What is this price monitoring tool that turns out to be so important for e-commerce business? It is only about tracking your competitors’ prices. It is indispensable to control your direct rivals’ prices; that means, those who sell the same products as you do, to the same type of audience and for a similar price.
However, you can also monitor indirect competitors’ prices (those with similar products targeted to the same or different audience and for a higher or lower price than yours), so that you can get a much deeper insight into the market situation. Nonetheless, it is advantageous only if this data is going to give you any relevant information for your e-commerce; otherwise, there is no need to track them.
Even though this price tracking can be done both manually and automatically, today, we are going to talk about the process of automated monitoring. And finally, the most relevant question would be, why is competitors’ price monitoring so important?
Price monitoring tools to improve your e-commerce pricing strategy
In general terms, one of the main goals of price monitoring is creating a proper pricing strategy for your e-business. That means being able to set prices that adjust themselves to the real market situation and are competitive enough among your rivals’ products.
In a closer point of view, one of the primary indicators to know if the pricing strategy you chose is working properly is the metrics:
There are three main metrics you can never forget: price index, margin, and conversion rate. Price index levels your competitiveness status among your rivals. Margin is the benefit you obtain, the difference between your purchasing cost and your retail price. The conversion rate is the number of check-outs on your website.
These three key indicators will help you not only improve your competitiveness but also will let you know what is your positioning concerning your competition in marketplaces like Google Shopping, for example.
Besides, price analysis offers some advantages that may help you set a competitive pricing strategy for your e-commerce store. By taking into account your competitors, you can improve your competitiveness and digital performance, and due to studying your rivals’ prices, you can also find out any existent price difference with them.
For example, if your competitors can lower their prices more than you can, it may be that their distributors offer a lower purchasing cost than yours. So, thanks to price monitoring, you could renegotiate your costs and, in consequence, be able to display more competitive prices in your vertical.
A proper e-commerce strategy will enable you to increase conversions
Furthermore, you will have a much more detailed and broader view of the market situation. By checking the market’s prices, you can identify the pricing strategy that your rivalry is doing. Thanks to price monitoring tools, when you understand the behavior of your vertical, you can also recognize if there is any existent periodic trend in prices. That means you can optimize your e-commerce’s pricing strategy to maximize your sales, by offering promotions and discounts when trends foresee an upward growth, for example.
Besides, by identifying your rivals’ strategy, you can take advantage of it by organizing your stock availability appropriately you can foresee sale opportunities and trends, you can better optimize your purchases and thus save money.
Some of the price analysis tools also include pricing optimization features. That means, when collecting all data of your competition, you can apply some specific rules so that the software can determine the best price for your products.
The final goal of price monitoring tools, undoubtedly, is to increase the conversion rate your e-commerce store, always taking into consideration your profit margin.