Today marks the end of Black Friday weekend; Online retailers and bricks-and-mortar stores have relied on the effects of dynamic pricing to draw in consumers to buy their goods, be it planned purchases or impulse buys.
Consumers are used to fluctuating online prices - Waiting just 24 hours to book a flight can result in a mark up of £100, and likewise waiting for Black Friday to buy that leather jacket you've wanted for ages to sure enough find it’s been marked down in the sale.
Most internet consumers are familiar with this happening if not with its name; dynamic pricing. Shifts in supply and demand effect the cost of goods or services, which in turn ebb and flow in response.
Most commonly it's been airlines and hotels who have needed to fill as many seats or rooms as possible and thus calibrate a range of ticketing and selling deals. Now we're also seeing sports teams, entertainment venues and theme parks using dynamic pricing methods to respond to peak times and and making the most of their selling ability.
With the hopes of boosting it's box office revenue, 2018 will see the introduction of dynamic ticket pricing at America's US cinema chain, Regal. With this fast becoming a technology that retail companies want to utilise, UK football clubs Derby County and Manchester City have both consulted with one of the leading dynamic ticketing firms in the US, Digonex.
Company CEO comments that in 5 years time, this dynamic pricing will be commonplace in attractions retail. It would seem now is the time to get ahead and start using this technology wherever possible in online business.
The world's online retail leader, Amazon, alters prices throughout each day. Shoppers who are savvy are starting to use price analysis websites like CamelCamelCamel.com to wait for the best bargains. These websites analyse Amazon price drops and lists the biggest for that day.
Don't be fooled into thinking that this dynamic pricing is something that only the big retailers like Amazon can use - This technology is something that any online retailer can utilise, and is certainly something that we can help to implement in your business.
Bricks-and-mortar retailers obviously can’t quite match the agility of their online rivals; imagine the amount of label changes it would take to keep up with the likes of Amazon in one day! But that's where technology steps in once again: On their way to the UK from European supermarkets are “smart shelves” – digital price displays that allow retailers to offer deals at different times of day, along with information about the products. These digital labels have already been trialled in Sainsbury’s, Morrisons and Tesco. Last year, Marks & Spencer conducted an electronic pricing experiment, encouraging commuters in the morning rush to buy their lunch early by selling sandwiches more cheaply than later in the day.
This new technology will certainly help physical retailers get a bit of an edge back in the fight against online consumerism. Senior innovations and trends analyst Toby Pickard at the grocery research firm IGD, says this new technology will benefit retailers by enabling them “to gain more data about the products they sell; for example, they can closely gauge how prices fluctuating throughout the day may alter shoppers’ purchasing habits, or if on-shelf digital product reviews increase sales.”
And it's not all for the companies benefit! Dynamic pricing might help to gain you more sales, but it also keeps your customers happy too by feeling like that they consistently get a good deal. IGD’s research suggests there is an appetite for this sort of tech from consumers, for example, says Pickard: “Four in 10 shoppers say they are interested in being alerted to offers on their phone while in-store.”
This is something that can easily be implemented in your business to kick start dynamic pricing and clever selling for the best sales possible.
This kind of technology can see business raising their revenue as well as decreasing waste - another topic that is popular with consumers. Earlier this year, the Luxembourg-based computer firm SES took a majority stake in the Irish software firm MarketHub. Together, they are bringing data analysis and smart-shelf-style systems to some 14,000 stores in 54 countries including the UK. MarketHub says two Spar stores in London have succeeded in raising revenue and decreasing waste since introducing its technology.
This might not be quite the same as the dynamic pricing you see on the likes of Amazon, but rather than altering prices in reaction to real time supply and demand, they can schedule deals for times of day like M&S and their cheap sandwiches in the morning. These changing deals still offer their customers the discounts they re on the look out for, but with more relevance and less promotions, better value and resulting in more customer loyalty.
You could call it dynamic pricing, or agile retail, but either way this technology is guiding shoppers to making their purchase with your business and feeling good about it as well.
The trend for online bargains and the tendency to hunt down the lowest price online seems to be more popular with the younger generation, whereas perhaps the 71% that Retail Systems Research found to dislike the idea of dynamic pricing might be more prone to the kind of deals that agile physical retailers will be beginning to offer.
Dynamic pricing may seem like it's benefitting the businesses rather than the consumers, but actually they are getting good deals too so it's a bit of a win-win.
Far more controversial however is concept of personalised pricing, where specific customer characteristics are tracked and used to charge different amounts for the same product, tailored to what the retailer thinks they can and will spend. This tracked data may one day even include our credit rating.
This premis isn't new and is something that all sorts of businesses use when quoting or charging for goods or services, in particular the use of addresses and whether the consumer is thus deemed to live in an affluent area and likely to spend a bit more.
In 2012, the travel site Orbitz was found to be adjusting its prices for users of Apple Mac computers, after finding that they were prepared to spend up to 30% more on hotel rooms than other customers. That same year, the Wall Street Journal revealed that the Staples website offered products at different prices depending on the user’s proximity to rival stores.
Again, this type of technology for not only increasing sales but also including the revenue from those sales is something that can be easily set up online.
Generally the thinking behind online shopping is that it's completely neutral and the price you are seeing is the same as what everyone else is seeing. However, this may not be the case, as a 2014 study conducted by Northeastern University in Boston found that several major e-commerce sites such as Home Depot and Walmart were manipulating prices based on the browsing history of individual customers. When shopping online, the seller has information about you, and about your other buying options that physical retailers cannot hope to replicate.
The ethics of pricing based on an individual’s personal data are vexed: some consumers will find it manipulative and insist on its regulation; others may feel it’s fair – socially beneficial, even – to charge wealthy customers more for a product or service. But that's not for us to argue here.
Regardless of what technology you use, the days of fixed prices seem to be coming to an end. You might see dynamic pricing, agile retail and perhaps even personalised pricing as a return to days long before online shopping - A time when traders would haggle with customers by judging their accent or the cut of their cloak and adjust their prices accordingly.
As we've seen discussed here, dynamic pricing and agile retail technology can benefit both the business and consumer. If the implementation of this technology is something you would like to discuss for your business, please get in touch with us via one of the below methods.
Winchester Office +44(0) 1962 670 190 firstname.lastname@example.org
London Office +44 (0)203 389 5464 email@example.com