Coolblue has a price position of 6. This means that there are 5 retailers offering the product for a cheaper price. The result is that Coolblue will not get many clicks. “Who cares? Since they are not getting clicks, it is also not costing them anything”. A logical, but potentially dangerous conclusion. The idea of Coolblue being more expensive is still printed in the mind of the consumer. If it happens too often, with too many products, the consumer - either consciously or subconsciously - develops the idea that shopping at Coolblue is expensive. To safeguard your image regarding price competitiveness, you should exclude all products from the feeds to comparison engines with a price position that is too high. With Omnia, you will be able to do so. Required Omnia modules: Pricewatch Feedmanager Do you want to know more about how Omnia can bring your business to the next level? Request a free demo or contact us via info@omniaretail.com or call +31 (0) 35 699 02 22.

Marketing, About Omnia

08.11.2017

Hardware.info Added as Exclusive Data Partner

We are happy to announce that we have added Hardware.info as a pricing data partner for the Netherlands and Belgium. Omnia has a direct and exclusive API connection with Hardware.info's database and can collect and update competitor data multiple times a day. Next to their unrivaled data coverage in the hardware category, Hardware.info also has deep retailers coverage in other electronics categories. This data connection is ready to be used and can be connected within a few minutes. Please contact info@omniaretail.com for more info and a free prodcut assortment match. Unrivaled data coverage in Hardware categories Like the name suggests, Hardware.info specializes in hardware products: computers, components and peripherals. To provide you with an indication of the value of this data source, Omnia has compared the pricing data of over 100.000 hardware products to our current data sources. Hardware.info got the best score on both the number of products with pricing data (90% had a match) and the average number of prices found per product (6.3 retailers), making it an ideal addition to the current data sources for the hardware categories. Strong retailer coverage in electronics categories Next to the hardware products, Hardware.info also scored well in other electronics categories. Hardware.info might not always have the broadest product coverage of all the data sources, but definitely has the deepest retailer coverage: averaging at around 9 retailers per product, compared to an average of 5 over the other data sources. Adding Hardware.info as an additional data source for these categories will greatly increase the total overview of the competitor landscape and lead to better pricing decisions. Curious in your data coverage at hardware.info? Are you interested in comparing your product assortment against the database of Hardware.info? Please contact INFO@OMNIARETAIL.COM for more info and a free product match.

Product Update, About Omnia

27.10.2017

Tips & Tricks - Easily Analyze Marketing and Pricing in Omnia

Due to complete price transparency in online comparison shopping engines and marketing channels such as Google Shopping, consumers can directly compare prices between competing retailers. It’s even possible to sort by price! In such a situation, it becomes very hard to convert the products which are relatively expensive compared to competitors. As a retailer, you can ask yourself why spend marketing budget on products which are outpriced if it’s so clearly visible for consumers? As such, pricing has become the most important factor in determining online marketing variables such as views, conversions and eventually return on ad spend. It is crucial in online marketing to take into account what the pricing situation is for your product, by answering important questions. For example: Which products get the most views and what is my pricing situation for those products? Where am I the cheapest in the market and how is my conversion there? These questions are not possible to answer via standard tools such as Google Analytics & AdWords. With Omnia, you can answer these questions and much more. A unique and powerful feature of Omnia is the combined automation of marketing and pricing. Moreover, it also offers valuable insights in these two fields via the Reports functionality. With this functionality you can set up a data extract of the current situation at the product level. With these insights you can re-evaluate your current pricing & marketing strategy to get better results. In order to analyze pricing & marketing in a fast and easy way via Omnia, you need three things: Omnia Dynamic Pricing Google Analytics Connected Google Analytics with Omnia Consult the set-up guide or ask our customer service on how to set this up. After you're set up you can get started and create a valuable report in minutes with five steps: Step one: set up the necessary variables in “Mapping” You can copy paste the following mapping / calculation (2nd column) including the brackets [brackets] into your mapping. Also see the screenshot as an example. EXPORT FIELDS MAPPING/CALCULATION EXPLANATION OMNIUNIQUEID ID Product ID within Omnia EAN [EAN] EAN / productcode which matches with competitors Top_category [Top Level Category] Category level Brand [Brand] Selling_price [Selling Price] Current price PriceRatio [Selling Price] / [Average price competitor(s)] Price ratio: your price divided by the average price in the market Minimum_market_price [Minimum Price of Competitors] Distance_to_minimum [Selling Price] – [Minimum Price of Competitors] Distance between your price and the minimum (lowest) in the market Views_L4W [# of UPV PDP last 4 weeks] Unique pageviews of last 4 weeks Total_sold_L4W [# Omni-channel Unit(s) sold last 4 weeks] Total amount sold in last 4 weeks Conversion_Perc [# Omni-channel Unit(s) sold last 4 weeks] / [# of UPV PDP last 4 weeks] Conversion rate (%) If possible, you can also take online sales instead of omni-channel sales. We recommend you include at least these variables. It is always possible to add others if you like & the data is in Omnia. For instance, if you want to analyze a low-level category, add that to the report. Step two: Add a filter to exclude products without competition As products with no competition have no price ratio or minimum price in the market, be sure to filter these products from the report by excluding them from the report. A product has no competition when the price ratio is equal to zero (because Omnia is unable to compute a market average) You can choose to include only the category and/or brand of your interest. This decreases the amount of products in your report and makes it easier to analyze. As in the example below, the report will only include Brands named “Omnia”. Step three: Sort your data on the interested variable The Top-X functionality allows you to sort and mark/take the “Top” products based on a variable and in a group. For example: only take the top 3 highest selling (sorting variable) products for every brand (grouping variable). If you take only the top 3, this works like a filter: the total number of products will be limited to a maximum of 3 per brand, making the report smaller. You can use this functionality in three ways: Sort and take (filter) or mark the “top” products per group Sort and mark the “top” products per group Only sort the products based on the sorting variable The difference between the 3rd and the first two is that in the 3rd way you sort on a number of products which is larger than the largest group or assortment (for example 100.000 products per group): thus you include every product in a group and effectively only sort the products based on the sorting and grouping variable. For this report, it might be handy to sort on the amount of views per category: from highest to lowest (descending). This way, you can analyze which products in a category have the most pageviews and directly compare it with the conversion rate and pricing situation (e.g. priceratio & distance to the lowest price in the market). Certain products might have lots of views but are priced too high compared to competitors. You can reconsider your pricing strategy based on this information. Step four: set-up the export In this step, you can set-up the export of the report, for example: have it emailed to you every Tuesday at 9AM. We recommend you to set up the CSV settings according to your Excel settings. So check which kind of decimal separator your Excel uses (comma or dot) and how fields are quoted and delimited. This way, the file will instantly open in Excel and be ready for analysis. Standard English uses a comma decimal separator and semicolon field delimiter with no quotes around values (see screenshots). Tip: You can always click “Run Now” and download the file in the “Preview” screen to get a fresh report. Analysis: This is what your Excel file will look like, I have colored some products which might be of interest and formatted the conversion percentage to show percentages. Green rows show products which seem to be doing well: high number of views and high conversion rate, while the pricing does not seem be extreme, meaning there are no extreme values of the priceratio. It might be a certain brand or model which is popular and you could discuss whether to increase the price for that, depending on the market. Try to find a common link between products that are getting good metrics and evaluate the strategy. Red rows show products where action or at least further investigation is needed: there are a good number of views (>300) but the conversion rate is relatively low or even zero. For instance, the first red row is a relatively cheap product with a price ratio of 0.86 (i.e. 14% cheaper than market average), but it does not convert well. Could the content of the product page be insufficient? Is the product targeted well in the marketing campaigns? Was the price lowered very recently? Are my main competitors cheaper? For the other two red rows: the product is priced at the minimum of the market (distance to minimum is zero) and there are no conversions. It indicates something is wrong and further investigation is needed. This simple report shows that by combining dynamic pricing and marketing with automated reports you could choose to only focus on “problem” cases. This saves you time, which you can spend in pro-actively changing your strategy instead of reacting only to market changes. Closing remarks This example report shows how you can combine pricing and marketing data in one report to give you valuable insights for your strategy. As the Omnia reporting functionality is very flexible, you can always add data, create formulas, add new filters or different Top-X groups to your reports. This helps you to zoom in on problematic products instead of your full assortment at once. If you have any questions regarding this topic, don’t hesitate to reach out to customer service.

Marketing, About Omnia

05.10.2017

Omnia Retail Targets International Growth with Capital Injection

Omnia Retail supplies retailers with algorithm-driven software for dynamic pricing and dynamic online marketing. With this Software-as-a-Service (SaaS) platform, Omnia Retail is the market leader in the Netherlands. Omnia will use Connected Capital's capital injection to ﬁnance its international growth ambition. Omnia Retails' software enables retailers to automate their pricing and online marketing campaigns in a simple and effective way. The software gives category and marketing managers superior insight into their product range, prices and marketing efforts. This enables them to effectively make strategic choices and automatically process these at a high frequency. Omnia Retail scans and analyses more than 500 million price points every day. Based on this, the system makes more than 7 million daily, automated price adjustments to its customers' product ranges. For each client the individual, optimal price point is calculated, taking into account factors like price elasticity, logistics costs and purchase price. In addition, factors such as weather forecasts and product-related promotional activities are analysed. In order to optimise online marketing, Omnia analyses and prioritises more than 2 billion options a day on Google Shopping and many other marketing channels. The result is that clients benefit from a strong growth in turnover and revenue. From our ofﬁce in Amsterdam, Omnia Retail services more than 80 retailers among which are leading online and ofﬂine players such as Bol.com, Wehkamp, Nextail and Decathlon. “We have the luxury of being the only company in the world with a system that provides integrated pricing and online marketing information based on advanced algorithms,” says Sander Roose, who founded Omnia Retail together with Herman de Jager. “Large international retailers are starting to contact us, which makes international upscaling both easier and necessary. With Connected Capital's investment and strategic support, we can enlarge our team and further develop our product.” Technology increasingly important in retail Technology is quickly replacing location as a success factor in retail. Instead of a few times a year, prices are currently adjusted several times a day. The tried and tested promotional folder has been overtaken by real-time auctions for spots on online price comparison websites. With these numbers and adjustment frequencies, regular manual category and price management are no longer sufﬁcient. Software that combines raw calculating power with a price and marketing strategy is an absolute must for today's retailer, both online and ofﬂine. The advent of big data and artiﬁcial intelligence, which are already being used by players like Amazon and Alibaba, has led to a strong growth in the demand for this type of software both in Europe and elsewhere. Talk to one of our consultants about dynamic pricing. Contact us Rock-solid product with great potential for growth Omnia Retail is in a perfect position to meet the future demand of retailers with regard to dynamic pricing and dynamic online marketing. Connected Capital's investment will mainly be used to substantially enlarge the team, the services, and the product portfolio in order to reach Omnia's growth targets. In addition, Omnia will start partnering with international consulting partners and online marketing agencies. Apart from capital, Connected Capital will offer hands-on strategic and operational support to Omnia Retail's management to help further growth. Connected Capital's team has a varied background in venture capital, private equity and in top-tier strategy consulting and thus brings extensive and complementary knowledge and expertise to the table. Geert van Engelen, partner at Connected Capital: “Herman and Sander are very strong and experienced and lead a team of talented developers and sales consultants. Together they have built a rock-solid company with an extremely attractive growth potential in a highly innovative market. The company ﬁts the investment philosophy of our fund and we look forward to using our knowledge, network and energy to help Omnia Retail reach its growth ambition.” About Connected Capital Connected Capital is an independent growth capital investor focusing on innovative technology companies that contribute and respond to increasing digitalisation in the Benelux and Germany. Apart from capital, Connected Capital also offers intensive support with regard to evaluation and implementation of growth strategy, globalisation and general management support. Connected Capital has a professional and complementary team of six experienced professionals with a background in private equity and strategy consulting. www.ConnectedCapital.nl

About Omnia

09.08.2017

5 Ways To Measure ROPO Effect [INFOGRAPHIC]

In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not odd when you understand more than half of the offline sales are preceded by an online point of contact. An omnichannel retailer, therefore, needs to have good estimate of the ROPO effect in order to engage in effective bid management, and more. Learn how to measure the ROPO effect and what to do with this information in our new infographic. Links on the bottom of the page. Links: https://developers.google.com/analytics/devguides/collection/analyticsjs/events https://support.google.com/adwords/answer/6100636?hl=en https://www.facebook.com/business/help/176164682883378?locale=en_US https://support.google.com/adwords/answer/2998031?hl=en https://www.accenture.com/us-en/retail-research-2015-consumer-research

Marketing

12.07.2017

Will the EU Limit Google Shopping?5-Level Campaign to Maximize Traffic

Google Shopping has been thriving over the few last years and on average retailers are already spending over 50% of their paid search budget on shopping. The EU's recent verdict will cause some changes to Google Shopping in the EU. How this will exactly effect the consumer and the retailers is still unclear. However, given Google Shopping's current market share, they are most likely to remain, by far, the most dominant party. The pie may become slightly smaller in the short term, forcing retailers to fight harder for their traffic share. Having a solid campaign structure to deal with the challenges of Google Shopping is crucial in maintaining and growing one's traffic share. Lets dive a little bit deeper into the challenges of Google Shopping and the campaign structure available to deal with these challenges. Challenges of Google Shopping One of the main benefits of Google Shopping is that it is easy to set up and that products are automatically shown on relevant keywords. Therefore, it is very easy to generate relevant traffic with Google Shopping. However, this also has a major disadvantage. Namely, it is not the retailer who determines which keywords a product will be displayed for – like in traditional AdWords text campaigns – but Google itself. Google decides this mainly on the product content delivered to the Google Merchant center by the retailer, but also on general knowledge about the product. Not being in control of which products are displayed on which keywords creates two challenges: Challenge 1: How do you increase bids for more specific keywords? Some search queries are more specific than others. For more specific queries, it is clearer what customers are looking for and chances are higher that you show will the right products. This will result in higher click though rates (CTRs), that in turn will lead to better quality scores in Google Shopping and eventually a better ROAS. In addition, more specific queries are used further down the customer journey, where chances on conversions are higher. Both are good reasons to bid higher on more specific keywords. Challenge 2: How do you control which products are displayed for broad keywords? Google just decides which product to show based on a combination of the relevancy and the CPC bids. How can you, as a retailer, make sure that your best-selling products are shown for broad keywords? And preferably those products that are also profitable to sell. Both challenges can be managed by combining the campaign priorities and filters with negative keywords lists. The 3-level Google Shopping structure It’s quite common to use a 3-level Google Shopping structure to cope with the first challenge of increasing bids for specific keywords. Step 1) Split campaigns To solve the first challenge – increasing bids for more specific keywords – you need to split the traffic into 3 campaigns, thereby making keywords more accurate: Product terms - all terms that contain a product name: e.g. Samsung UE40KU6400. Brand terms - all terms that contain a brand name: e.g. Samsung 40-inch television or Samsung Led TV. Other terms - all terms that do not contain a brand or product name: e.g 40-inch television or LED TV. In the product terms campaign, we now exactly which product to show: a Samsung UE40KU6400. In the Brand terms campaign, we know at least what brand to show: a Samsung. In the other terms campaign, it is now always clear which product to show. Step 2) Add Priorities and Negative lists To split the campaign in these three traffic groups, you need to use the priority settings in the Google Shopping campaigns. There are three choices: high, medium and low priority. These priorities decide determine which campaign Google first tries to serve a keyword. If you got three campaigns with the same product (no filters), priorities by itself will not do much. Google will serve all keywords to the campaign with the highest priority: in this case, the Other terms campaign. But once you start combining the priorities with negative keywords/keyword lists it becomes interesting. Two types of negative keywords lists need to be created: Brand terms - containing all brand names: e.g. Samsung or LG. Product terms - containing all product related terms: e.g. UE40KU6400 or Sonos play 1 Adding these negative keyword lists to the Other terms and Brand terms campaigns will suddenly provide an interesting dynamic between the three campaigns. Let’s take 3 keywords as an example: “LED television”, “Samsung LED television” and “Samsung UE40KU6400”. Google Shopping first tries to serve all 3 keywords to the campaign with the highest priority: the “Other terms” campaign. The “LED television” keyword can be served, but the other two contain the brand term Samsung, which are on the brand terms negative lists. These keywords cannot be served to that campaign and will continue to the campaign with a medium priority: the “Brand terms” campaign. The “Samsung LED television” keyword can be served on that campaign, but the “Samsung UE40KU6400” contains the product term UE40KU6400, which is on the product terms negative list. This keyword will continue to the “Product terms” campaign, to which it can be served. Step 3) Optimize CPC bids With this structure, the traffic is automatically split into 3 campaigns based on the accuracy of the keywords. The bids of the campaigns can be optimized separately, allowing you to bid higher on more specific, more valuable, keywords. Splitting traffic on keywords types is necessary to increase the performance of the campaign, but will also make it more difficult to manually manage it. Google Shopping should already be managed at the product level and splitting the keywords types complicates this even further. It is, therefore, crucial to think more strategic and to translate these strategies into rules and then automate them. Disadvantages of the 3-level structure The 3-level structure solved the first challenge, but does not solve the second challenge: how to control which products are displayed for broad keywords. The Other and Brand terms campaigns contain both rather specific search terms (“40-inch LED television”) and broad terms (“LED television”). Broad terms generate lots of traffic, but are often not profitable as it is hard to control which products to show. There are 3 possible ways to make these products profitable within this 3-level structure, but all three solutions have their downsides: Solution 1: Lower CPC bids, so the broad terms are profitable. Missing lots of traffic: low impression share on broad terms. Bids too low for other more valuable, specific terms. Solution 2: Add the broad terms to negative lists. Missing all traffic on broad terms Solution 3: Filter only popular products into Brand and Other terms campaign. Much lower number of impressions, as products in campaigns do not match all keywords. These problems can only be resolved by extending the 3-level structure to a 5-level structure. I would, therefore, like to introduce a 5-level structure to be fully in control of the keywords and get the most out of Google Shopping. The 5-level Google Shopping structure Step 4) Splitting the campaigns even further In the 5-level structure, the broad keywords are moved into two separate campaigns in which they can be managed separately, allowing you to have control over these keywords and providing the opportunity to resolve the problems that are present in the 3-level structure. These two campaigns will focus on the following broad keywords: Brand & Category Terms - terms like Samsung television or Sonos sound system. Category Terms - terms like television and sound system. Step 5) Adding Priorities and Negative keyword lists: To make sure that the broad keywords are served on these campaigns, an extra negative list must be created and added to the campaigns with the 3-level structure: Broad terms - containing all broad terms: e.g. [Samsung television] and [Sound system] etc. (note that this must be an exact negative keyword: [keyword]) Broad terms are now served to the broad “Brand and Category Terms” and “Category Terms” campaigns. Adding the right priorities and the already existing “brand terms” and “product terms” negative lists, will, in a similar way as for the 3-level structure, make sure that the “Samsung television” keyword is served to the “Brand & Category Terms” campaign and the “Television” keyword is served to the “Category Term” campaign. Note that you will also need to add the product terms list as a negative list to the broad campaigns, as the product terms campaign has a lower priority. The broad terms are now divided properly over the two extra campaigns, but we have not yet solved the second challenge: How to control which products are displayed for broad keywords. Step 6) Adding smart filters: The second challenge can be solved by adding smart filters to the campaigns, so that only products present in the “broad terms campaigns” are those that you want displayed for the broad terms In Omnia, we have created the Top-X functionality to support this. The Top-X functionality consists of 2 parts: Grouping the products Selecting Top-X products within that group, based on a customizable popularity formula: The product groups must be chosen in such a way that it best suits the broad keywords corresponding to the additional campaigns: Brand & Category Terms campaign -> Group by Category & Brand combination Category Terms campaign -> Group by Category Now that you have grouped the products, you need to select the top products for each of those groups based on a popularity score. In Omnia, you can use all fields and historical data to create a popularity score that best suits your targets. A few examples of commonly used popularity scores are: Absolute max profit in the last 4 weeks Formula = [# Unit(s) sold Online last 4 weeks] * [margin] Most PDP page views in last 4 weeks Formula = [# of UPV PDP last 4 weeks] Weighted online vs Store units sold Formula = [# Unit(s) sold Online last 4 weeks]^2 * [# Unit(s) sold Store last 4 weeks] Only price competitive products, sorted on turnover in the last 4 weeks Formula = If ([Price Ratio] < 1, [# Unit(s) sold Online last 4 weeks] * [Selling Price], 0) Where [Price Ratio] = [Selling Price Retailer] / [Average price competitor(s)] Based on these popularity scores you can mark the Top X (e.g Top 2 or Top 5) products for each group by assigning them a label. In the AdWords Google Shopping campaign settings, you can filter on these labels and select only the most popular products per Category in the Category Terms campaign and the most popular products per Brand & Category combination in the Brand & Category Terms campaign. The product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date. You are now in control of which products are shown for broad keywords! Step 7) Optimizing CPC bids Being in control of the broad keywords gives you the opportunity to manage the CPC bids of these products. Because you are only showing popular products, chances are higher that you are showing a relevant product to the customer. This will increase your CTR and consequently the ROAS of the campaign. Higher ROAS means that you can increase the CPC bids and gain larger impression shares on these high volume broad keywords. Also, the broad keywords are now separated from the Brand Terms and Other Terms campaigns, solving the problems of the 3-level structure. This will allow you to increase the bids on terms like “40-inch Samsung television” or “40-inch grey LED television”. Gaining maximum impression share on these products. Benefits of the 5-level structure Let's recap the main benefits of the 5-level structure: Bid higher on more specific, more valuable, keywords. Optimizing traffic on those terms. Full control over which products are shown for broad keywords to push the products that serve your business targets. Popular products are shown for broad keywords. Increasing the CTR and ROAS and allowing you to increase CPC bids to gain impression share and consequently increase your revenue. Broad keywords are now separated from the Brand terms and Other terms campaigns, allowing you to increase bids on these campaigns and maximize this impression share. In addition, this can all be automated with Omnia: Automatic ad-group creation based upon values in the feed: e.g. brand and category combination CPC bids updated hourly on product level for each campaign corresponding to the performance of each of the 5-level campaigns. Smart filters by using the Top-X functionalities: product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date and saves a lot of manual work. Initial negative keyword lists can be created by using the content of the feeds. Tips Try using negative lists, instead of negative keywords within a campaign. These lists can and must be used by multiple campaigns, so choosing proper lists will save lots of time and will let you keep the overview. Use “Phrase” negatives for product and brand terms, so that you don’t have to add every search term that contains “Samsung” as a negative. Use [exact] match for broad keywords. Broad Modified Match is not available as a negative keyword. Choose your Top-list groups so that the top products cover the whole spectrum of broad keywords. When you select only the top performers of the whole assortment, chances are great that products only match a portion of the search volume: e.g. when you only select televisions in the Top-list, products will not show for a broad keyword like “wall-mount”. So you will at least want your best performing wall-mount to be in the Top-list. Use the shared budget option for the AdWords campaigns. For this structure it is necessary to make sure the keywords are always shown in the right campaign. When the budgets are separate, you risk the “Other Terms” campaign will run out of budget. This will cause the other terms to be served on the brand or product terms campaigns, where CPC bids are much higher. For more information about the 5-level Google Shopping structure or guidance on how to implement this structure, please contact us via info@omniaretail.com or call +31 (0) 35 699 02 22. Or log directly into the console to get started: login.omniaretail.com.

Marketing, Implementation

06.07.2017

Product Update: Improved Console Speed and Faster Channel Exports

After launching Omnia last year, we have been grown rapidly and already 12.5 million products run through Omnia's Dynamic Pricing and Marketing processes every hour. Our focus has been on supporting this growth and developing new functionalities so that our customers can perform all desired actions for their entire product range. However, the combination of this rapid growth in both functionalities and products has caused some processes to take longer than might be expected. That's why we've spent a lot of time accelerating various screens and processes within Omnia over the last 2 months. Most likely you have already noticed the speed improvement in the console, but we would also like to inform you via this newsletter about improvements in 3 other area's. 1. Loading times console screens To our great satisfaction, all settings in Omnia are used quite extensively. So much so, however that sometimes more than a 100 marketing channels, field-mappings and/or pricing strategies are entered into Omnia, by one givin retailer. To ensure that the screens keep functioning properly with all these settings, we have greatly accelerated the load times of the screens below. This allows you to quickly navigate through the screens and adjust settings instantly and easily. Screens with improved load times: Marketing Channels & Reports overview Mapping of all fields in the three different sections: Connect > Import Mapping Marketing > Channels > Mapping Reports > Mapping Pricing > Settings > Strategies Pricing > Settings > Actions 2. Speed of running marketing channels and reports When updating marketing channels and reports, the update sometimes had to wait in line for other processes to finish. Consequently, it could take quite long before the channel was updated and one could verify the new settings. In order to provide faster feedback on manual changes, we have given priority to the export channels that are run manually. The export starts to update immediately after clicking the "run now" button and after a few moments, the exports can be checked, modified if needed, and re-run. 3. Pricewatch exports are finished earlier Due to the ever-increasing number of unique products in Omnia, we need to collect more and more price data from our data partners. Together with our various data partners we have been able to speed up these data connections. In addition, the data processing within Omnia has been optimized and the processing power is further expanded. The result: tens of millions of competitor prices are delivered well within the agreed times! We hope that these speed improvements will make working within Omnia even easier and more effective. Feel free to contact us if you have any more questions, by email (info@omniaretail.com) or call +31 (0) 35 699 02 22.

Product Update, About Omnia

15.06.2017

Dynamic Pricing is Also Possible in Physical Stores: Here’s How

More and more e-commerce players use dynamic pricing to automate pricing to grow sales and contribution margin. This leads to frequent price changes on their entire stock with some products even getting repriced multiple times a day. For physical stores, the process of printing and changing a single price tag in a physical store takes several minutes and physical stores carry many thousands of products. How then can omnichannel retailers keep up with pure e-commerce players, for whom changing prices is a completely digital event taking at most milliseconds, and therefore are changing their prices multiple times per day? This is a question we often get from omnichannel clients and omnichannel retailers considering implementing dynamic pricing. In our many years of experience in implementing dynamic pricing at omnichannel retailers, we have learned that dynamic pricing for omnichannel retailers is certainly possible. We present an action plan for implementing dynamic pricing, ranging from tips to create political momentum in often quite traditional retail organizations to technical considerations, such as electronic shelf labels Step 1: Building the business case for dynamic pricing Before e-commerce, retailers had to operate under the “shelf space is limited” constraint. E-commerce has introduced virtually unlimited shelf space: they are only limited by the size of their warehouse. Drop-shipment even removes that constraint. Many omnichannel retailers have also grasped this opportunity provided by e-commerce. They have a core product assortment which is carried both online and in physical stores, but they also have a considerable web-only products. For omnichannel retailers we, therefore, recommend a pilot period during which dynamic pricing is used solely for the web-only products. This provides them with a solid business case to prove to management that dynamic pricing also has a huge impact on sales and contribution margin at their retail format, not just for Amazon. If an omnichannel retailer does not have web-only assortment, it could decide to run a pilot on a subset of the omnichannel assortment that is so limited that it doesn’t have a significant impact on store operations. In that case, it is still crucial to make sure that the stores are aware of the importance of the pilot and to make sure store execution is optimal. This prevents the risk of drawing the conclusion that dynamic pricing does not have an impact while it was caused by poor store execution. If both alternatives for the pilots are not possible, omnichannel retailers could use the 10-20% average contribution margin increase that Omnia Dynamic Pricing users see as input for their calculations. It should be noted that there is huge difference in the performance of a well implemented value-based dynamic pricing system and a poorly implemented rule-based dynamic pricing system. The latter can even be margin eroding. Step 2: Store rollout by electronic shelf labels or reduced frequency of changes Once the business case has been established, the omnichannel retailer needs to plan a roll-out for their entire range of products. The retailer needs to make an important decision at this point on whether to implement electronic shelf labels (ESLs). Over the last couple of years there have been great improvements in performance of electronic shelf labels, mainly driven by e-ink technology, and costs are continuously decreasing. Several providers of digital shelf strips are sesimagotag, Pricer, and Displaydata. Considering an average store carries thousands of products, electronic shelf labels will still be a significant investment. Typical payback periods of ESLs are 18-24 months. It is, however, important to stress that the impact of dynamic pricing is not just driven by “smarter price points” but also by increased frequency of price changes. Electronic shelf labels help to increase frequency of price changes and thereby returns on dynamic pricing. Some omnichannel retailers decide on a middle ground, implementing electronic shelf labels only for fast moving products with a high frequency of price changes. The route of implementing electronic shelf labels primarily has technical challenges, however. The ESLs need to be placed in the stores, there needs to be a communication network and the system needs to connect with the retailers' ERP system. From the perspective of this article, it is, however, the most straightforward implementation as – after implementation – the retailer has complete flexibility in frequency of price changes. If the business case for implementing ESLs does not (yet) seem feasible, the retailer needs to take a different approach. The retailer first needs to decide whether to couple the frequency of online and offline price changes. The advantage of coupling the frequency of price changes is that there can never be price differences between online and offline purchases, which is of course an important consideration for omnichannel retailers. However, in this approach the retailer does not exploit the ability to have as high a frequency of price changes in its webshops as its e-commerce rivals. This would make the retailer competitive on all online touch points where shoppers carry out their research, such as Google Shopping and comparison shopping engines. An alternative approach for the retailer therefore could be to have a (much) higher frequency of price changes online than in the physical stores. We would recommend retailers taking this approach to have the policy that – when shoppers note a price difference between online and offline – they always get the lowest advertised price. In any case, the retailer will have to operate with a relatively low frequency of price changes in the physical stores. Most of our clients start with once a week. Once store operations get used to the new process, this could be increased; for example to twice a week. Final thoughts We believe the approach without electronic shelf labels to be an intermediary option, which of course is still a great improvement versus not doing dynamic pricing as omnichannel retailer. Ultimately, we expect all omnichannel retailers to fully adopt ESLs. The shift to online orientation for products, increases in frequency of price changes and developments in ESL technology will accelerate this trend. What are your thoughts on (implementing) dynamic pricing in physical stores? Please let us know!

Omnichannel Retail

08.05.2017

3 Dynamic Pricing Methods and How to Implement Them in Omnia

The rise of e-commerce has led to a greater assortment of shops. In addition, the internet has greatly increased price transparency in the market, which in turn has increased the frequency of price changes. The combination of these two factors made dynamic pricing a necessity in today’s retail market. And as part of the Five Steps to Successfully Implement Dynamic Pricing, shops need to choose a pricing method that makes sense for their organization. Dynamic pricing is often equated with a purely competitor-based pricing method. For example, “Always adjust the price to the lowest of the three competitors X, Y and Z”. Competitor-based pricing, however, isn’t the only dynamic pricing method, nor is it the most recommended pricing method. Three dynamic pricing methods are outlined in this blog post. Pricing method 1: Cost-plus The most straight-forward pricing method is cost-plus pricing. The starting point is the cost per product, where the desired margin (percentage or € amount) is added to calculate a selling price. If the cost per product changes daily or even hourly (due to changing suppliers or dropped shipping for example), it is necessary to implement this method dynamically. Main advantage: Easy to understand & implement Main disadvantage: Takes only internal factors into account How can I apply the cost-plus pricing method in Omnia? This method is easily implemented in Omnia. Create a new variable with the formula editor. Start with the purchase price and add all other product costs from your feed plus a desired margin, possibly at the product-level. Include this variable in your strategy settings as a lower & upper limit and you are set. Read more: The Ultimate Guide to Dynamic Pricing Pricing method 2: Competitor-based With competitor-based pricing, products are priced relative to (direct) competition. For instance, a company might want to undercut a certain competitor. Or, a company might want to maintain a certain price position in the market. It is a common strategy for shops to match prices with their most important competitors for certain products. Stores specialized in electronic products have the highest frequency of price changes and other product categories are likely to follow with an increasing frequency. Therefore, it is essential to implement this method dynamically to not lose any market share. Main advantage: Takes external factors (competitors) into account Main disadvantage: Assumes your competitors have the right price How can I apply competitor-based pricing method in Omnia? Two steps are involved to implement this method in Omnia: 1. Create an action, which is the concrete formalization of your strategy. Some examples: Never price higher than competitor X Never price lower than position 2 in the market Set price equal to most occurring price Etc. 2. Apply this action in the Strategy settings within Omnia to a part of your assortment based on a variable, such as: brand, category, color or even stock. An example: raise price above the average of the market when stock is below 10. Pricing method 3: Value-based By far, the most recommended pricing method by experts is value-based. Value-based pricing is a dynamic pricing method based on the economic principles of demand and shows the best results in additional sales and total margin. As the true value of products is difficult to uncover, consumers’ willingness-to-pay functions as a proxy for the perceived value. Omnia calculates the price elasticity of products to uncover consumers’ willingness-to-pay for the combination of product and seller. A product with high price elasticity is very sensitive to price changes as consumers value the product less than a product with low elasticity (keeping all other things equal). Over time, Omnia learns how much consumers are willing to pay for the product at each price point relative to the competition. You can use this data to further optimize your pricing strategy and create rules for maximum profit with the given price elasticity. Main advantage: Combines external and internal data Main disadvantage: Most complicated pricing method How can I apply this method in Omnia? After a few months of gathering sales data and comparing prices against those of the competitors, Omnia has sufficient data to determine the price elasticity of products and categories. You can then use those insights to build pricing rules that capitalize on the price elasticities of different products or categories. Ending remarks While value-based pricing in theory is the best pricing method, Omnia recognizes the importance of having complete flexibility in automating pricing strategies. Omnia gives the power to (online) retailers to use all three popular pricing methods at the product level and even combine them according to your strategy. For example, the strategy in Omnia for a specific product could be: Begin with value-based pricing through price elasticity Never price higher than competitor X Never price lower than 10% margin To conclude, there are five main benefits when you use Omnia’s integrated pricing methods: Omnia brings internal product & sales data together with external market & consumer data Omnia’s proprietary algorithm automatically determines the price elasticity of products and categories Easily combine all three pricing methods at the product level Automation of the pricing process, multiple times per day No "black box": Omnia is completely transparent about the decisions of the price setting process. For more information about our dynamic pricing & marketing software or guidance on how to implement these pricing methods, please contact us via info@omniaretail.com or call +31 (0) 35 699 02 22. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: 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 Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. 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. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.

Pricing Strategies, Implementation

28.02.2017

Get the Most Out of Facebook Dynamic Ads with Omnia Dynamic Marketing

The world’s largest social network keeps expanding. With over a billion monthly active users, Facebook provides great marketing potential for any business. Because the platform is well aware of this fact, it is constantly adding new opportunities for businesses trying to expand their reach. It now seamlessly blends advertisements with generic content, adds social proof and stimulates sharing and liking. Facebook also allows retailers to use their immense data sets to create audiences based on interests, marital status, income, and many other factors. Most of all, it has the best performing mobile ad format. In Q4 of 2016, the company reported that 80% of its total ad revenue came from mobile advertising. Consistently, the platform has been able to offer marketers high CTR (Click Through Rate) and returns. This is because, "traditional" mobile advertising – in the form of banners – is generally seen as obtrusive, and most clicks are actually by accident rather than intentional. In contrast, the ads on Facebook are seemingly integrated in the user experience. Often it does not even occur to us that we are looking at advertisement, it's just another post in our newsfeed that we are seeing. If it is interesting, we engage, if not, we just scroll down. That is the power of Facebook mobile advertising. For retailers, the dynamic product advertisement is especially relevant. They become even more powerful when combined with a remarketing audience, which will be the focus of this article. Besides the possibility to export your products to Facebook with Omnia, you also get the most out of the campaigns, by using the unique features Omnia has to offer. Automated remarketing using Facebook Dynamic Advertising Remarketing means trying to engage those people who have visited your webshop, looked at products -maybe even added some products to the cart- but did not finalize the purchase. Out of all potential audiences to show your ads to, this group will have the highest probability to convert into buyers. This translates into a high ROAS (Return On Advertisement Spend), making it one of the first places to spend your marketing budget. By using Facebook remarketing, you can specifically show the products that the person has shown interest in. Consequently, the CTR of the advertisement will increase significantly. The end result is a dynamically tailored product ad -such as the one shown below-, whose content and target audience is chosen with maximum ROAS in mind. It is also possible to intelligently expand the audience using the "look-a-like" feature in Facebook. With this feature, Facebook looks at all characteristics of the people in the remarketing audience, and finds other similar people on Facebook. Use this feature to expand the reach of your ads, while maintaining the benefits of a high ROAS target group. For more information on Dynamic Advertising on Facebook, see the video below. Five steps to implementation 1. Make a company Facebook page and sign-up for Facebook Business Manager In order to start advertising on Facebook, you need to have (1) a personal Facebook account, (2) a company Facebook page and (3) access to Facebook Business Manager. The last step is done by signing up at business.facebook.com. In the Business Manager, you can manage the company page, create ads, and set up the Facebook pixel. This brings us to the next step. 2. Give Facebook customer data To set up a remarketing campaign, you have to supply Facebook with data about your webshop’s visitors, so target audiences can be created automatically. Therefore, it is necessary to implement the Facebook pixel. The best way to do this is by using a data layer that can be used to make Facebook tags in Google Tag Manager, which in combination makes up the Facebook pixel. The pixel needs to contain your unique Pixel ID, which can be found in the Facebook Business Manager. 3. Create a Facebook channel in Omnia Next, you must provide Facebook with a product feed. This is done by creating a Facebook channel in Omnia. Under Marketing > Channels, simply create a new channel with the Facebook template. All mapping will be done automatically for you – just add the tags and you are done! Of course, if you wish to the edit the mapping, you have the ability to do so. 4. Connect Omnia in Facebook Business Manager Now that a live feed has been created in Omnia, it can be connected toFacebook. This is done in Facebook Business Manager, in the Product Catalogs section. 5. Create the advertisement The last step is actually creating the advertisement in Facebook Business Manager. Since the products are inserted dynamically, you only have to create one advertisement! To do this, choose the product catalog sales ad under conversion. The rest should be fairly straight forward. Congratulations! You have now created your first Facebook Dynamic Ad remarketing campaign. Tips from the Omnia marketing and pricing consultancy team At Omnia Retail, we are constantly working on improving the capabilities of our software. As a result, our extensive features allow for the creation of advanced strategies in order to get the most out of the Facebook advertisements. Our team of experts here at Omnia have come up with three options for omnichannel profit maximization, listed below. Tip 1: Only advertise competitively priced products In the Facebook channel in Omnia, you can add filters which exclude certain products based on the supplied rules. The rules can be made using data from your feed, but also from pricing data. This is very useful, since the conversion rate on products with a competitive price in market will be higher than the conversion rate of products that are out-priced. Indeed, the webshop visitor may have actually decided not to buy the product he/she looked at, because it did not have a good price in the first place. Money spend on showing advertisements highlighting the same product is money wasted. To prevent this from happening, create a filter based on a pricing variable such as ‘price ratio’, ie. Your price divided by the market average. An example of such a rule could be: If Price ratio > 1.1, then exclude product. This means: if the product has a price higher than 10% above the market average, I do not want to show it in my Facebook campaign. Tip 2: Strategically include only top products based on bottom line margin Let’s say you have decided to create a product catalog campaign not based on remarketing, but on a wider audience. Which products would you show in this case? Certainly there are better options than randomly showing products. Well, there is. With Omnia’s Top-X functionality you can automatically only show the top products according to a certain parameter. We recommended a Top-X such as the following: Top 3 products per category based on bottom line margin (or volume * product margin). Tip 3: Optimize advertisements for omnichannel profit If you have a webshop in addition to physical stores, you can strategically show products to increase both online and offline sales. First, create a Facebook channel in Omnia for each physical store, using a filter to only include products that are in stock in that specific store. Second, connect the feeds in Facebook Business Manager. Third, create an advertisement for each store, using the remarketing audience (generated by the pixel) but only targeting people near that store. You also have the option to add a custom first slide, which shows either the store’s location on a map or a photo of the storefront. The end result is a highly tailored local remarketing advertisement, showing the products that people near that store location have seen on the webshop, and are actually in stock in there! This is a very effective type of adverstising for products that people predominantly search online but buy offline (such as a home cinema set of 1000+ euro). Are you excited to get started with Facebook advertising through Omnia? Do you want more insights? Be sure to contact us at info@omniaretail.com or call +31 (0)35 699 02 22.

Marketing, Implementation

07.12.2016

What does Amazon’s Increased Focus on the Netherlands Mean for Pricing in the Dutch Market?

After launching amazon.nl with an assortment of Dutch Kindle e-books by the end of 2014, Amazon recently made a second step in entering the Dutch market. Last week it added the Dutch language to their German website, amazon.de. While parts of the website have not yet been translated and there is no iDeal payment option yet, this is a clear sign that Amazon is starting to focus more on the Dutch market. It is becoming clear from comments on articles in the trade press about this move by Amazon that opinions vary wildly as to what this impact will be on pricing of products in the Netherlands. Some claim that “all margins will shrink to zero”, while others claim that Amazon is not priced aggressively at all. What does the data show? Of course, Omnia has access to pricing data of amazon.de. Amazon.de advertises on a major Dutch comparison site, so it is included in the Dutch Omnia Pricewatch data. However, this mainly covers electronics. It is also possible to source pricing data from all major German comparison shopping engines via Omnia's Pricewatch Module. This will expand insights into Amazon pricing in categories beyond electronics. For this analysis we looked at a large set of electronics products, found on amazon.de and 5 large Dutch electronic retailers, bcc.nl, bol.com, coolblue.nl, mediamarkt.nl and wehkamp.nl - all 6 of which were advertising on this major Dutch comparison shopping engine. In Omnia Pricewatch and Omnia Dynamic Pricing, price ratio and price position are key performance indicators reflecting your price position versus key competitors. The chart below shows the price-ratio and price position of amazon.de and the 5 key Dutch retailers mentioned above, both against the average of these six retailers in total. Looking at price ratio, amazon.de indeed has the lowest prices. However, the difference compared to mediamarkt.nl is small. Looking at price position, is seems that amazon.de is not pricing efficiently, because - although it has the lowest price ratio - its price position is one of the worst. This seems counterintuitive, as Amazon is known as one of the most advanced retailers in terms of dynamic pricing capability. The logical explanation for this is that Amazon does not have localized pricing for the Netherlands. The amazon.de pricing advertised in the Netherlands are simply their German price points and these price points are fully based on the German market. This may lead one to conclude that amazon.de only has a minor impact on pricing the Dutch market. However, this – unfortunately for Dutch retailers – is not the case. It’s precisely these German prices that cause amazon.de to undercut the lowest priced Dutch retailers by a very large margin in many cases. Except maybe in promotions, a Dutch retailer would never undercut its lowest priced Dutch rival by such a large margin. The chart below shows the price ratio of amazon.de versus the 5 key Dutch retailers. Each bar represents the price ratio on a single product. This data shows that amazon.de is undercutting Dutch retailers by a very large margin (up to 50% below the average of the 5 key Dutch retailers) on a significant portion of the product assortment used in this analysis. Conclusion Our expectation is that the greater focus of Amazon on the Dutch market will lead to further margin pressure in this market. The key reason for this, however, is not Amazon’s aggressive pricing in general, but the fact that it does not localize its pricing. Amazon is operating in the Dutch market with German pricing. And because Omnia as of right now has pricing data in 32 markets, including Germany, we know that - in general - pricing in the German market is more competitive that in the Dutch market. Omnia is a supplier of competitor pricing data and software to automate your pricing strategy in the most optimal way. Of course, Omnia is a software supplier and the choice of pricing strategy is always up to the retailer. Below are some suggestions in terms of pricing data and the use of Omnia software, considering the increased focus of the world’s number 1 retailer on the Dutch market. 1. It all starts with data. To decide about competitive pricing compared to amazon.de, it is crucial that you have access to amazon.de’s pricing data. With regards to electronics assortment, the pricing data of the Dutch comparison shopping engines will probably suffice. If you need data coverage on products outside of electronics, then you will need data of major German comparison shopping engines and/or data from the German Amazon Marketplace itself. If you’re interested in this, please contact Omnia. 2. Determine the impact of amazon.de on your product categories. The lack of iDeal payment option, and the longer delivery times make Amazon’s offers less attractive in the Netherlands. However, if the price differential is sufficient we see that many Dutch consumers will choose amazon.de over its higher priced Dutch competitors. The click-out reports of major Dutch comparison shopping engines may provide an indication of the impact of amazon.de on your product categories. 3. Determine whether you want to adjust according to amazon.de pricing. The answer on the previous point should, of course, be an important input to this decision. If you don’t want Omnia’s core algorithm to adjust to amazon.de, you can set the competitor weight to zero. 4. Omnia strongly advises always using a margin protection. Based on the dynamics of your business this protection can be set at zero percent, or at some percentage above or below zero. This has always been our advice, but considering a retailer is now offering goods at a 50% discount versus key retailers in the market, this has become much more important. 5. Use intelligent pricing methods. If the increased focus of amazon.de indeed leads to further pressure on margins in the Netherlands, then it becomes even more risky to apply a dynamic pricing strategy as “position X in the market”. The urgency to move to a more intelligent dynamic pricing strategy based on price elasticity product becomes even greater.

Retail Trends & Research, Amazon

10.03.2016

Important Update: Google Tightens their Requirements for EAN / GTIN Codes

We would like to inform you of an important update by Google concerning the Global Trade Item Number (GTIN) requirements, and show you how you can utilize Omnia to give your products the appropriate GTIN format. In 2015 Google made GTINs obligatory for the products of 50 specified brands. From now until May 16th 2016, it is mandatory for advertisers to supply the correct GTINs and the corresponding brand for all new products for which a GTIN code has been assigned by the manufacturer. What is a GTIN? A GTIN makes a product identifiable anywhere in the world. Plainly speaking, the GTIN is the barcode of a commercial product. In Europe it is popularly known as the European Article Number (EAN) or the International Standard Book Number (ISBN) for books. If there is a GTIN available it will be shown below to the barcode on the package. The length of the GTIN depends on the product type and where the product is sold. For Europe, the EAN (in Europe/GTIN-13) is a 13-digit number underneath the barcode. Why this change? Providing GTINs is essential for Google to recognize your product and supply their users with the most accurate and complete information. If Google knows exactly what you are selling, then they can help you improve the performance of your advertisements by adding valuable information and showing the ads in a relevant way. In addition, it allows Google to match different retailers' offers for the same product. This result is better visibility, improved targeting and more ads being setups. Therefore, you should add GTINs for all of your products in the feed. If there is no GTIN for a product in the feed, it is denied and will not show up in Google Shopping results. There is no point in creating a fake GTIN because has connections with all GTIN-databases and will immediately recognize if there are fake GTINs in your feed. Google reports that retailers that added correct GTINs to their feed had an increased conversion rate of up to 20 percent. What does this mean for you? When you target Australia, Brazil, France, Germany, Italy, Japan, The Netherlands, Spain, the Czech Republic, the United Kingdom, the United States, or Switzerland, starting May 16th 2016 you have to provide correct GTINs and the corresponding brands for all new products that are in stock and where a GTIN is supplied by the manufacturer. If you sell products that are made-to-order, hand-made or vintage products, these changes have no influence on you. In this case, you could improve your results by providing unique product IDs. Don't have GTINs? Your suppliers should be able to help you with all required GTINs. If not, then you can contact the manufacturer, or check the barcode on the packaging. For the latter, you can use a barcode-scanner app. Alternatively, some GTINs can be found in a GTIN database such as icecat.nl (this particular site is mainly for electronics). Correct GTINs are important for the optimal use of the Omnia Modules Providing correct GTINs for your products is very valuable and will pay off in both the areas of pricing and marketing. The GTINs form the basis of the Pricewatch and Dynamic Pricing modules in Omnia. Without GTINs we are not able to compare your products with competitors and it is not possible for the Dynamic Pricing engine to incorporate market prices in its calculation of optimal price points. Additionally, GTINs are the basis for the optimal performance of all marketing channels at a product level. Products with GTINs will have improved exposure on marketing channels, resulting in a substantial traffic increase for these products. Moreover, they allow the marketing channels to categorize products and expand the content of advertisements. Because of this, the consumer will be exposed to more information, and those who end up on your website will therefore convert to buyers more frequently. How do I adapt my feed in Omnia? The GTINs are entered by the Omnia user in their input feed. For each product there is a field for the correct GTIN code. In the ‘mapping’ section, Omnia has a function called ‘MakeEAN’, which will add zeros at the beginning of the GTIN code to reach the necessary 13 or 14 digits (if applicable). For example, the function will change “87263517” to “000087263517”. Moreover, the function checks to see if the GTIN is indeed an official GTIN. You are able to easily perform the same check with this tool. If the GTINs (EANs) are correctly entered in Omnia - Connect, then Omnia will automatically make sure that the right format will be supplied to marketing channels. When are these changes occuring? Google started warning advertisers February 8th 2015. Since this date you have seen a warning at the product level in the tab ‘Diagnostics information’ for products that do not meet the requirements. Update these products in accordance with the warnings. Starting May 16th 2016 Google will be enforcing this change. From this date you will see denials at the product level in the tab ‘Diagnostics information’ for all products that do not meet the requirements. After this date you have to adhere to the GTIN-requirements to be able to keep showing advertisements for your products. Want to know more? Do you want to know more about how to correctly provide GTINs to your marketing channels? Reach out to one of our Omnia consultants via email: info@omniaretail.com or call +31 (0)35-699 02 22. Good luck!

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