More than half the number of humans on earth are on the internet. This makes the internet the largest market on earth. This is why, today, most businesses want to sell online through what is generally referred to as e-commerce.
This is both a good and bad thing. A good thing because the market is large enough to accommodate all businesses but also bad because it means the struggle to stay in front of the largest audience or at the top has never been this crucial. With more competition comes the need to stay ahead. One way many businesses have learned to stay on top is by developing a solid strategy that makes price monitoring a priority.
Importance of staying on top of the competition
Staying on top of the competition is very important for some reasons.
- More sales and revenue
Customers usually tend to buy from brands they perceive to be on top of their industry. For instance, when searching for a product online, about 75% of internet users do not look beyond the first SERP (search engine result page), and about 60% always click on the top 3 websites of a search result.
This is because it is believed that those websites on top belong to businesses that are at the top.
2. Easier product introduction
Being at the top also means easier and quicker product acceptance. Everyone, including customers, understands that it takes dedication and delivery of high-quality products and services to stay at the top.
Being at the top, therefore, means more customers will trust the brand and readily accept new products and services introduced by that brand.
3. Increased customer loyalty
Staying on top of the competition wins trust and with trust comes lifetime loyalty. And usually, customers connect emotionally with brands they are loyal to.
The exciting thing about this is that once customers can trust a brand that much, you can expect them to voluntarily begin to market you to others resulting in more customers, more sales, and more revenue.
Price monitoring and why it is important
Online competitive price monitoring is defined as the process of using both internal and external data to optimize a business’s price strategy.
The prices of goods and services can never remain the same forever. They have to be reviewed and changed regularly. This is done through a solid strategy aimed at improving profit and staying at the top.
Price monitoring also helps businesses in the following ways:
- It helps to build certain kinds of reputation (e.g. being the brand with the lowest prices)
- It helps to decide the best time to adjust prices
- It provides historical data that can be used to understand changes in consumer behaviour
- It tells businesses the right time to take advantage of limited-time price offers in other to increase sales
- It helps businesses make critical decisions like deciding what low-margin products are becoming too competitive and how to adjust the price to suit the new trend
- Data from price monitoring can tell when new competitors enter certain markets
How e-commerce businesses can stay on top
Every e-commerce business needs to have an excellent strategy to get ahead, but more importantly, the strategy needs to be improved upon now and then to align with the times and trends.
One of the main ways e-commerce businesses can fine-tune their strategies to guarantee more success is by applying price monitoring.
As we have earlier explained, price monitoring works by considering two factors; internal and external factors.
The internal analysis usually involves using all the elements under the company’s direct control, such as price history, brand value, stock availability, and product rotation, to create the best pricing strategy.
The external analysis involves using the things the company cannot directly influence to decide the best prices. The information used for this analysis includes competitor’s prices, consumer’s behavior, seasons, etc.
It is always important to combine both analyses to create a pricing strategy that allows the prices not only to adjust themselves according to real market conditions but also give the brand a fitting competitiveness status.
Other vital ways by which e-commerce businesses can improve their strategies include:
- Paying extra attention to delivering better customer services
- Engaging and communicating with their customers regularly
- Being transparent and honest in their business practices.
- Creating a unique brand voice that customers can easily recognize
- Regularly creating offers and promotions to appreciate customers’ loyalty
The internet is where the market is heading towards, yet data has shown an e-commerce failure rate of 80% to 98%. This means that even though more buyers are online today than ever, not all businesses succeed at selling online.
This is especially because many brands do not recognise the importance of being at the top of the competition and therefore fail to build sustainable strategies such as price monitoring.