How to Adjust Price by Managing Stock Correctly

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Managing the stock of an e-commerce store might seem like a simple task at a glance. However, it has a significant impact on the performance of your store. Let’s see what aspects you should keep into account when managing your inventory in order to improve your digital activity.

The better you observe, the better you foresee

A good way to manage stock more effectively is watching your competition. Speaking in terms of e-commerce business, it turns out to be impossible being competitive without considering rivalry in your market. Watching how they behave and having under control their prices will allow you to improve your stock management and optimize your acquisition investments.

Thanks to the information you obtain by tracking rivals’ prices, you can not only detect patterns in products’ pricing, but you can also identify possible regular increases in sales volume. Nonetheless, it is necessary to mention that all this turns out to be much more efficient if done through automated monitoring tool, as the big amount of data you have to analyze is very considerable and it would be a high investment of time and money.

Do you display how many items you have left available in stock?
It creates a sense of urgency that may increase your conversions.

We want to mention that proper inventory management, as well as helping you optimize your pricing, can also imply a reduction of unnecessary costs. When you know the market in-depth, you can foresee the amount of inventory you need; thus, you can spare on maintenance costs, damaged goods, and a much more efficient internal organization.

Dynamic pricing and readjusting prices

Dynamic pricing is a valuable solution to adjust competitive prices. It suggests prices adapted to a group of rules previously set by the same e-commerce. You can define to be X euro cheaper than a specific competitor, or to equal rival’s prices for a specified category. All these conditions will affect the suggestion of the tool, and it will finally end up with an optimal price for your product.

Nevertheless, dynamic pricing also bases its suggestions on several factors (internal and external), such as:

  • The number of competitors inside your vertical: the fewer competitors you have, the higher prices you can put if you are working with a very specialized product. Otherwise, you will need to lower and optimize a lot your pricing in order to win competitiveness.
  • Acquisition costs: the sales department needs to get outstanding purchasing costs. This way, the theoretical margin is much broader, and the variation change for dynamic pricing is greater.

Even though you have a vast theoretical profit, it is essential to respect and have under control the profit margin, also called the product’s operating margin. That is the difference between purchasing cost and the sale price of a particular product. It is necessary to remark that is not worth it risking your profit margin only to achieve a better conversion ratio; as e-commerce doesn’t make truly sense if it is not profitable.

That is precisely why the best monitoring and pricing optimization tools include a kind of “margin shield”; a rule with which you can specify how much margin you want to protect for each product, brand or category. That way, you will make sure that even if a price lowers considerably, it will not be low enough to put in risk your benefits.

Then, proper stock control, along with competition’s monitoring and effective dynamic pricing solutions is a simple and effective way to adjust competitive prices that help you boost your sales and increase conversions.

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