The performance of any business, whether online or traditional, can be measured through metrics. The three main ones are: profit margin, conversion ratio and price index. With these statistics you can know where your e-commerce is and the profitability of the products in your inventory.
In this guide we will give you the keys to improve your profits, increase the sales of your products to help growing your business.
Detect opportunities to improve your profitability
While the above metrics are very important for understanding where your company stands, much more information can be gathered by studying the competition and the market in which you operate.
Having regularly updated information about the competition will give you a substantial advantage over your rivals as you increase your perspective and knowledge about your vertical. With the use of product monitoring tools you will be able to keep track of your competitors at all times and receive alerts when one of your rivals decreases the price of their products, so you can react and be competitive.
Thanks to these tools you will be able to identify situations where you are not taking advantage of a clear position in front of your rivals, for example: you are the only competitor with stock for a certain product. In this context, the best scenario would be to raise prices, which would increase your profit margin.
React to the competition
If we have previously reviewed an advantageous situation for your online business, the reality is that many times you find yourself in a disadvantageous position compared to your rivals, where the products in your catalog are not competitive enough. In these cases, the main option to gain competitiveness is through a price decrease, taking into account safeguarding the profit margin.
The use of dynamic pricing tools automates the process of adjusting prices in response to the competition’s own price decline. By using this type of software you will not only become more competitive in the short term, but by having better prices, the positioning of your e-commerce will improve, which in the long term will increase the number of orders your online store receives.
Protect profit margins
Although all of the above metrics are important, protecting your operating profit margin is imperative for your company to have revenue. There is no point in increasing the conversion rate if you do not ensure that sales prices do not respect the minimum margin to generate revenue. To identify the desired margin, we have to take into account the cost of the goods purchased, as well as the operating costs, both variable and fixed.
The Dynamic Pricing software has a margin suggestion, with which you can identify which is the most competitive part of your inventory and which sector of your catalog has the most room for improvement.
Improve your online position and increase sales
To increase the sales of your online business it is essential that you develop a content marketing strategy for your e-commerce website. You need to have a blog where, apart from telling the objective of your company, you publish content that could interest your buyer persona.
Beyond the content strategy, one way to improve the online positioning for your e-commerce is having the best prices, a factor that will make you be in the first results in product searches on platforms such as Google Shopping or Amazon.
Price is the key factor in choosing one product over another, and to increase the conversion rate of your products it is crucial that, besides having clear and concise product descriptions, you have competitive prices. As we have seen before, you have price comparison tools at your disposal. By adding them to the dynamic pricing tools, you can set a pricing strategy to make your products competitive without putting your profit margin at risk.
Managing the metrics of your online business is not an easy task, but thanks to the in-depth study of the competition and the market through tools or big data software, which collect information on price and other attributes such as the stock of rivals is the starting point for improving revenue, profit margin and web position of your online store.