The Pricing Blog by Omnia Retail
15.10.2020
Omnia's Customer Success Philosophy
Set up for success. Yes, product is important. But what matters more is how the product helps you reach your goals. That’s why at Omnia, in addition to giving you the best dynamic pricing solution on the market, we...
Set up for success. Yes, product is important. But what matters more is how the product helps you reach your goals. That’s why at Omnia, in addition to giving you the best dynamic pricing solution on the market, we deliver it with an entire team dedicated to your success.
15.10.2020
High-quality Data is Expensive, and That's a Good Thing
That’s right. High-quality dynamic pricing data costs money, but it’s money you should be happy to spend. Why? Here are four things you should know about data quality with pricing (and why it’s important you get the...
That’s right. High-quality dynamic pricing data costs money, but it’s money you should be happy to spend. Why? Here are four things you should know about data quality with pricing (and why it’s important you get the best data out there).
15.10.2020
Retail Pricing Wars Report
Automation in the UK Retail Industry? Omnia was curious, so we surveyed the top 150 retailers in the country to find out how they use automation.
Automation in the UK Retail Industry? Omnia was curious, so we surveyed the top 150 retailers in the country to find out how they use automation.
15.10.2020
Why Pricing and Marketing Go Hand in Hand
Get your data to work for you. Whether you have thousands of products or millions, your pricing and marketing insights can do more for you. Whether it's discovering the most profitable products to advertise on or...
Get your data to work for you. Whether you have thousands of products or millions, your pricing and marketing insights can do more for you. Whether it's discovering the most profitable products to advertise on or connecting your online and offline stores, combined marketing and pricing data lets you run a more effective, agile, and profitable store.
15.10.2020
7 Ways Pricing Insights Make Your Job Easier
Download the whitepaper to learn: How you're wasting 25% of your week on manual price checking. Why Omnia customers love Pricewatch What the benefits of pricing insights are for your company.
Download the whitepaper to learn: How you're wasting 25% of your week on manual price checking. Why Omnia customers love Pricewatch What the benefits of pricing insights are for your company.
15.10.2020
Pricing and Data Quality
Quality data is the foundation for any dynamic pricing solution. Just like any other software, clean data means the difference between a pricing solution you can trust and a pricing solution you grow to hate. Click one...
Quality data is the foundation for any dynamic pricing solution. Just like any other software, clean data means the difference between a pricing solution you can trust and a pricing solution you grow to hate. Click one of the pages on the right to explore why data quality is so essential to pricing.
15.10.2020
What to Look for in a Dynamic Pricing Solution
If you’re a retailer or a brand, pricing is one of the linchpins of your overall commercial success. And if you’re considering a dynamic pricing solution, we understand that finding the right one for your organization...
If you’re a retailer or a brand, pricing is one of the linchpins of your overall commercial success. And if you’re considering a dynamic pricing solution, we understand that finding the right one for your organization is of the utmost importance. The world of dynamic pricing is overwhelming at the start. That’s why we created this guide to help you make the choice for yourself. So what does your dynamic pricing tool need to for you to achieve real results? Here’s the shortlist of 12 different criteria that you should look for in any solution you consider, regardless of which software vendor you use.
14.10.2020
Price Points Podcast EP 6: The Power of Customer Success
What is "Customer Success," and why is it so important to dynamic pricing? Omnia Vice President of Customer Success Haiko Krumm tells all in this episode of Price Points. [00:00:11.120] - Grace Hello. I'm going to Price...
What is "Customer Success," and why is it so important to dynamic pricing? Omnia Vice President of Customer Success Haiko Krumm tells all in this episode of Price Points. [00:00:11.120] - Grace Hello. I'm going to Price Points, the podcast that examines the changing world of e-commerce, one episode at a time. I'm your host Grace Baldwin. And last time we posted I talked with our Product Manager Berend about what it takes to build a complete dynamic pricing platform from a technical perspective for this episode. I wanted to talk about dynamic pricing success from the other side of the equation the user base inside dynamic pricing can be a big organizational change and it creates a whole host of opportunities but it's also complex and it touches a lot of different areas within your organization. So how do you manage that change and ensure that you're getting the most out of the tool. I sat down with Haiko Krumm, our Vice President of Customer Success, to discuss how Omnia helps customers feel happy with their dynamic pricing I go began at Omnia about a year ago but he has a long history of working in the field of customer success. It's something he's truly passionate about and since he's joined we've made pretty amazing strides at Omnia. In this episode we talk a lot about what customer success means to him. The changes he's brought to Omnia and more. So sit back, relax, and enjoy this interview with Haiko. Thank you for meeting with me. Can you maybe introduce yourself a little bit and talk about who you are and what you do here. And yeah just your overall roll. [00:01:39.750] - Haiko Cool, will do so. My name is Haiko within Omnia I'm responsible for Customer and Partner Success. A bit myself first. I'm 41 years old, I live in Amsterdam, I have a son of eight and a wife. Love Amsterdam, won't ever leave it. And about Customer Success within Omnia I'm responsible for Customer and Partnership Success. To start off with Customer Success I think it's very important as we as a company sell in principle a product that's about pricing a marketing automation but the product itself doesn't make customers successful and doesn't directly deliver any value. So a Customer Success team is responsible to help our customers get the most out of our products and therewith achieve value and stay as a happy customer and become brand advocates. [00:02:36.410] - Haiko Thank you so much. [00:02:37.360] - Grace But this isn't a new role to you. You were Vice President of Customer Success at Insided, correct? [00:02:42.330] - Haiko Yeah that's correct. [00:02:43.150] - Grace Yeah. So one step before that before I was at InSided I had— I've been a Marketing Consultant which I loved because you see a lot of different companies and can help them out but there was also a little bit too passive for me because it's a lot about defining strategies, giving workshops and creating reports. But in the end you never know whether that really turns into value. So I thought I would like to be a little bit more active really making sure that that stuff happens. And next to that I also wanted to be a little bit more in an entrepreneurial environment. So by then that's now I have to think like nine or 10 years ago even I by coincidence came into contact with Robin where there's an online community company and I thought these communities make a lot of sense from a marketing and customer service perspective. And he was an entrepreneur so I thought let's just have a lunch with him and do some knowledge sharing. And during that lunch a lot about communities made sense to me but also Robin told me he actually wanted to pivot a business model from owning his own communities to facilitating those for larger companies. And that made a lot of sense to me. And after a couple of brainstorms he asked me what I would like to join. And actually that's immediately helped me to become more entrepreneurial of course. So basically I started off there creating the proposition as it wasn't there, creating sales material, websites. Did sales, got the first customers onboard. And then of course we promised a lot. And then we had to make sure that stuff really happened so I did project management, consultancy, account management, etc. During this journey I more and more saw that my passion is more on the customer side instead of the sales side, as you really build up a relationship not with a company only but also with people within the company. And my passion is really to make them successful. [00:04:47.230] - Grace Why is that a passion for you? [00:04:48.960] - Haiko Yeah, so what I really like is to build a long term relationship with uh with people and to really accomplish something. I mean sales is just the start of the journey and it's super important uh part of course but it's just a start. And I'd rather really build up a relationship and in a couple of years together look back say wow we we really accomplish this and it's a mutual benefit. I mean of course companies pay money for our services but if they do so with joy, that's the best situation I think we we can have. [00:05:21.490] - Grace So if you say you know you want dynamic pricing you're choosing between different companies why do you think customer success is so important to figuring out which company you want or you want to go with? [[00:05:30.940] - Haiko So the definition of customer success is that customers achieve their ever evolving value they want to get out of our products. So as said, the product by itself doesn't deliver any value and we can just deliver a platform for whichever retailer or brands but it won't do anything. So taking one step back and that's of course also my proficiency but I believe that customer success is crucial for each SaaS, software-a- a-service, you buy as yeah just having this platform won't help you out by itself. And I think it's especially for dynamic pricing crucial as dynamic pricing of course directly impacts your overall company results. And it touches upon many different departments finance to marketing and last but not least but not least it's really a complex matter and you really have to have a clear strategy on your pricing and be able to translate that into your pricing rules within Omnia. But that's only where the journey starts. After that you want to learn you want to use the insights you you get out of a platform because we have a lot of rich data and you have to turn it into insights and continuously optimize your strategy based on these insights. And yeah that's a lot more than just the platform by itself. So I really believe that customer success is crucial for for getting the most out of the dynamic pricing. [00:07:03.210] - Grace So do you feel like our dynamic pricing tool is sort of like a hammer and the customer success team is showing you how to actually use it? Or is maybe a better analogy is a power tool so maybe like a circular saw and then for instance showing you how to use it safely and how to actually get the most out of it right? [00:07:21.610] - Haiko Yeah I like that analogy. Thanks. I will use it more often and if I would think uh onwards in this uh philosophy then I would rather uh call it the toolkit. 00:07:32.850] - Grace A toolkit, yeah. [00:07:32.880] - Haiko With a lot of different uh possibilities. If you look at our platform it's pretty exciting what's possible with it. But indeed you have to understand what's to do with it. And first of all you have to have a plan, actually, of what you want to do because if you have a toolkit and you just start hammering nails into the walls that won't happen. But if you have an idea to actually build a house then you have to start to really think through that already and to map stuff out and then start working on it. And that's indeed exactly what Customer Success is about. So you actually automate the biggest part of your assortment continuously which is a quite a challenge. [00:08:05.070] - Grace And so how have you embedded this sort of philosophy into Omnia? So something that's been done since you first started here is we now have kind of core sections within Customer Success. I'm wondering if we can maybe talk a little bit about each of those. So you have Onboarding, Customer Success Management, Knowledge and Strategy, and Support and so you're responsible for all of that, correct? [00:08:27.450] - Haiko That's correct. So uh also nice to start in this order. Onboarding is actually the starting phase. So if a customer starts to use Omnia, we know this is super crucial period where the customer is excited but also gave us a lot of trust and has to learn everything still about a platform at least. So in this period of approximately two to three months we really deep dive into the tool and not only making sure that it's technically implemented but that's the as said strategies are really translated into pricing rules that the customers really understand how the tool works and are able to use it themselves instead of that we should be doing it for them. [00:09:17.880] - Grace So it's partially making making sure the customer feels comfortable with the tool before you really kind of let them do their own thing, right? [00:09:31.500] - Haiko Yeah exactly. So it's it's uh making sure it is really implemented and live. But also that it shows the first initial value and that customers indeed trust the tool and are able to independently work with it, correct. [00:09:47.870] - Grace Yeah. And so then the next part the next part of this process is customer success management right. Or is it knowledge and strategy. [00:09:55.340] - Haiko No. The. Yeah. That's a bit the the same but. So for if you look at a proactive process we start with the onboarding and after the Onboarding we move over to Customer Success Management. And Customer Success Management is about continuously checking, okay what is your objective with the tool? What are your strategies and what do we actually want to achieve in the upcoming year? And then do regular check ins whether that's indeed working or not. And also making sure that customers really know what is happening at Omnia, what is on our roadmap, what we have delivered, how they can use it. So that's the proactive contact we have to make sure that customers get the most out of the products. And it's not about only the the contact and relationship but it's also about really diving into the metrics we have of our customers and making sure that they're on the right way. [00:10:47.010] - Grace Okay. And then knowledge and strategy what's next. [00:10:50.950] - Haiko Yeah. So uh we have a lot of expertise on pricing and marketing and of course our own tool. And uh mostly that knowledge lies with uh with uh the consultants and of course all product management. And as we are as software as a service company we don't say want to do a lot of one on one consultancy because that's not really scalable and that's also not our business model to do by-the-hour consultancy. So that's why we tried to create more generic knowledge uh and share our expertise. And that's be done mostly by the consultants so they create a knowledge base with a lot of articles we create blogs. We do a lot offer analysis which we want to share with our customers so that all the customers benefit from the work that we do and indeed again are able to get the most out of their pricing and marketing. [00:11:47.080] - Grace And do you see customer communities as part of a future within knowledge and expertise? [00:11:51.240] - Haiko Yeah that's a that's a nice one of course that's my background within, within Insided and I definitely believe that that it can help and especially also because now we have a lot of expertise. But the more and more customers we get the customers in the end of course know even more than we do. And communities are a great way to capture that knowledge and share it among the customers and making it a total more interactive platform. So I definitely do believe that's in which phase of the company I don't know yet. [00:16:01.830] - Grace And does Omnia and let you do that? [00:12:23.730] - Grace Yeah. Yeah but I mean I do think it's pretty cool because like for example but we had a customer independently come up with something that we'd been thinking about for a while but they were actually testing it and their strategy is working. And so it would be cool for them to be able to share that more easily with other with other customers. [00:12:42.330] - Haiko Absolutely. And also a lot about, of course, our platform development. So both communicating what has been developed how you can use that and if customers have any questions they directly can do so and other customers also see these questions and answers but also on product feedback. What do you like uh what what would you see different in our platform and by voting you know which is the most important for customers. Instead of just one customer asking something and then you have to say no because hey it's not the most important but then it's super transparent and also insightful for us. [00:13:18.270] - Grace The last step in the process is customer support which is a little bit different, I understand, right, than Customer Success. So maybe you can talk about that. [00:20:08.170] - Grace Do you think it's worth it for enterprise companies to try and build their own dynamic pricing system? [[00:13:26.790] - Haiko So in principle Customer Success is more a proactive approach where we continually help our customers proactively. And customer support is more reactively. So if customers still needs helps on something, still has questions or indeed if something's going not the right way. If there are issues with imports exports then of course we still need somebody to help these customers out. We have our Product Specialist Jelmer there. So we also define it as a Product Specialist and not as a support agent because he's not just simply following scripts but he's really expertise guy on our platform and knows on some points even more on the platform compared to the Consultants or the Product Managers as he's continuously diving into the stuff that happens with our customers and is really making sure that customers get the most out of it again. [00:14:25.800] - Grace So how did you come up with these four different parts? [00:14:29.010] - Haiko Yeah. So as I a bit explained within Insided I moved into this Customer Success but that was still with a with a consultancy mindset really doing one on one consultancy helping each customer out but that's of course not scalable. And like five years ago I believe the Customer Success proficiency actually came up and that's still the same mindset making customers successful. But then in an efficient and scalable way more really with a structured process. [00:14:59.850] - Grace And that's the customer success proficiency? [00:15:01.740] - Haiko Exactly. And that that totally made sense to me. So I really dived into that gate side as a company SaaS company that really fueled this customer success movement. So I read a lot of books about it, joined conferences, follow each blog there is about this, but also I do a lot of one on one knowledge sharing with peers and I also facilitate a Customer Success a leadership Meetup like two to three times a year. So really to keep up with what is happening and also be able to translate that in actual actions and strategy and tactics we can use as Omnia. [00:15:43.650] - Grace Okay. I didn't know that about you. So how big is that event then, that Meetup that you host? [00:15:48.720] - Haiko And that's not too big. Actually uh because uh usually if you go to conferences you hear the showcases and how great everyone is doing. [00:15:48.720] - Haiko And that's not too big. Actually uh because uh usually if you go to conferences you hear the showcases and how great everyone is doing. But that's most of the times not the things you can learn from you. You learn from each other's challenges and falls and and more deep dive in setups. So that's why there's this meetup is only like I believe eight to 10 people. And we are really transparent there of what do we do and what is working what isn't working and each time we have a different [00:16:32.970] - Grace Yeah and I imagine it's probably also probably better rather than going to a conference once a year to act to have multiple touch points throughout the year. That's sort of the same thing here with our, we do EBRs multiple times a year. To make sure people are on track and they're getting the most out of the product and we don't wait for a catastrophe or for like a once a yearly review right. [00:16:54.930] - Haiko Absolutely and and also I think the difference is that conferences mostly are somebody presenting and learning from that's where both the EBRs as the meet ups are more interactive so that you actually can ask a debate about things. So getting some more deep learning instead of just scratching the surface. [00:17:18.060] - Grace So what makes Customer Success at Omnia different than at other organizations? [00:17:22.980] - Haiko Yeah I think uh that's based on the passion there already was within the company and the knowledge before I came. So Sander our CEO is really an expert on this matter. We have consultants said are really experts and so does these this expertise and already having the passion to really make our customers successful has been embedded in the company for for many years and I think what I tried to contribute to that is to make it more structured and scalable from now on. [00:17:58.950] - Grace What about partnerships. What role do partnerships play in customer success? [00:18:02.550] - Haiko Yeah that's a good question because we decided to make it the responsibility of partnerships also within the customer success teams who is actually customer and partner success. [00:18:13.960] - Grace Why did you decide to do that? [00:18:15.320] - Haiko Yeah. So it both is about the long term relationship and getting mutual value. So both our relationship with our customers as our relationship with our partners. And within Omnia we also defined partners and partnerships as really of strategical value. So first of all we of course have our marketing and pricing platform but it's fueled with competitive data and competitive data we get by our data partners or data partners so there are actually a crucial part of our proposition. And next to that we also have partnerships with for instance Microsoft, Google, a lot of strategy consultants. So we believe there's a lot of value in and in partnerships both for partners as for us as for the customers of course. And that's it's a pretty similar dynamic compared to customer success. We decided to have that in the same department. [00:19:15.960] - Grace Thank you for talking with me. If people want to get in touch with you what's the best way? [00:19:20.910] - Haiko They can always send me an email at haiko@omniaretail.com. I think that's the most easy way to do this. [00:19:27.030] - Grace And then also include a link to your LinkedIn. Perfect alright. Thanks Haiko. [00:19:31.810] - Haiko Thank you so much Grace. [00:19:40.440] - Grace Thanks for listening the price points. I hope you enjoyed this episode if you'd like to get in touch with Haiko feel free to send him a message. Haiko that's H a i k o and I'm your retail dot com or connect can be linked. I'll include both of those in the show notes along with my contact details as well. In the meantime now I hope you have a great rest of your day. SHOW NOTES: Omnia was founded in 2015 with one goal in mind: to help retailers take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help retailers save time on tedious work, take control of retail their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading retailers, including Decathlon, Tennis Point, Bol.com, Wehkamp, de Bijenkorf, and Feelunique. For her clients, Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily. Website • LinkedIn Music: "Little Wolf" courtesy of Wistia TO CONTACT HAIKO KRUMM: Email: haiko@omniaretail.com LinkedIn: Visit here TO CONTACT GRACE BALDWIN: Email: grace@omniaretail.com LinkedIn: Visit here
13.10.2020
Price Points Podcast EP 3: Risks and Rewards in Dynamic Pricing
What are the risks and rewards of dynamic pricing, and how can you tip the scales towards reward? Travis Rice explains all in this episode of Price Points. [00:00:11.590] - Grace Hello and welcome to price points...
What are the risks and rewards of dynamic pricing, and how can you tip the scales towards reward? Travis Rice explains all in this episode of Price Points. [00:00:11.590] - Grace Hello and welcome to price points episode three. I'm your host Grace Baldwin. And today we're talking about the risks and rewards of dynamic pricing. Risk aversion falls on a spectrum. Some people are naturally more tolerant of risks but others try to avoid it like the plague. No matter where you personally fall on the spectrum though when it comes to big changes at work are warning bells start to ring. It's understandable. Tools like dynamic pricing do affect your job pretty dramatically and any big changes the way we work are enough to leave us with sweaty palms and an elevated heart rate. But is the perceived risk around dynamic pricing actually valid is dynamic pricing really that big of risk in the pursuit of this answer. I sat down with Travis Rice one of our customer success managers working with our enterprise customers to make sure they get the most out of Omnia and by conducting business reviews giving helpful tips and tricks and updates on where the product is going. Just from our chat it's pretty obvious that he understands the resistance to dynamic pricing deeply but that he will also talk us through that resistance until you feel totally comfortable with the tool. Travis and I talked at length about the fears and risks around dynamic pricing and he gave me a lot of reasons why the practice is actually less risky than you might imagine. So sit back and relax and enjoy this interview with Travis Rice. Welcome Travis. Thank you for sitting down with me. Can you tell me a little bit about yourself and what you do here. [00:01:45.800] - Travis So thanks Grace. Name's Travis. I'm a customer success manager here at Omnia. My main responsibility is to help customers achieve value through our platform to really understand what they can do strategically and commercially with Omnia for their pricing strategies. So when it comes to our team as a whole I work directly with our consulting team. I work directly with our product team and many internal facets to really help us further understand what do customers need. What can we further iterate in our product to help them again get the most value moving forward. [00:02:08.730] - Grace So today we want to talk a little bit more about fear and dynamic pricing in the risk when it comes to dynamic pricing. So what are people afraid of when they think about dynamic pricing. I mean do you think that there is a resistance to dynamic pricing and why. [00:02:31.970] - Travis Actually I do and I have seen this as a reoccurring trend especially a lot of the new customers that we've been onboarding even some of the prospects. So. I actually think it's funny I come from a world of the background of marketing and this is what marketing went through five six years ago where a lot of the tasks were being done manually. A lot of the work was being done manually especially on the agency side and there was a huge resistance to automation there there's a huge resistance to the marketing automation whether it's you know big email flows or the agency side in the performance side of saying Okay well we don't want to give our bidding over to Google right. And so at that time it wasn't necessarily more effective but today it is. So I see that very similarly here in the retail space in that I believe a lot of customers and in their executives are saying we're really a little resistant to moving towards a dynamic pricing model. We don't necessarily know how this is going to be advantageous for us or on the other side. We do know that this is something we want to move towards but we're scared in the process. We don't know how this is going to look both the change internally and the change for what our business outcome is going to be. [00:03:46.970] - Grace Why do you think people are resistant to it? Do you think there's a fear of a lack of control or a lack of oversight in it? Do you think that there's some sort of a fear within the automation itself that makes people a little nervous about it? [00:03:59.700] - Travis Yeah I mean I think people are inherently resistant to change. And I think when you have a process and whether it's the most efficient or not it's something that you're comfortable with and it's something that you know when you're changing that process it can feel like it's a little bit of a risk. Something like Omnia it's a platform right. It's not going to come in and tell you what your commercial strategy should be what your pricing rules should be. But I do think that it does force people to really understand and evaluate that themselves. You can't use Omnia if you don't understand what pricing rules you want to put in place what those pricing rules are eventually moving towards in terms of your overall commercial strategy. And so I think that a lot of again that maybe that fear of that lack of control is valid right. I think that you're right to feel that way any time you implement a new system it does change your internal workflows and it does have an impact on your bottom line. But the thing that I would also encourage people to look at is what's the opportunity if we do change to this how much better can our internal workflows be how much more depth of data is going to be available to our pricing team. What can we then get insights from in terms of okay. We know that we're moving dynamically with the market because a lot of these industries these days that you wouldn't even think tires fashion. I mean obviously electronics is an obvious one but a lot of these industries have already moved to denim and pricing. And so if you're not in your resistance to it you're not necessarily saying well I don't want to be the first one to be moving here you will your competitors are. You also need to understand that there is a lot of opportunity cost to resisting this change and giving into that fear. [[00:05:35.270] - Grace How big of a change is Omnia? [00:05:37.250] - Travis I think it can be a big change. I think it can be a big positive change too. So when you look at Omnia as a platform again it does not work if you don't have a commercial strategy laid out. If you don't have pricing rules laid out if you don't know what you want to achieve with Omnia. It's simply a tool and a tool allow companies to really transform the way that they do pricing let's say internal pricing team you're spending x amount of hours on actual execution and putting in this strategy week in and week out manually looking at prices manually making changes and think if you're able to put that number of hours in two more strategy. I think that is transformational in and of itself. When you look at the bottom lines knowing that okay the prices we're putting out there to the marketing channels that they're going towards it's going to impact the marketing department. It's going to impact pricing. It's going to impact purchasing. We have a lot of insights in reports that can be taken in by the purchasing teams. So going through and getting better negotiations from the suppliers and from the brands themselves. So I mean I think when you're looking at that whole organization there is a ton of opportunity that's available. It's just depends do you want to give in to the fear of hey this is a brand new process this is a brand new product. It's a platform I don't quite understand yet. Or do you want to say this is a great opportunity for me to learn something new and for me to make our organization competitive if not more competitive in the market [00:06:58.580] - Grace So the fears behind dynamic pricing I think that there's a lot of fear. Like when we flip the switch what happens next. And there's a fear of OK are we going to have a race to the bottom. Are we going to understand what's happening. Do these fears have any validity? [00:07:12.770] - Travis Yeah I think they do hold some validity and I do understand where they come from. You know I think the first the first thought that a lot of directors and executives have about dynamic pricing and what the impact will be is. OK. The algorithm is just going to make us the cheapest and then the competitors the cheapest and then where the cheapest and we end up having this race towards the bottom. It doesn't work that way. You know Omnia takes into account a lot of business rules. It takes into account minimum acceptable margins and there's certain fail safes that are actually in place. So I do think that there are inherently like any new system any ERP system any marketing system any financial system. There are inherent risks if we just said here's a platform. Go ahead and use it. Right but Omnia has a team of consultants. We have an onboarding team and we have a customer success team that I'm a part of that really teams up with each and every one of our customers to make sure that they understand what are the safety nets that in rules that we have to be putting in place. What are the types of data that we need to take into account. How do we ensure that we have the proper integrations. So I do. I do think if you just said more generally is there a risk to dynamic pricing maybe. How do we mitigate those risks and do oftentimes do we almost eliminate them. Yes. And so I do think that at the end of the day moving towards dynamic pricing is a very low risk high reward opportunity for many many companies. [00:08:43.460] - Grace How can companies tip that balance of risk and reward more towards reward? So we've already mentioned really understanding kind of what you're doing finding the right team. Is there anything else really that helps make this more reward than risk. [[00:08:59.720] - Travis Yeah I think the first it comes comes back to you need to be realistic about where your industry is moving towards. There is going to be opportunity cost with not moving towards dynamic pricing. If you're still doing things manually internally and changing your prices the market's likely changing if not every day multiple times a day. So I do think that that's a big aspect to take into account. But the other thing is if you want to get more reward out of this than risk again this is an opportunity to really define what sort of pricing rules do we want in place what is how does our pricing impact our overall commercial strategy and I do think that I've been surprised at some of the conversations I even I've had my time at Omnia with customers that these are the types of conversations that can go six, 12 maybe even 24 months without being re-evaluated. Are you continuing to re-evaluate your strategy. Are you continuing to look back and say do we need to tweak some of our pricing rules. Do we need to get more granular with specific brands or categories in some companies don't. Some companies are really good at that and those are the ones that are getting an advantage in the field. So the ones who are gonna get the rewards. Are we going back in and are we using Omnia for getting more granular with our pricing strategies and the reporting that we get back from the insights that we take. Are we then going back and re-evaluating as an organization or as a pricing team. Okay well now we had the first iteration how do we do better the next time how do we continue to iterate. And that's really the process that most people are going to see the most value from. [00:10:39.110] - Grace Do you think that that the fact that you're automating so much of the previous manual labor now gives you time to go over those insights and actually point a little bit better and and iterate and test and figure out what works and what doesn't. [00:10:51.320] - Travis Yeah exactly. I think that hits the nail on the head. You know us as humans we only have a certain amount of hours in our week some are willing to put more towards worker or you know more towards other things. But at the end of the day we only have a certain amount of time that we're going to be able to invest in our work. The more that we can allocate that to strategy the more that we can really move that towards collaborating with our team rather than the actual execution of work in the manual processes. And you look at that over time the aggregate of that time saving the aggregate of that time going towards areas that are going to more effectively impact the bottom line I think is really going to increase the reward people will see from using dynamic pricing especially with a tool like on how do you think people can get comfortable with dynamic pricing from the start. [00:09:45.770] - Grace So what are some of the different ways brands can differentiate their assortment across different channels? [00:11:38.750] - Grace So you know I think a lot of people maybe understand that dynamic pricing is important and maybe at the point where they know that they need to find a solution but they're still not totally comfortable with it. Do you have any advice on how to actually just feel more comfortable with the idea of dynamic pricing. [00:11:56.630] - Travis Yeah absolutely. I mean first thing it's a you know self plug here but I would recommend reaching out to Omnia. We have a team of consultants we have a team of customer success managers like myself who are always willing to go through the process. I mean I thoroughly enjoy the conversations I have where there's question question question question because that's our goal we want to make you feel comfortable with not only the transition but the process and what the ultimate outcome could look like for you. It's not for us to define what your strategy should be or could be or what rules you have to put in place that's for you to find out that's for you to really determine internally you know what is important to us as an organization where do we want our focus to be. But if you're feeling uncomfortable if you're feeling a call we don't know the first steps or here's a platform that we're not quite as comfortable. And I actually liked your question before about how do we know if we foot the switch that this isn't going to go wrong. Do you think that at the same time you look at the opportunity that's available to you you also need to be realistic in that this does impact organizations and it does impact jobs and I fully understand the hesitancy to move a process you know over to a more automated system. The great thing that on our team provides is again going through the actual tangible fail safes that are in place what sort of catch all pricing rules you should implement so that things aren't missed. And the insights that you can get from it. So we're gonna be able to then kind of coach you through that whole process. And the last thing I'll say on this is it doesn't have to be a switch that happens right away. I think just like anything else every other industry the idea is hey we're gonna get this up and implemented and all of a sudden in three months or in six months everything's changed. This is a process and it should continue to always be a process just like any other thing in business when you're rolling out a new product. You realize okay there's certain iterations we need to have or maybe we change the messaging on our go to market for this for this product. It's the same thing with your internal pricing right. So we're gonna start and maybe some companies start a little bit more conservatively and say that's OK you if you want to get used to the system you want to put in place the first few rules that are really going to start to impact it within a certain you know within a certain margin that's perfectly acceptable and then start to get more granular from there then start to iterate from there. Not to say that the simplicity almost isn't more effective sometimes it can be sometimes these really granular plans right off the bat they're just too complex to understand and our system gives a really transparent way to see what pricing rules are impacting the final price. How did it get. How did the system come to that so that your pricing team can really say okay I'm comfortable with how Omnia is contributing to it. I understand how they made the pricing changes and I agree with them. So again I think it is. I see as a process I don't see this as a switch that you know we go from before and after. And then it set it and forget it and I don't believe there is any really effective system that does do that. So I wouldn't view pricing the same way either its foundation piece in The it's all based on what it again come back to you what is your commercial strategy what are the pricing rules that you believe are gonna work best or have worked best for you. And then how do we start to automate that once you get the insights back. How do we start to iterate and get better and better and better. [00:15:12.080] - Grace How quickly can someone see value and see the reward of dynamic pricing? 00:15:17.260] - Travis Yeah it's a good question and I think it again it's going to come back to how you wanted to find value are you going to be seeing in your bottom line week one maybe maybe not. Are you going to be able to start seeing process improvements once we do turn on on year once you do start to integrate that in with your internal workflows. Yes you're going to be able to see right away how is on your making these pricing decisions. Is it changing our pricing. Is it automated through my whole process at least as far as is we want to allow to begin with. So yes from day one from a process standpoint the value is going to be instant. Now how does that value translate into the bottom line to increasing margins to increasing revenue. That's again going to be largely dependent on did we have the right pricing rules in place or do we need to re-evaluate those pricing rules to be more effective moving forward again. I wouldn't say Omnia is not something where you just set a specific target and say hey like in marketing I want to you know 3000 percent return on my ad spend Google go ahead and do this Omnia is not necessarily translated in that way again I think the value from the bottom line is going to be how effective is my commercial strategy in my realistic about where we're at in the market and what sort of pricing rules do I want to integrate into that commercial gee how effective are those. So the two pieces that I see is the internal value side. That's instant and I will continue to grow as people get more comfortable with our platform. The revenue the margin and the bottom line business side that happens over time. And I think that's just like any other system. Again I'm all about iteration. I'm all about the process but it can and I think again you look at quarter after quarter after quarter that's when things get really interesting because the little iterations and the better that we get each quarter. Now when you start to look at year over year I think that's when things can get really fun for looking at the bottom line there. [00:17:11.970] - Grace Well thank you for sitting with me. If people want to get in touch with you. What's the best way for them to contact you. [00:17:18.160] - Travis Yeah if anyone wants to reach out. My email is Travis at Omnia retail dot com. [00:17:23.130] - Grace Can people also find you on LinkedIn? [00:17:24.900] - Travis Yeah of course. [00:17:26.500] - Grace Okay cool, I'll link I'll link that in the show notes. [00:17:28.900] - Travis All right sounds good. Thank you Grace. [00:17:37.220] - Grace Thanks for listening to Price points. I hope you enjoyed the interview with Travis if you'd like to reach out to him. Feel free to email him at Travis at the retail dot com or on LinkedIn. As always I concluded his contact info in the show notes so you can easily access it if you'd like to get in touch with me. You can also send me an email at Grace at a retail dot com or on LinkedIn and you can also find that information in the show notes as well. I would love it if you reached out and told me what you think of the show, your ideas for future topics or how I can just make it better. In the meantime though I hope you have a great rest of your day. SHOW NOTES: Omnia was founded in 2015 with one goal in mind: to help retailers take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help retailers save time on tedious work, take control of retail their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading retailers, including Decathlon, Tennis Point, Bol.com, Wehkamp, de Bijenkorf, and Feelunique. For her clients, Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily. Website • LinkedIn Music: "Little Wolf" courtesy of Wistia TO CONTACT TRAVIS RICE: Email: travis@omniaretail.com LinkedIn: Visit here TO CONTACT GRACE BALDWIN: Email: grace@omniaretail.com LinkedIn: Visit here
25.08.2020
What is Bundle Pricing?
When it comes to online shopping, bundle pricing is ubiquitous. This pricing method is extremely popular amongst Internet retailers, and for good reason. Competitive bundling is an excellent way for you to push more...
When it comes to online shopping, bundle pricing is ubiquitous. This pricing method is extremely popular amongst Internet retailers, and for good reason. Competitive bundling is an excellent way for you to push more product, stand out from the crowd, and connect with your audience in an intriguing way. So what are the benefits of bundling? Keep reading to learn more about this strategy. Bundle pricing definition Price bundling, also product bundle pricing, is a strategy that retailers use to sell lots of items at higher margins while providing consumers a discount at the same time. With bundle pricing, retailers offer several different products as a package deal, then offer that package to consumers at a lower price than it would cost to purchase those items separately. In the example below, which shows a Fujifilm Instax camera bundle and which sells for $99, consumers get a camera, a case, batteries, two film packs, a camera case and strap, a photo album, a self lens, colored filters, hanging frames, a clips and string to hang photos from, sticker frames, a cleaning cloth, and standing frames. That’s a lot of product, especially when you consider that the camera itself costs somewhere in the realm of $60. Bundle pricing is a great way to move products quickly, sell off less-successful SKUs, and offer more value to your loyal customers. Bundling is extremely common in e-commerce and retail, and you’ll often see product bundles on cheap goods or discount items. However, it isn’t the only application for price bundling, and companies in all sectors from software to utilities (like Comcast) use bundles to sell their products. Bundling works because price is the most important “p” in the marketing mix. Price is often the most important differentiator for consumers, and when they can get a bundle price on products they love, they will feel like they’ve gotten the best deal possible. Product bundle pricing has advantages and disadvantages. On the one hand it’s a great tactic to use if you want to move product quickly or give your customers a great value. However, product bundling pricing may weaken your brand if done incorrectly. It’s ultimately up to you to build a great strategy that delivers value without hurting your image. What is an example of bundling? Bundles are everywhere in retail and e-commerce. They are most common in discount stores or amongst cheap goods, but luxury brands may also run promotional bundles on occasion. However, bundles are especially important to Amazon’s strategy, and the online marketplace makes great use of bundles (which you can learn about in our guide to selling on Amazon). There are countless Amazon bundle examples, so it’s easy to dive in and look at what works. In general, there are two types of bundles on Amazon. The first is a Seller-created bundle, like the one in the photo below. This bundle is built around one high runner — the Nikon camera — which is then sold with 22 other “accessory” items like camera straps, memory cards, lenses, tripods, flash devices, and more. It’s the perfect kit for someone who enjoys photography enough that they’re willing to invest in equipment, but who doesn’t already have everything a professional may want. An Amazon bundle example built around one major high-runner item: a Nikon camera. The key to this bundle is that it is a great deal for consumers. It would take countless hours to find all of these items separately, and it would likely be more expensive to purchase each accessory individually. With this bundle, which costs $619, a consumer can be ready with their complete camera kit within two days. It’s the kind of bundle that will leave an amateur photographer with sweaty palms and a thumping heart as they click “Add to Cart”. The second type of product bundling strategy on Amazon is the kind suggested by the marketplace itself. In the image below you see an Amazon listing for a Magic Bullet blender, which costs $38. In the bottom left hand corner of the image though, you’ll see a section on the page titled “Frequently bought together” which suggests two additional products to the consumer. This section is the Amazon-suggested bundle, which uses Amazon’s algorithm to determine similar products and suggest them in the same post. In one click, the shopper can easily add all three items to their cart and know they’re getting everything they could possibly need for this blender. This suggested bundling isn’t only for small electronics. In the screenshot below of a listing of a MacBook computer you can see that Amazon suggests a pink laptop protector and case as an additional item. Related: How the Coronavirus will Affect Retail Bundles are popular outside of Amazon as well. The below bundle is a great bundle pricing strategy example. It is from the company Alpkit, which makes outdoor gear in the United Kingdom. This bundle is built around the idea of a “mountain marathon”, which is, as you may have guessed, a marathon that takes place on mountain trails. An example of a bundle in the outdoor clothing category. This bundle includes two coats, gloves, socks, a shirt, and waterproof running pants. Mountain marathons require special technical gear because weather conditions can change so quickly out in the wild. Many races require that you bring things like gloves, jackets, and trousers with you as you run, but this technical gear is often extremely expensive. Some runners will acquire these pieces over time, but some of the individual pieces can create a significant hurdle to investment (like the rain jacket in the above bundle, which costs €120). Alpkit solved this problem with a smart bundle that includes much of the gear you would need for a trail race. This kit not only moves products out of Alpkit’s warehouses — it also saves the consumer €98. How to create and use price bundles To create effective price bundles, you need to get into the mind of the consumer. What are they really looking for, and how can you give them more value with a bundle? So what can we learn about bundling from Alpkit and the other examples we’ve seen in this article? A couple of things: Understand what your users are looking for, whether that is a camera or mountain running clothes Use a high-runner item as a centerpiece Fill in the gaps with simple accessories Product popularity data (which you can get with Pricewatch) is a great resource for creating effective bundle packages because you can understand which products are flying off the shelves and which products are taking up space. If the slow-moving products complement the fast-moving ones, you can pair the two together to create a bundle that helps clear out your warehouses. This is an especially popular strategy with electronics like TVs and laptops, which will often come in bundles with charging cables, HDMI cords, and other items. You can also create bundles of popular products, which can make your high-runners even more attractive. If you see that the most popular products in the market could combine well together, you could create a “sale” bundle of these high-ticket items and sell it at a slightly higher price than you could if you discounted each product individually. You can still discount these products individually to drive people to your store with dynamic pricing (especially if they are highly elastic products), but offering the products together gives you some room to improve your margins. Finally, you can use bundles to give consumers more control. If you follow a “build your own package” model, you can give consumers the chance to create their own bundles from a selected assortment of products, then layer a discount percentage on top of their final choice. Final thoughts Bundle pricing is an awesome way to get creative with your assortment and delight consumers in unexpected ways. If you can create a bundle that meets your audience’s needs and satisfies your business goals, you’ll find a happy medium that pushes products off the shelf while keeping your store profitable. Curious to learn about some other pricing strategies? Check out some of our other articles below. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method What is Penetration Pricing?: A guide on how to get noticed when first entering a new market What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
13.08.2020
What is Cost Plus Pricing?
When you produce a product, it costs your company a certain amount of money. When it comes to pricing, this “cost” serves as an anchor point for most pricing strategies. Because it costs money to produce a product,...
When you produce a product, it costs your company a certain amount of money. When it comes to pricing, this “cost” serves as an anchor point for most pricing strategies. Because it costs money to produce a product, retailers and brands, understandably, want to have an end price that is more than that cost. If the end purchase price is lower than it costs to produce a product, the retailer or brand will lose money every time they sell that product. This is where cost-oriented pricing comes into play, most notably a cost plus pricing strategy. In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is cost plus pricing? Cost plus pricing is the most straightforward pricing strategy out there. Sometimes called a variable cost pricing strategy, variable cost pricing model, or even full cost pricing, this price method guarantees that you never lose money in a sale. Cost based pricing is the foundation for any smart pricing strategy, and is both easy to calculate and apply to your assortment. There are only three steps involved in the cost plus pricing formula: determine how much it costs to produce a product, determine how much margin you want to make (also called the “markup,” meaning how much you mark the price up above the costs), then calculate the final price by combining these two figures. “Markup” another word for the amount that you add onto the cost of a product in order to achieve your desired margin. Markups are expressed in percentages and currency amounts. How to calculate markup percentages Markup percentage is the percent amount that you add to the price for markup. To calculate a markup percentage, there is a markup percentage formula. All you need to do is subtract the cost of the product from the end price. Divide that number by the cost of the product, and multiply the result by 100 to find the markup percentage. The retail markup calculation, also called markup pricing formula Pros and cons of a cost plus pricing strategy The biggest pro of a cost plus pricing strategy is that it’s simple: just calculate your costs per unit, decide how much margin you want to make and calculate a price based on this information. But this simplicity means that cost plus has a few major disadvantages in the world of variable pricing. To start, it only considers internal variables in calculating a price, but doesn’t account for larger market influences in the pricing equation. Imagine you are selling a hair dryer, which costs you €10 to make. Say you want to make a 50% margin, in which case you’d add a €5 markup to the item on the market. This is a great strategy, and you’re guaranteed to always make that €5 with every sale. But if you looked at other products on the market, you may discover that you can raise that price a little more. Below are the first two results that appear when searching for a hair dryer. The first is from Philips and is listed at €22.49 at MediaMarkt. The second is from Hema, and is listed at €20. Even if you want to be the lowest price out of these three hair dryers, you’re still missing out on margin by only pricing yourself at €15. Related: Price: The Most Important P in the Marketing Mix The second major disadvantage to cost-plus pricing is that it isn’t flexible enough to keep up with the current dynamic market (especially if you are selling on Amazon or other fast-paced market places). If you only use cost-plus, your prices will never change with market dynamics. So, if the two hair dryers in the above example drop price unexpectedly, you may accidentally end up as the highest-priced option on the market, which can damage your price perception and lead to a reduced number of sales. Cost plus pricing also makes digital investments in things like electronic shelf labels, dynamic pricing, and pricing data like Pricewatch useless. Finally, a cost plus pricing strategy doesn’t account for the times where you may WANT to sell items at a loss. Some examples of these kinds of strategies include end-of-season sales, clearance sales, Black Friday sales, penetration pricing strategies, or even times when global pandemic fundamentally alters retail. Related: How the Coronavirus will Affect Retail What to think about when using a cost plus pricing strategy When you consider the cons of a cost plus pricing strategy, it’s easy to see why we at Omnia don’t advise cost-plus as the only strategy you use. Determining markup varies from retailer to retailer and category to category. There’s no standard markup pricing, and there isn’t any sort of markup pricing “formula” that can fit every retailer’s needs. Instead, retailers and brands need to think about markup within the context of their market. There are two main considerations: stock rotation and strategic positioning. Stock rotation Let’s start with stock rotation. If you are in an industry that has fast stock rotation, you can get away with having lower margins on the products you sell. This is because you’ll sell a high volume of these products, meaning you’ll still make profit even if there isn’t a high margin. If you produce or sell a slow moving product though, you’ll need to think about your markup differently: because you won’t sell a high volume of products (and because your products will take up valuable shelf or warehouse space for longer periods of time), you need to recoup the loss with a high margin. This is why luxury goods — like a timeless Rolex — come with high prices. You’ll have to think about where your products sit on this spectrum when determining your markup. Strategic positioning Beyond thinking about stock rotation though, you also have to think about the product’s strategic positioning. In some cases, you may want to sell a product at a LOSS instead of a gain, in which case the cost-plus pricing strategy may not be relevant for you. “Diapers are a great example of this strategic loss,” says Sander Roose, CEO of Omnia. “It’s well known within retail that diapers are not a profitable product. But smart retailers use this knowledge strategically. In many cases, they may run a sort of high runner strategy and sell the diapers at a loss, but with the ultimate goal of pulling families into the online shop. These families have bigger budgets, so retailers can easily make up for the loss on the diaper with other products.” When to use a cost-plus pricing strategy “I think a cost-plus pricing strategy makes sense for non-comparable products or own-brand products,” comments Sander. “If you can’t compare your product to anything in the market, or don’t have price elasticity data, then you can use cost plus to arrive at sensible prices for your products.” A cost plus strategy may also be good as a fallback strategy or a “last resort” pricing strategy within your dynamic pricing engine. Cost oriented pricing can be an effective way to figure out the pricing floor for your dynamic pricing strategy. When you account for a certain amount of margin as your lowest price, you can still ensure that all sales will be profitable. Final thoughts The cost plus model pricing is easy to apply to your assortment, but it does have a few major disadvantages. That said, it’s a great starting point that you should use as your price floor in any dynamic pricing strategy you create. Curious about other pricing strategies? Check out our series of different strategies, all linked below. What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method What is Penetration Pricing?: A guide on how to get noticed when first entering a new market What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren.
07.08.2020
Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed)
Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. But how do you access the full power of pricing? The key is to...
Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. But how do you access the full power of pricing? The key is to understand the psychology that goes into a pricing strategy, and this article is a perfect place to start. To continue our series of articles about different pricing strategies, in this article we’ll discuss what psychological pricing is, how it works, and what you need to build a great psychological pricing strategy. What is psychological pricing? Psychological pricing is the practice of using the power of psychology to push consumers to spend. It’s a joint effort of pricing, marketing, and sales to build an attractive offer that captures consumer attention and makes a product so desirable the shopper can’t wait another day to buy it. Psychological pricing techniques are nothing new, and clever vendors have used these strategies throughout history to influence consumer behavior for quite some time. Before price tags, store clerks had to learn the art of haggling to create deals that were mutually beneficial for customers and the store, and since price tags emerged, marketers have leveraged the power of price to achieve the same results. However, just because psychological pricing strategies are ubiquitous doesn’t mean they are unimportant. In fact, they’re so important and foundational to pricing, marketing, and sales that you should have a deep understanding of how these strategies work. Why does psychological pricing work? To understand why psychological pricing works, we need a quick lesson in marketing and pricing psychology. Take a look at Maslow’s hierarchy of needs, which is a theory of how humans prioritize different things in their lives. At the bottom of the pyramid are physiological needs — you know, the things we as humans truly need for continued survival. These include food, water, shelter, rest, oxygen...et cetera. Above the physiological needs are safety needs. In other words, once you have the basics of survival covered, humans become more concerned about their general safety and security. After worrying about safety and security, the theory states that humans care about belonging and community. We want to build friendships, experience love, and the “gezelligheid” that comes from being around other people. After community, people begin caring more about themselves and their aspirations. The next tier above belonging is “Esteem” and the very last tier (the one at the tip of the pyramid) is “Self-Actualization.” Chances are you know all of this already, especially if you work in e-commerce marketing. Maslow’s hierarchy is a foundational element of modern marketing theory...so why am I bringing it up? When you, your pricing team, sales team, and marketing teams want to create a psychological pricing strategy, you should refer back to Maslow’s hierarchy to serve as guidance for the strategy. As you’ll see shortly, this framework gives you the freedom to be creative in your strategy, while also making sure it is effective. Related: Price: The Most Important P in the Marketing Mix So the answer to why psychological pricing works is because these strategies are based on a deep understanding of what drives people, not just customers. To even get started, marketing teams, pricing teams, and sales teams need to have a deep understanding of what drives people, not just customers. Related: How Will the Coronavirus Affect Retail? Examples of psychological pricing strategies Psychological pricing strategies are everywhere, and are employed by some of the top global companies like Amazon, Hershey, Motorola, Apple, and Costco. In this section we’ll highlight a few examples of psychological pricing tactics, many of which we’ve already written about extensively on Omnia’s site. 1. Value based pricing Value based pricing is a “basic” pricing strategy, but it’s one of the hardest to pull together because it requires an excellent understanding of the market and a lot of self-reflection. In a value based pricing strategy, you use your price as a way to control consumer understanding of your product. Do you want to be seen as a luxury brand? Then you probably should have a luxury price. Do you want to come off as the best value-for-money option on the market? Well, your price should reflect that. Value based pricing requires a lot of research into your target market, competitive landscape, and business goals. That means a lot of cooperation across departments, but that cooperation is a great way to build a more cohesive strategy. Learn more about value based pricing in this article: What is a Value Based Pricing Strategy? 2. Odd even pricing Odd even pricing is a psychological pricing tactic that uses the power of number psychology to drive consumers to action. The odds and the evens refer to the numbers in a price: “odd” retail prices feature mostly odd numbers (like €7.99), whereas “even” prices feature mostly even numbers (like €8.00). Most often we see prices that end in odd numbers, but even prices have their own power. Odd even pricing can be used strategically in several different ways, whether it’s to offer strategic discounts or just create a price that is memorable. Below is an example of how Uniqlo does exactly that — the company is discounting a shirt that originally cost €24.90 (a mostly “even” price) down to €7.90 (a more “odd” price). We wrote an entire 1,000-word article that goes deeper into odd even pricing so we won’t go into too much detail, but check out: How Odd Even Pricing Helps You Utilize the Power of Psychology. 3. Charm pricing Charm pricing is very similar to odd-even pricing. In a charm pricing strategy, companies use prices as a way to elicit an emotional response in consumers and drive them to action. Some of the most notable examples of charm pricing can be seen in late-night infomercials. These pricing strategies are notable for their specificity, exceptional bundling strategies, and, often, their delivery. Learn more about charm pricing in our article: What is Charm Pricing? Psychological pricing is everywhere If you pay attention, you’ll see examples of psychological pricing in marketing everywhere. Once you start looking, these examples are impossible to ignore. Browse through sports stores, look at real estate listings, even check the barcode on the books on your shelf. Even alcohol companies and gas stations employ charm pricing or odd even pricing to pull in more customers. Psychological pricing advantages and disadvantages Psychological pricing strategies are extremely advantageous, but are also hard to set up. Here are a few of the pros and cons for these techniques. Advantages of psychological pricing Get a better understanding of the playing field: When you aim to use a psychological pricing strategy, you need to do a lot of research into who your competitors are, what strategies they are using, and what your target audience thinks of those pricing strategies. This research gives you tons of insights that you can use across the organization. More organizational alignment: A psychological pricing strategy should never be carried out by an isolated pricing team. Instead, these strategies require serious cross-department commitments and communications. More strategic: With a psychological pricing strategy, you can actually be proactive in your strategy. Rather than just trying to maximize profits or break even, you can consider things like public perception of your products, competitor comparisons, and more. Disadvantages of psychological pricing Complex: Psychological pricing strategies are complex. They require a lot of cross-organizational cooperation and insights. This makes them hard to set up and stick to. Time consuming: Because psychological pricing strategies require in-depth research, they can be time consuming to set up. If you invest in software (like Pricewatch or Dynamic Pricing) the job becomes easier, but it still takes a lot of energy. Final thoughts The term “psychological pricing” can cover any number of pricing strategies, several of which we’ve covered in this article. But there are no limits — in all honesty, any pricing strategy that uses consumer ideas about product value is inherently psychological, so feel free to be creative. What is most important though is internal alignment. Psychological pricing strategies work best when they align with marketing and sales to ensure a cohesive experience for the user across your webshop.
30.07.2020
Meet the Team: Niels Botman
Whether car camping in Namibia, speeding around Medemblik, or in his work at Omnia, Niels Botman, our Product Business Analyst, has a keen sense of adventure. In this month’s “Meet the Team,” you’ll get the chance to...
Whether car camping in Namibia, speeding around Medemblik, or in his work at Omnia, Niels Botman, our Product Business Analyst, has a keen sense of adventure. In this month’s “Meet the Team,” you’ll get the chance to learn more about Niels and how he helps make sure Omnia’s product is constantly improving. Hi Niels, how are you doing? I’m fine, thanks. Great. So to start, can you give a bit of background on yourself? Yeah, so I came to Omnia three years ago. I did my studies in Marketing, and after I finished that up I went to work for one of the supermarket chains in the Netherlands, in the head office. I was there for a few years, and had the chance to work in several different commercial departments. I worked on the supermarket template, and how they build the formula of a supermarket, the merchandise, the assortment, all those things. I also did some category management in the same company, which was interesting. However, after a while I decided I wanted to do something a bit more innovative. Supermarkets are quite conservative in what they do and in how new initiatives are introduced. And just in how things get done. But I wanted to be somewhere a bit more innovative. So I ended up joining Omnia as a Product Specialist a few years ago. And what’s your role now? I am a Product Business Analyst. I work within the Product team and, together with Berend, our Product Manager, I’m responsible for everything around the product and how we can improve it. And this role is recent for you, right? Yeah it is! In 2019 I actually resigned from the Product Specialist job so I could travel the world with my girlfriend for six months, which had been a dream of ours for years. When I got back to the Netherlands, I got back in touch with Sander and Haiko and they told me there was a nice role within the Product team that was open. It was a good fit for what I wanted to do — something more technical and innovative — so I rejoined Omnia. Where did you go on your trip? We started in Tanzania with my family, then myself and my girlfriend continued on to South Africa and Namibia, which was really cool. After that we went to Asia, then finally ended in Australia where we spent a month, I think. Did you have the whole thing planned beforehand? Nope, not really. We had the first couple of stops planned, but after that we just went with the flow of things. And how do you like your role now? I love it. I think the Product Specialist role was great for me in the beginning because I had no tech or software experience. I also learned a ton on the retail side and how our users interact with the product. I really learned the product inside and out and it paved the way to where I am now. So what does your day look like? Most days I start my days with a “daily startup” where I check in and make sure that everything is running properly. After that though, every day is different, so it’s hard to describe a “typical” day. It really depends on the projects we’re working on at the moment. I think that’s a common thread at Omnia. Definitely, but that’s also what makes it fun. For me at least. I like that there is a lot of variety and freedom to pursue opportunities and initiatives and that things are always changing. There’s tons of room for improvement and growth, so we’re always wondering what we can be doing better. I really like that part of the job. What’s your favorite part of working at Omnia? Well, what I just said is definitely a big part of it. I like that there’s lots of change all the time, both on the product side and the process side. I also really like the freedom at Omnia. I like that I don’t need to ask anyone for time off if I need to go to a doctor’s appointment. I think we all work very hard, but we have the flexibility to go to an appointment and come back and finish up a little later, if need be. Also, my colleagues are pretty cool. It’s a really international bunch. On the Development side of things we have people from four different continents on the team, which is awesome. Okay Niels, last question. What do you do for fun outside of work? Well, it’s a bit of a weird time to be asking that question since we’re in a pandemic and our movements are somewhat confined. But since the start of the pandemic I’ve gotten into cycling more, which is really fun! I’ve gotten pretty into it...I’m currently riding about 100 kilometers a week.
29.07.2020
What 3 Months of Amazon NL can Teach Us About Dutch E-Commerce
In the beginning of 2020, we at Omnia believed the news story of the year would be the arrival of Amazon NL. We couldn’t have been more wrong about the biggest story of the year, but that doesn’t mean that Amazon NL...
In the beginning of 2020, we at Omnia believed the news story of the year would be the arrival of Amazon NL. We couldn’t have been more wrong about the biggest story of the year, but that doesn’t mean that Amazon NL isn’t an important player we should ignore or forget about. Three months after Amazon NL’s debut, what has happened to the market? We did a short analysis to see how Amazon compares against other major Dutch retailers and what that means for its market position. Amazon is dominating out-clicks In a monthly report we receive, Omnia’s CEO Sander Roose noticed that Amazon NL was dominating the out-click shares from a major local comparison shopping engine in May and June. In fact, the number of out-clicks was double the out-click share of the second retailer, bol.com. Amazon’s pricing strategy is notoriously dynamic. The company is well-known for extremely frequent price changes and an ethos of providing the best customer experience in the world — which often coincides with rock-bottom prices. We were curious what was driving this high number of out-clicks. So, we did what we do best — dove into the data to see what was happening in the market. We used the top 2000 products on Amazon as a baseline, then looked at a couple of key factors in comparison to the rest of the market. High frequency price changes The first thing our consultant analyzed was the frequency of price changes on Amazon.nl, and what he found was not altogether surprising. Amazon’s top sellers change prices frequently — in line with Amazon’s pricing strategy. In the graphic above, you see the number of price changes from Amazon compared to other major market competitors like Coolblue, Mediamarkt, BCC, and more. The blue columns represent the number of price changes on Amazon.nl, while the green columns represent the average number of price changes from the rest of the market. From March to June, the percentage of Amazon’s assortment that experienced a daily price change was more than double the percentage of the rest of the market. You can see the full figures in the table below. However, what’s particularly interesting to look at is the month of April, where 77% of the products in the sample of Amazon’s assortment experienced a daily price change. There are two likely contributing factors to this. The first is that April was the first full month that Amazon was a full webshop in the Netherlands, and the company had likely set a more aggressive pricing strategy during this time. It’s impossible to say for certain though that the company’s strategy was the reason behind this increased frequency of price changes. April was also the first month of a strict lockdown against the coronavirus in the Netherlands, which drove a huge increase in e-commerce. Lowest price on the market Amazon NL doesn’t only change its prices more frequently than other Dutch online retailers. It also has the lowest price consistently, according to our data. At Omnia, one of the metrics we look at when evaluating price position on the market is called price ratio. It’s a measurement of how the price of a product varies from one seller to the next. Say, for example, you sell headphones online for €90, but your competitor sells the same headphones for €100. While you know that you have the better price, it may be useful to know how much better your price is. That’s where the price ratio comes in: it shows the relationship between two prices. To calculate price ratio in the above example, all you need to do is divide 90 by 100, giving you a price ratio of 0.90. In other words, as long as your price ratio is below 1.0, your products will be cheaper than the competitor you’re comparing yourself to. We took this calculation and applied it to Amazon’s top 2000 products, as seen in the graphic below. We compared the price for these products to the market average price of other relevant retailers in the Netherlands. This average market price was calculated as the average price of several of the largest retailers and e-commerce stores in the Netherlands, including Bol, MediaMarkt, Coolblue, BCC, and others. What we found wasn’t altogether shocking: Amazon has a lower price ratio, ranging from 0.92-0.94 across the last few months.This means that Amazon’s product prices were, on average, 6%-8% lower than the market average price. What does this mean for Dutch retailers? When Amazon made its debut in the Netherlands, we made a couple of predictions: Amazon would price aggressively in the Netherlands and drive market prices down Amazon would make the market more dynamic with its extreme number of price changes Amazon would drive brand loyalty with the Prime program Our data shows that the first two predictions have come true. Amazon is, on average, the lowest price on the market, and the number of price changes every day has skyrocketed. There’s also good reason to believe that Amazon’s Prime initiative is also working. Even though Amazon doesn’t publicly disclose the number of Prime members, Emerce reported that Amazon Prime Video had one million viewers in the Netherlands in April. The data also shows that Amazon is sticking to its localization strategy. The company is keeping prices close enough to Dutch retailers to be seen as the cheaper alternative to the existing e-commerce space, but isn’t going for rock-bottom prices or trying to match its German webshop prices. Instead, Amazon appears to be hovering just below other Dutch retailers. “Amazon is not holding back when it comes to its pricing, and I wouldn’t be surprised if they’ve already passed two million Prime members,” commented Sander Roose, CEO of Omnia Retail. “Now, more than ever, Dutch retailers and brands need to adopt technology to help them follow market prices.” The reality is that Amazon will always price lower than you, so resist the urge to drop your prices further. Amazon will simply follow the market, and you could trigger a race to the bottom. Instead of dropping your prices, it’s important to look at your commercial strategy. You can expect Amazon to have a lower price than you, but what can you offer your customers that Amazon simply can’t? Now is a great time to revisit your commercial strategy and pricing promises and evaluate how you can best serve your customers.
27.07.2020
What is Penetration Pricing?
Have you ever asked “what is penetration pricing?” If so, you’re not alone. In this article (part of our continued pricing strategies series), we’ll break down penetration pricing and help you decide if it’s the right...
Have you ever asked “what is penetration pricing?” If so, you’re not alone. In this article (part of our continued pricing strategies series), we’ll break down penetration pricing and help you decide if it’s the right strategy for you. Penetration pricing definition So what is penetration pricing? To answer that question, you first have to understand market penetration. Market penetration occurs when a company launches a new product in a market where similar products already exist. Since there is already an alternative to the product, marketing and pricing teams need to be creative to figure out how to make their product stand out. One way to do this is through a penetration pricing strategy, or a price penetration strategy. A penetration pricing strategy lets businesses attract customers to a new product by offering a discounted price upon its initial offering. After generating enough interest and gaining market share, a company will then begin to raise the price again back to market levels. The goal of a penetration pricing strategy is to introduce consumers to a product at a low risk, gather interest in a product, and build brand loyalty — not necessarily to turn a profit. Instead, the major objectives associated with a market penetration pricing strategy are to: Hook in new users Introduce consumers to a product Undermine established market leaders Create market share These goals are achieved through low, low prices which are raised again after a certain period. Companies that employ this strategy will use a price monitoring software to track average market prices over a given period of time, then use that data to calculate their introductory price. Price skimming vs penetration pricing Penetration pricing is often confused with price skimming, but these two strategies are very different. A marketing penetration strategy is when companies forego margins for the sake of drawing users to their products. It’s mostly used when a company or a new product enters a market and when the main goal is to get as many users as possible. Because margins are so slim, penetration pricing is less flexible than price skimming. Price skimming, on the other hand, is a strategy used by luxury products or other high-ticket items in inelastic categories to maximize margin. Instead of offering a low price for a product, companies using a price skimming strategy will put a high price on their products and optimize for high margins. Price skimming is frequently used by companies with high brand recognition and loyalty or products that offer significant amounts of differentiation from competitors. That’s why companies like Apple can get away with charging a relatively high price for new and innovative products. Related: How the Coronavirus will Affect Retail Penetration pricing advantages and disadvantages When deciding whether to use a penetration pricing strategy, it’s important to weigh the pros and cons. While penetration pricing is considered to be a great approach to pricing for maximum visibility in the market, it also may harm your brand perception if you don’t execute the strategy well. Pros of penetration pricing There are a few key points that make penetration pricing so powerful. 1. Introduces new customers to your product offering at a low risk One major objective associated with a market-penetration pricing strategy is to connect consumers with a new product or service. It’s a great way to enter a new market, draw attention to your product, and get some sales traction right from the beginning. It’s also an opportunity to pull customers into your store and increase potential for cross and up sells. 2. Influences price perception Penetration is also a great way to influence your product’s price perception right from the start, regardless of whether you want to be seen as a high-end retailer or a value-for-money option. With careful marketing campaigns (and using tactics like odd even pricing, charm pricing, and others), you can build an image around your product value and tell a story that influences how the consumer sees your brand. 3. Shakes up the market Penetration pricing is also a way of overhauling a market if there is an established leader. In many cases, “underdog” companies may enter a new market and sell a new product at a low price to attract customers away from an established product or service. Cons of penetration pricing While penetration pricing is an awesome strategy, it can be risky. If you don’t proactively account for the hazards of the strategy, it could be devastating. 1. Lack of value Penetration pricing’s greatest strength — its ability to draw attention to your product amongst a sea of similar alternatives through aggressive pricing — is also its weakness. Dropping a price too low will leave consumers disgruntled when you begin to raise the price — they’ve anchored their value of the product on the low price, and may not return to purchase when you adjust your price to normal levels. 2. Potential race to the bottom Another disadvantage of market penetration pricing is the potential reaction from other sellers when you introduce a low price on the market. If competitors or other market players also lower their prices in response to your introductory offer, it could spark a race to the bottom. One way to protect against this race to the bottom is to use a dynamic pricing software and set a price floor that still leaves you with some margin. Penetration pricing example An excellent example of a marketing penetration pricing strategy occurred in the Netherlands just a few months ago when Amazon.nl officially launched. Amazon’s pricing strategy is notoriously aggressive and dynamic. The company is well-known for extremely frequent price changes and an ethos of providing the best customer experience in the world — which often coincides with rock-bottom prices. As a marketplace it carries almost any product you could want, but it delivers it at a price significantly lower than other retailers. Upon launch, Amazon didn’t differ too much on its prices compared to other major online retailers in the Netherlands. But over the last few months, Amazon has competed heavily on price to drive traffic to its shop. Since most of the products on Amazon are highly elastic and offer lots of alternatives, it’s a smart strategy; it drives the average price down for most products on the store and solidifies Amazon’s price perception as the cheapest place to shop on the internet. Amazon NL has also deployed the company’s most deadly weapon: Amazon Prime. Prime is one of the key drivers of Amazon’s webshop because of the brand loyalty it inspires. It’s so effective that 82% of US households have a Prime membership, according to a recent survey, and Prime members spend almost double the amount of non-Prime members every year. When consumers have a Prime account, their first thought when they need something is to go see if Amazon sells it. Amazon knows that once consumers become Prime members, they are unlikely to leave because of the convenience Amazon provides. Prime is so critical to Amazon’s success that it was a clear part of Amazon’s Day One strategy in the Netherlands. At the time of launch (and at the time of this writing still), Dutch shoppers could try Prime free for 30 days. After the 30 day trial period, they’d only be billed €2,99 per month. This is a stark contrast to most markets, where Amazon Prime costs around €8 per month. Amazon’s goal in the Netherlands is clear: they are coupling an aggressive market penetration pricing strategy with their exceptional loyalty program, all at a low risk for consumers. Related: The Complete Guide to Selling on Amazon in 2020 When to use a penetration pricing strategy A penetration pricing policy is most likely to be effective when the product is highly elastic and in markets where there is little difference between Product A and Product B. If consumers are both sensitive to price changes and if comparable products are virtually the same as yours, it’s the perfect breeding ground to make price the only differentiator. Why? Because, according to basic economic theory, demand will increase if you drop your price. And if your product offers a better value-for-money promise, consumers will quickly buy your offering over an alternative. Say you sell blenders, for example. The basic feature of all blenders is the same: they blend liquids. Some may have shaper blades. Some may have a nicer build quality. But for many consumers, these features don’t make much of a difference. What they want is something that will last a long time and do a great job blending up smoothies every morning — nothing more, nothing less. If you wanted to introduce a new blender to the market, a market penetration pricing strategy may be a great way to get your brand noticed. If you can craft a thoughtful marketing campaign around your pricing strategy, you may be able to keep that attention and build brand recognition and perception. If you’re successful, future consumers won’t bat an eye at increased prices: they’ll know the value of the product. Final thoughts Penetration pricing is a great way to take on a new market and get your product noticed. But make sure you’re careful in the execution. If done poorly, penetration pricing can harm your brand image rather than help it — and nobody wants that. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
30.06.2020
How Odd Even Pricing Helps You Utilize the Power of Psychology
As a continuation of our series on different pricing strategies and pricing methods, in this post we'll take a deeper look at Odd Even pricing. This pricing strategy looks at the psychological effect that numbers have...
As a continuation of our series on different pricing strategies and pricing methods, in this post we'll take a deeper look at Odd Even pricing. This pricing strategy looks at the psychological effect that numbers have on the human brain, then uses that power to shape price perception. Curious about the other strategies in this pricing series? Scroll to the bottom of the post to find links to other strategy-related posts. What is odd even pricing? Odd-even pricing refers to a pricing method that’s similar to charm pricing. It's a form of psychological pricing that uses underlying human motivations to drive consumers to action. It’s the strategy of odd-even pricing utilizes a psychological appeal of the numbers that are displayed in a price. What is odd pricing The “odd” in odd pricing refers to the odd number at the end of a price. Odd prices typically use endings like €0.99 or €0.95 to signal specificity. What is even pricing Even prices are the exact opposite: they end in an even number or zero. An example of an even price would be €20 or €1.50. Odd even pricing examples You don’t need to look far to find great examples of odd number pricing. But some of the best are found in late-night infomercials. The charm of these commercials is in their delivery of course, and the packaging and bundling is expert. But one of the (many) elements that make these commercials so effective is the use of odd pricing. The pricing scheme is presented along with strategic bundling and classic scarcity tactics to create an incredibly convincing reason to call now and order these products. Even pricing examples are nowhere near as prevalent as odd prices. And that notion is confirmed by some odd-even pricing statistics. When you look at odd even pricing statistics, it’s easy to see that even pricing has long been overshadowed by odd pricing. According to a 1997 study, the most common ending numbers for a price were 9 and 5. These two numbers accounted for a whopping 90% of the prices they analyzed. Just the 9-ending alone dominated 60% of the data set! It’s no wonder that even prices feel underutilized — they are rare to find! Related: How Will the Coronavirus Affect Retail? Psychological pricing advantages and disadvantages Does odd even pricing work? The answer is a resounding yes. The effects of odd even pricing more psychological than tangible. Even though there’s no real difference between €19.99 and €20.00, the two prices feel very different. However, psychological pricing does have its advantages and disadvantages. The biggest pro of odd even pricing is the amount of control it gives you over your brand and price perception. When you understand how different numbers “feel” to consumers, you’ll be able to build a better marketing mix (which includes pricing) that is strategic. You can use the power that these deeply-held feelings have to subtly influence the way people look at your products. However, this power behind psychological prices is also the biggest con for odd even pricing. The feelings that different numbers give consumers are deeply-rooted; it will be hard for any company to break these molds. If you don’t understand how an odd even pricing strategy works, you may accidentally harm your brand. How to build an odd even pricing strategy So we’ve covered the basics of odd even pricing and the pros and cons of each method, but how do you actually use odd and even prices to your advantage? Here are some starting ideas. Use even prices, but give odd discounts If you want your offer to feel like a discount, a great strategy is to present the product at an even price, then offer an odd-priced discount. An example of this may be discounting a €16 shirt down to €14.99. You can also mix this with a high runner strategy to optimize for the most popular products on the market. Related: Everything You Need to Know about the ROPO Effect Create memorable prices Consumers are used to prices that end in 9’s and 5’s, so much so that these prices have lost their “sticking” power. If you want your price to stand out, try advertising it at a less-frequently used odd price. For example, instead of pricing a lamp at €25.99, try selling it at €23.99. This number will leap off the page to shoppers and you’ll be able to capture their attention. Want to take it a step further? Try advertising at an even price that really stands out. When you make your price seem precise, consumers believe they are getting the most up-to-date price on the market. Luxury brands and odd even pricing If you’re a luxury retailer, you may want to consider using even prices rather than odd prices, especially on new items that gain a lot of attention and boost your brand perception. Since odd prices are so popular, consumers often equate these psychological numbers with sales. Because of this, many luxury retailers eschew odd prices and choose to go with more "whole" even prices. So, to conclude, what are the best numbers to use for pricing? When choosing between even ended pricing versus odd ended pricing, the answer is disappointingly simple: it depends on your commercial objective and goals. Odd-even pricing is considered to be a rather effective approach to pricing, but you will only reap the benefits of this strategy if you align it to your commercial ambitions. If you want to be seen as a luxury retailer, chances are you will want to use even prices. These rounded numbers give a sense of “wholeness” to the price. However, for most retailers an odd pricing strategy makes the most sense. Consumers are so used to odd numbers that even numbers may feel too expensive, depending on your category. In the end, do some research on your competitors to see what they do, then decide if their pricing aligns with your goals. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
03.06.2020
What is a Value Based Pricing Strategy?
Out of the “basic” pricing strategies, value-based pricing is one of the harder to pull together. It requires deep research into your target audience, the broader market as a whole, and competitor product offerings. The...
Out of the “basic” pricing strategies, value-based pricing is one of the harder to pull together. It requires deep research into your target audience, the broader market as a whole, and competitor product offerings. The research is well worth the effort though. When you execute a value-based pricing strategy, you not only have a flexible strategy that follows market demand, you also learn significantly more about your target audience and competitors. Like this post? Today’s is part of a series on pricing strategies. We already have content about the high-runner strategy and charm pricing, if you want to read more, but keep your eyes open for more content like this in the coming months. What is value-based pricing? Value-based pricing is also known as value-added pricing or perceived value pricing. Utpal Dholakia, a marketing professor at Rice University, defines value-based pricing as, “the method of setting a price by which a company calculates and tries to earn the differentiated worth of its product for a particular customer segment when compared to its competitor.” Value-based pricing is somewhat of an umbrella term for any pricing strategy that considers the value of a product in the eyes of the consumer and market. By using a value-based pricing approach, companies can build a framework that leverages their brand, product features, audience demographics, and market position. Cost-based pricing vs. value-based pricing Value-driven pricing and cost-driven pricing are two very different strategies. Cost-based pricing is the most straightforward pricing method. It is easy to implement. All you need to do is consider the costs per product, then add a desired margin on top of that. With cost-based pricing, there’s no consideration for how your product compares to others on the market or how your target audience perceives the product. If your costs are too high and the resulting market price doesn’t match the expectations of consumers, then you will be outpriced. Value-based pricing is more nuanced. This strategy uses the economic principles of demand and considers internal information as well as external factors. With extensive research into the target audience, greater market, and product specifications, you’ll create a pricing strategy that’s flexible, supports your brand image, and considers all market factors. Advantages and disadvantages of value-based pricing Value-based pricing strategies are not easy to set up, but they are the most advised pricing strategy for a reason. Advantages of value-based pricing Considers internal and external variables: Value-based pricing looks at several different factors to make sure you consider all relevant factors when creating a price. In many ways, it is more strategic than cost-based pricing because it lets you differentiate yourself from the market. Better understanding of the playing field: Value-based pricing requires a lot of research. This research gives you a better understanding of your audience, competitors, and market. More insights: The research you do on the competition and needs of your target audience can spark ideas for product development. Higher profits: In a value-based pricing method, you “maximize” your price by asking the highest possible price you can based on perceived value. This maximizes profits; you, as a producer, capture as much “consumer surplus” — the difference between value perceived by a consumer and the price of a good — as possible. Disadvantages of value-based pricing Complex: A value-based pricing can be difficult to implement because it is a complex process that involves lots of research and analysis. Time consuming: Because there is so much research and analysis involved, creating a value-based pricing strategy takes time to set up. How to set up a value-based pricing strategy Now that you know what a value-based pricing strategy is, it’s time to start creating one. Here are all the steps you need to follow to begin building your strategy. 1. Research your target audience How is the value of a product determined? Through meticulous research. Unfortunately, there is no simple price-value equation that you can apply across the board. Instead, you have to rely on research, which is the foundation of every value-based pricing formula. You can start in a few different places, but in a competitive market, perceived value is determined by consumers. That’s why we recommend beginning with researching your target audience for a clear understanding of how the product affects their lives. This research will be a combination of demographic information on your audience combined with qualitative information you can glean from interviews. Sure, you want to know what the income level is of your target audience, but it’s more important to know the problem you’re solving with a product, and what they are willing to pay to solve that problem. You may already have a lot of insights in your organization from product development research, so reach out to the product team to ask for insights. But don’t be afraid to reach out to your existing customers to ask more questions, especially if you are in charge of marketing these products. You should create strong connections with your existing customer base to understand how they view your product, what features they are missing, and get other feedback. Related: How will the coronavirus affect retail? 2. Research your competitors Many companies believe that value-based pricing is all about the value of their product. But the reality is that your product’s value is only relative to the market, and you need competitor pricing information to build a value-based pricing strategy. If your product is €900 more expensive than your next closest competitor, you’d better have some justification. If there isn’t enough value created in the product (and its marketing), consumers will opt for the cheaper alternative. That’s why competitive research is the second step in value-based pricing. At this point, your goal is to look at the next best alternatives on the market and understand what makes your product different. At this point you’ll want to look at actual features of the product. Ask yourself if your product... Lasts longer than the next best alternative Looks and feels like it’s made out of quality materials Offers more features (like a longer battery life, for example) Costs more to make than the competitor’s Is priced higher than the market average Again, you may have a lot of these insights from your R&D team, so go ahead and review the competitor products. You can also use a price comparison software to help you get more market insights. Price elasticity and value based pricing strategies Price elasticity data is extremely useful in the research phase of building a value-based pricing strategy. “Omnia can calculate the price elasticity of a product and uncover the consumers’ willingness to pay for a product,” says Jelmer Reijerink, an Omnia Consultant. “If you can access this data, you’ll be able to uncover even more insights about how the market responds to your product.” 3. Determine the value of your differentiation You’ve done all the research. Now it’s time to put a quantitative value on the different features you uncovered in step two. To do this, ask yourself how much the key features on your product are worth. How much is extra screen space worth? What about a longer battery life? What about better quality materials? Assign an amount that reflects how much that feature is worth. You don’t need to assign value for every single product feature; you only need to calculate the value of the features that make your product different. This is a brilliantly simple way to avoid doing a lot of unnecessary work. Related: How to define your commercial objective 4. Craft marketing and pricing campaigns that meet your target market’s needs After understanding the needs of your audience, your competitor’s alternative products, and where your product stands, you can create a value-based pricing strategy that is optimized for your product. What is a value-based pricing strategy in marketing? Start with marketing. The first thing marketers need to do when building a value-based pricing strategy is to decide whether to add value or focus on features. This is where you need to get strategic. There are two basic value-based pricing strategies. Good value pricing strategy A good value pricing strategy focuses on features, not value. The goal is to make consumers believe they are getting a good product at a fair price. When creating marketing campaigns for these types of products, marketers don’t need to focus on building a lot of additional value. Instead, create a campaign that very clearly solves your consumer’s problem and how your product solves it. Highlight how the features of your product solve these problems. Good value pricing is great for more “basic” products that don’t have a lot of extra fluff. These products also tend to be less expensive and may be susceptible to the ropo effect. Value added pricing strategies Value-added pricing and marketing strategies, on the other hand, focus on building the perceived value of a product. This is often done to justify a higher price. Unlike a good value pricing strategy, a value added strategy focuses on what makes a product different and unique. You definitely want to look at features, but the focus of your campaign should be more on the benefits. So, if you’re a marketer creating a campaign for a luxury or high-priced product, it’s time to dust off your textbooks and revisit Maslow’s Hierarchy of Needs. Add value at the top of the pyramid: focus on how your product makes someone feel. Will the product boost their social status? Will it help the consumer reach their full potential? Build value around these ideas. Example of a value added pricing and marketing strategy One of the most famous examples of a value added strategy is De Beer’s Diamonds’ famous tagline “A diamond is forever”. The line, written in 1947 by Frances Gerety, forever changed the diamond business and helped justify the exorbitant cost of engagement rings. The campaign reshaped the way we look at diamond rings — De Beers framed the product as something that was an essential demonstration of love. To this day, diamond engagement and wedding rings are, for many people, an essential part of a marriage. It’s an accomplishment to purchase or receive a ring, and it’s a demonstration of social belonging and love. What about brand value? To consumers, value is based on several key factors, one of which is brand. This is especially true for luxury brands. Whether it’s a Louis Vuitton purse or Nike Air Jordans, brand value goes a long way in justifying a high price. Retailers might also want to consider their perceived brand value when building a value-based pricing strategy. If you offer a luxury or premium service as a retailer, you may be able to raise your prices. But factoring brand value into your value-based pricing strategy is tricky. It’s difficult to calculate brand value in a way that lets you quantitatively add value to every product in your assortment. Your “brand” is more of feeling about your overall company, not the individual products you offer. That said, brand value is an important part of your commercial strategy, and you want your prices to reflect your brand promises. As such, a value-added strategy is a great way to build brand value across your assortment and justify higher prices. Conclusion The key to successful pricing is to match the product with the consumer's perception of value. And while cost-based pricing is a simple framework for a pricing strategy, it doesn’t consider the consumer at all. That’s why value-based pricing is so powerful — it factors in every part of the pricing and marketing mix. Once established, a great value-based pricing strategy strengthens your brand promises, stays agile in the market, and gives you more insights into what customers want from your product.
12.05.2020
Meet the Team: Vanessa Verlaan
For this month’s Meet the Team blog, we’re excited (and honored!) to introduce you to Vanessa Verlaan, Omnia’s new Operations Director. Vanessa has an incredible career trajectory, and has been working with Omnia for...
For this month’s Meet the Team blog, we’re excited (and honored!) to introduce you to Vanessa Verlaan, Omnia’s new Operations Director. Vanessa has an incredible career trajectory, and has been working with Omnia for the last 6 months as an ad interim Head of People Operations. Vanessa’s work never felt ad interim though, because she threw herself into the job with passion. She was always available to make time for Omnia, so it was no surprise when she officially joined the Management Team as the Operations Director this month. Everybody at Omnia is thrilled to have her officially become part of the team, and we know that there are great things to come from her. Please enjoy this interview with Vanessa. And if you’d like to learn more (or work with Vanessa) check out our careers page. Hi Vanessa, thanks for chatting with me! How are you doing? I am doing well, given the circumstances of the coronavirus! Thanks for taking the time to talk with me. First off, congratulations on officially joining Omnia as a Management Team member! How do you feel? Oh wow, thank you. I feel so excited to be here. I have enjoyed working at Omnia as an interim People Operations lead for the last few months, so joining the team officially felt right. Omnia had everything I would want in a job, and I’m inspired by everyone who works in the company. I feel very proud of joining in this role. You should be! We are excited to have you here. For this interview, I’d love it if you could give a brief introduction to yourself. Yeah sure. So my name is Vanessa Verlaan, and I am the Operations Director at Omnia Retail. I’m responsible for optimizing operations and creating a high-performing company culture to build a solid foundation for growth. I’ve been in Operations for over 10 years, most recently as a freelancer helping startups achieve operational excellence, which is how I came to Omnia in the first place. What about outside of work? What do you like to do in your free time? Outside of work I like to hang out with my son, who is five years old, and my husband. We live in a beautiful spot in Amsterdam near the water, so it’s a lovely place to go cycling and walking. I was supposed to do a 115-kilometer cycling tour this summer, but it got canceled, unfortunately. That’s such a bummer! I’m sorry to hear about that. Yeah, it is a shame. But it’s also understandable, right? That’s true. So let’s go back to your professional life. What is your story? How did you get to where you are today? Well, after studying Tourism I didn’t know what to do with my degree. So I applied to the Air Traffic Control traineeship at Schiphol airport, which is a very difficult program to get into. Each year there are about 600 applicants and they allow 10 people to the class. I don't know — I just tried because I knew I had an analytical mind and I felt strongly drawn to the responsibilities and challenging requirements. It took me a year to do all the qualifications tests to get in, and then I was ultimately selected, which was a huge honor, so I moved to Amsterdam to start the program. It was such a special time in my life. It felt like the ten of us were living in a bubble for a whole year. I mean, the class consists of all young people from ages 20 to 28 and we all started living in Amsterdam, even if we were from different places. It was crazy. You learned something new everyday. Every day was both challenging and rewarding. We needed to develop a wide range of new skills and knowledge, and our performance was judged everyday. It was such an amazing time. But, as you can tell I am not working in the tower. I never made it to Air Traffic Controller, and after a year in the traineeship it was obvious that the job wasn’t for me. Actually, nobody in my class ever made it to Air Traffic Controller. Only about 10% of the trainees do. When it ended for me I was very sad, but also really proud of myself because it was something I worked so hard for and I learned so much. But this was really the start of my career because I discovered my passion for optimizing and change. So I started to work in Operations at Martinair, which is a part of KLM. I was responsible for optimizing and coordinating all ground processes to reduce downtime as much as possible and to have each plane back up in the air as soon as possible. At Martinair I developed my skills related to operations and change management, and I got really excited about inspiring and developing people. But after three years it was time for me to move on and learn new skills in a more commercial and people driven environment. So I went to work for USG People, which is one of the largest staffing and recruiting agencies in the Netherlands. In my time at USG People I worked for different brands in different roles, but they all had one thing in common. Each role was related to change management: either implementation of a large new contract, advising on and implementing new strategies, or leading organizational reorganizations. I really learned a lot along the road and enjoyed the successes we celebrated. After working at USG People for more than nine years though, I was ready for a change of scenery, so I decided to go out on my own as a freelancer working with startups, which was awesome. I get really inspired by working for visionary entrepreneurs. They are so full of ideas and are really inspiring leaders. I liked that I could help them make those ideas a reality by focusing on which ideas to move forward with and how to implement them. I also found that I really liked the smaller size of the companies because they are fast-paced and full of endless possibilities. I worked as a freelancer for two years, and one job brought me to Omnia back in November of 2019. It was supposed to be a temporary position, but everything worked out really well and now I am a full MT member. What an interesting career path! This is also a really good segue. What do you like most about Omnia? There are so many things I like about Omnia! For one it’s small and still in the stage where everything is possible. I also like that the company has clearly defined values that actually shine through in everything we do. Everybody in the company is a superstar in their own way — so smart and driven. I really feel at home at Omnia. Another big thing that I like about Omnia is how transparent everyone is and how open everyone is to feedback and to learning. It’s so important to me to be somewhere where people want to learn and are open to change. I’ve realized I have kind of an “allergy” to the mentality of “Well, this is the way we’ve always done it so there isn’t any reason to change.” At Omnia this attitude just doesn’t exist. So yeah, so many things attracted me to Omnia. It had everything I was looking for in a job. It has been a long time since I’ve felt this inspired and motivated. When Sander offered me the job I was very excited and proud. And what’s your vision for Omnia? What do you want to achieve? What I would really like to do is help scale the company and expand to other countries. And make sure that we have the best foundation possible to grow on. We have a great product and amazing people, so when optimizing our scalability the sky's the limit. I want to make sure we achieve a high performance, yet people-focused culture at Omnia. This isn’t something that happens overnight, but we make progress every day by listening to our teams and adjusting step by step. How would you define your leadership style? I’m quite direct, as you’ve probably noticed. If there’s a problem, I want to discuss it right away, and I want my teammates to be open with me about the things they struggle with. I’m at my best when I work with a motivated team. I’ll make all the time in the world for someone who is motivated and who wants to improve. If you’re not open for feedback or willing to improve though, then I might not be the right manager for you. In terms of my direct reports, I like to give a lot of ownership and responsibility. It differs a bit for each person, of course, but I will help people build a framework for their success. I won’t let people sink. If someone is new to something, I’ll help them figure out how to execute the project. But everybody has their own style of doing things, and I’ll offer a sounding board for ideas on how to do something or provide a different point of view. It all depends on the person, but I prefer to coach and mentor and leave as much responsibility to my report as possible. As the Management Team member in charge of Operations you’ll have a direct role in the hiring of every new person at Omnia. What do you look for in new team members? We want people who match Omnia’s values, because if you don’t match the values then you ultimately won’t be happy at Omnia. So we look for people who are always learning, who are kind, and who will push themselves and their teams to a level of excellence. We want people who demonstrate all three values, but if someone has a superstar score in one area and is average in others, it’s a good sign because I really look for standouts. I want to say though that we do not expect anybody to be perfect. We expect people to be open, humble, and willing to learn. We want people who are able to come in and make mistakes, be honest about those mistakes, and learn and grow from the experience. What’s your favorite interview question? Well it’s not that exciting of a question, but I like to ask people the biggest lesson they’ve learned in the last year and why it was so important. Usually it’s easier for people to talk about things they’re really proud of rather than point out something negative about themselves, so their answer says so much about who this person is, whether it’s from their personal or professional life. How did they uncover this lesson? Did they take ownership? What did they learn and what would they have done differently, looking back? It gives me a lot of insights in someone's ability and willingness to learn. What drives you in your work? I always think, “How can we do it better, faster, and more efficient?” That's just what drives me, both at work and in my personal life. I always think things can be improved and I really like to come up with new solutions or life hacks. I also really enjoy empowering people to find solutions to their problems. I won’t be the one solving the problem itself, but instead I will ask questions to the other person find the answers themselves. Okay, thanks Vanessa! This has been an amazing interview. I have one final question. Do you have any book recommendations for people who are interested in Operations? I have two business books I’d recommend. The first is Lean In by Sheryl Sandberg. When I read this book I saw myself in the pages. It was really powerful for me and I think it’s a good book for people interested in setting an inclusive and equal (work) environment. The second book I’d recommend is Powerful by Patty McCord, who was the Chief Talent Officer at Netflix. I like Netflix’s culture: it’s about really working together as a strong team and empowering everyone to achieve their best. It’s like being a pro sports team with setting high bars, motivating everyone with challenging and rewarding work, and creating an open and transparent culture. Want to chat with Vanessa? You can connect with Vanessa on LinkedIn or reach out through our Contact page.
14.04.2020
3 Pricing Strategies that Incorporate Product Popularity
We’ve just announced a new data service called Product Popularity Scores. This new data service is an add-on to your Pricewatch export that shows the product popularity scores for different price comparison websites in...
We’ve just announced a new data service called Product Popularity Scores. This new data service is an add-on to your Pricewatch export that shows the product popularity scores for different price comparison websites in NL and BE. It’s designed to give you a better idea of what’s popular in the market so you can make more informed strategic choices when it comes to buying, marketing, pricing, and more. We wanted to give some inspiration into how you can actually use this service to create better pricing strategies. Below are three examples of pricing strategies that you can enhance with Product Popularity Scores. What is a Product Popularity Score? Product Popularity Scores are insights about the popularity of different products. At Omnia, can give product popularity information for a number of comparison shopping engines (CSEs). We don’t provide a “score,” per se, of product popularity, but rather provide information like the number of out-clicks a product has or who the most popular retailers are per comparison shopping engine. The type of data can vary depending on the comparison shopping engine you use, but in all cases it’s interesting to know how products react on different CSEs. Different product popularity strategies Product popularity insights are extraordinarily useful data points to incorporate into any of your pricing strategies. Here are three ideas on how to get started with this data. 1: The high-runner strategy The high-runner strategy combines two major pieces of information with your internal strategy. These two pieces of information are product popularity on the market, and product price elasticity. A high-runner is a product in your store that is extremely popular and which is sensitive to price changes. Depending on your category there may not be very many of these products in your assortment, but they tend to sell frequently. An excellent example of a high runner product is a recently-released smartphone. With the high-runner strategy, you use the power of these products to draw people to your store. This means discounting heavily on these products and marketing them aggressively so they appear favorably in comparison shopping engine search results. This pulls people to your store and builds consumer confidence that your store offers the lowest prices on high-demand products. Once a consumer has added this high-value product to their cart on your site, they’re unlikely to leave. This is when you can present them with different, inelastic products as a cross- or up-sell. These fully-priced products are where you can recoup your lost margin on the high-runner products. Take the smartphone example. If a shopper has entered your store and placed the cell phone in their cart, you might consider showing them a phone charger or phone case as additional suggested purchases. If the price is significantly lower than the main product they’re buying, consumers typically have no problem adding the inelastic companion item to their carts as well. 2: Bundling Product bundling is a pricing strategy that most retailers are well aware of. With bundle pricing, retailers will offer several different products (or services) as a package deal. This package is sold to consumers at a slightly discounted price than it would cost to buy the products separately. An example of a bundle in the outdoor clothing category Bundling is common in many categories, and you may use a bundling strategy already. But product popularity scores can let you make even smarter bundles. One way you might use bundling is to make your high-runner items even more attractive. If you price aggressively on the high-runner items, you can pull traffic to your site. You can then use bundles as a way to sell even more product once you have the traffic. Another way you can use bundles and popularity data is by creating bundles of popular products and using the bundle to optimize for price. In the traditional high-runner strategy, you discount each popular product individually and use adjacent products to recoup the lost margin. But what if you bundled the most popular products together? If you see that the most popular products in the market could combine well together, you could create a bundle of these high-ticket items and sell it at a slightly higher price than you could if you discounted each product individually. While you can still discount the products individually to draw people into your store, offering the products together gives you some room to improve your margins. Consumers may be willing to pay for the convenience of the bundle, especially if it’s an extremely large bundle that would require significant time investment to recreate. Example of a bundle built around one major high-runner item: a Nikon camera. It would require a significant amount of time to find all of these products separately. 3: Stock-based pricing A third strategy you can enhance with popularity score data is a stock-based pricing strategy. Stock levels and product popularity are inherently connected. If a product is popular, you’ll want to have more of that product in stock. If a product sells less frequently, less stock is required. In our blog about stock-based pricing strategies, we outlined four simple scenarios: When you have high stock levels, follow a pricing strategy as normal When you have high stock levels, decrease your prices When you have low stock levels, increase your prices When you have low stock levels, decrease your prices If you add popularity score data to these strategies though, you can make your pricing more nuanced. If you have low stock levels of a very popular product, for example, you can increase the price by a larger percentage than you would for products that were less popular. Final thoughts Product popularity scores are interesting data points that let you enrich your pricing strategies with even more nuance. This data is remarkably insightful and can help you come up with creative ways to sell more products or earn more margin.
01.04.2020
Amazon NL's Launch and Corona: How COVID influences the Marketplace
A few weeks ago we released a complete data analysis of what happened when Amazon entered the Dutch market. It made quite some news, but as the coronavirus reached the Netherlands, the coverage of the topic was quickly...
A few weeks ago we released a complete data analysis of what happened when Amazon entered the Dutch market. It made quite some news, but as the coronavirus reached the Netherlands, the coverage of the topic was quickly overshadowed by the virus. Coverage of the coronavirus obviously comes first. But Amazon’s entry into the Dutch market is not something to ignore, especially if you look at how Amazon is responding to the pandemic. Below we’ve linked several articles about Amazon’s launch in the Netherlands so you can get the full picture of how it is changing the market. Amazon NL launch Amazon’s initial launch in the Netherlands was disappointing. Omnia’s analysis found that products were 7% more expensive on Amazon.nl than they were on Amazon.de, and on launch day Amazon.de’s assortment was at least ⅓ larger than Amazon.nl. Our CEO Sander Roose spoke with several news outlets about the analysis. Below are links to the news articles. Please note that these articles are in Dutch, unless specified. Amazon in the Netherlands: great for consumers, but supply is disappointing (RTLZ) Amazon.nl is more expensive than Amazon.de (Retail News) Amazon.de is 7% less expensive than Amazon.nl (Emerce) Amazon suffers from startup problems: many products are missing (BNR) Amazon.nl offers are disappointing after start up (BNR) You can also see Sander's commentary on RTL news (beginning at 17 minutes). Amazon and the coronavirus For the last few weeks, the coronavirus has dominated the news cycle. As the world’s largest webshop, Amazon was forced to respond. The story began as a success. To accommodate for the high volume of online orders that came as a result of the coronavirus, Amazon announced it would hire nearly 100,000 temporary workers to fill orders. Amazon NL also extended its return policy to reduce pressure on the already overburdened postal system. In recent days though, Amazon has gained bad press in the United States as workers stage walkouts in protest of the company’s worker health protection policies. The protests in the US mirror earlier protests in Spain and Italy, and even the US government has written to the company to express concerns over employee safety. Amazon has a responsibility to protect its employees (and the broader world, as a result) from the coronavirus. But like every other e-commerce company in the world, Amazon is under intense pressure at the moment. The Wall Street Journal reported that Amazon is receiving anywhere from 10%-40% more product orders now than it did at this time last year, and Amazon is under high pressure to deliver quality service. The future of Amazon and the coronavirus The coronavirus will change retail permanently, and no company — not even Amazon — is immune to its effects. The virus has opened up a completely new set of problems, and every company is struggling to navigate its way through the uncharted territory. It's unclear how the virus will affect Amazon NL's performance, but it will certainly be a unique business opportunity across the world.
27.03.2020
What is Stock-Based Pricing?
Last week, as a response to the coronavirus, we offered some pricing advice to our customers: use stock levels as a way to prevent unintentional price drops on your products. To give some more background on this pricing...
Last week, as a response to the coronavirus, we offered some pricing advice to our customers: use stock levels as a way to prevent unintentional price drops on your products. To give some more background on this pricing method, we decided to create a blog post outlining what stock-based pricing is, why you may want to use this pricing method, and a few different strategies to consider while implementing it. Keep reading to learn more about this versatile pricing method and how you can use it strategically. What is stock-based pricing? Stock-based pricing is a pricing method. With this method, you can choose to use stock as a factor for a product’s price. In the graphic below you can see stock-based pricing at work in its most traditional setting. On Monday, when stock levels were high (as indicated by the blue bar), the price for this product (indicated by the blue line) was somewhat low. By Tuesday and Wednesday though, the stock levels dropped, and the price increased as a result. By restock on Thursday the price decreased again. As stock numbers dipped on Friday and Saturday, the price increased once again. Why use stock-based pricing? Stock-based pricing combines well with other pricing methods, and is a great way to enhance your overall pricing strategy. It also gives you some more control over what happens in your store as stock levels change. Even if used alone, stock-based pricing will help protect margins and can make your store more competitive. When you make a pricing rule, instead of making rules on actual stock levels, you want to set rules on stock coverage and stock age. Stock coverage is stock level divided by sell through. It's a more insightful metric because stock levels mean very little without relating to sell through. In Omnia, the field to use for the sell through is units sold in the last four weeks. Stock age is the number of days since the last stock increase or resupply. If you don't use both of these metrics, your dynamic pricing tool may begin to immediately discount on new products. At the start, the stock may be high, but the sell-through may be zero. Examples of stock-based pricing strategies Stock-based pricing can work into many different kinds of strategies. In some ways it should be an element of any well-rounded pricing strategy. If you’re just getting started though, there are four simple ways to use stock based pricing in a dynamic pricing tool. When you have high stock levels: use your standard pricing strategy This strategy is a “business as usual” strategy. When you implement this rule in your dynamic pricing tool, the tool will follow your standard pricing strategy as long as stock levels remain high. When you have high stock levels: decrease your prices Do you have some unwanted inventory that you’d like to get rid of? This is a great chance to use stock levels as a trigger to decrease the price. This strategy can be used any time of year if you have overstock, or simply just want to pursue an aggressive pricing strategy. When you have low stock levels: increase your prices In most cases, it is perfectly acceptable to increase your product price if there is a limited supply in stock. The main reason to do this is to prevent running out of stock too quickly on high-runners. This is especially useful during the coronavirus pandemic when global supply chains are unstable. This strategy also follows the basic law of supply and demand, and is something consumers understand inherently. That said, it might be worth packaging this strategy around a limited-edition product that has extra, more expensive features. When you have low stock levels: decrease price The final basic stock-based strategy is to lower your price when your stock levels decrease. This may sound counterintuitive, but if there is product that you want to clear out, this may be a strategy to consider. This strategy is great for end-of-season sales or holiday-themed products, for example. Advanced stock-based pricing The above scenarios are only the beginning of what you can do with stock-based pricing. Below are two more “advanced” pricing methods. Use seasonality When it comes to seasonal products, low stock may not be a good trigger to increase prices. In the case of these products like winter jackets, outdoor sports equipment, home repair supplies, and more, the response to stock levels will vary by the calendar month. Say you’re selling winter coats. If your stock is low in November, it might be a great trigger for a price increase. But if your stock is low in April or May and your price increases, you risk missing out on sales or damaging your price perception. If you are selling seasonal goods, you can have your dynamic pricing system automatically check if your stock rotates at a healthy pace. Is your stock rotating too slow? The system will slightly decrease prices. Are you selling too fast? The system can slightly raise prices to add some extra margin. By using this strategy, you maximize your bottom line margin on a SKU level and prevent going into the end of season sales. Do you need to update the seasonality of these products every few months? Not necessarily. Your dynamic pricing tool may have seasonality embedded into its pricing rules. In Omnia, you can provide the end of season date in your feed and the tool will automatically factor this into its price advices. Add sales data Combining stock-based pricing with sales data from the previous week (or month) can be useful for planning your pricing and stock strategy. If you see that sales are consistently higher on Mondays, for example, you can adjust your prices and stock levels on that day according to your commercial strategy. If your goal is to be a premium retailer with small-batch orders, you may limit your stock on Monday and increase your prices accordingly. If you want to follow a more aggressive pricing strategy, you may increase your stock for the Monday flow and decrease your prices. Final thoughts Stock-based pricing is a great supplement to any existing pricing strategy. During the coronavirus outbreak as the market becomes more dynamic, it’s especially useful to protect the stock levels of your high-runner products and prevent unintentional shortages in supply.
09.03.2020
The Strategies Behind Amazon’s Success
Amazon is built around one thing: customer happiness. Amazon was founded in 1994, and since 1995, the company has set out to be “Earth’s most customer-centric company, where customers can find and discover anything they...
Amazon is built around one thing: customer happiness. Amazon was founded in 1994, and since 1995, the company has set out to be “Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” Its mission statement is clear: do whatever it takes to make the customer happy. In this article we'll examine the strategies behind Amazon's success. Why is Amazon so successful? So what are Amazon’s strengths? The answer is a relentless commitment to the customer experience. Everything that Amazon does — every strategic move, every investment — is guided by its goal to be the most customer-centric company in the world. Every step along the way is designed to serve customers as best as humanly possible. Amazon has largely succeeded in this mission, as you can read about in our Complete Guide to Selling on Amazon in 2020. Over the last 25 years the company has introduced a wide variety of innovations to the market that have forever changed e-commerce. From a consumer perspective, these innovations ensure that Amazon is the place to shop for anything and everything. What is Amazon’s business promotion strategy? A SWOT analysis Amazon’s business promotion strategy is complex, especially since the company competes in three major industries. What are Amazon’s strengths? Amazon has a culture of testing ideas rigorously and then doubling down on the things that are effective. And as a company that’s not afraid to fail, and will put money on the line to develop a product or service, even if the product poses some risk of failing. Data: The sheer amount of data that Amazon has on consumers is mind-boggling. Amazon not only uses that data to improve its own operations and product offering, but also sells that data to advertisers through the Amazon DSP program. Prime membership: Consumers know and love Amazon, and there is a high loyalty to the company among Prime members. A recent survey by Consumer Intelligence Research Partners (CIRP) suggests that over 100 million people in the United States have an Amazon Prime account. CIRP estimates that 58% of Prime Members pay the full $119 yearly fee, 36% pay on a monthly basis, and the remaining 6% are on a free trial. CIRP also estimates that Prime members spend double the amount of non-prime members on Amazon — an average of $1,400 every year. Worldwide recognition: Amazon has a powerful influence on any new market it enters. Amazon has been able to leverage its brand recognition globally, which makes it such a threat to new markets. Amazon now has 31% of the market share in Germany and 47% market share in the UK. Logistics: Amazon has a logistics system that is far superior compared to other global retailers, and this is one of the key ways Amazon is able to deliver on its goal of being the earth’s most customer-centric company. From distribution centers near large cities to an advanced robotics system for improved efficiency, Amazon invests deeply in its logistical systems. Learn more about the history of Amazon’s logistics strategy and warehouses in this fascinating episode of Land of the Giants. Agility: Despite its size, Amazon can make decisions quickly that enable it to stay ahead of the game. The company has several built-in systems that keep teams and decision-making flexible and fast. One famous system is the “two-pizza rule,” which keeps problem-solving teams small and forces decision making. What are Amazon’s weaknesses? Just because Amazon is so big doesn’t mean it’s untouchable. The company also has several weaknesses that make it vulnerable. Fragmentation: Amazon is an “everything” company. It runs a media operation that produces top-quality television series and movies, a cloud-based web provider, and an online retailer, all wrapped into one. This could be a strength as Amazon can dominate multiple industries, but it also limits the company’s ability to focus on one strategic goal. Not brand friendly: There are some categories where brand value is more important than others. Amazon has traditionally done poorly in these categories where brand is important, such as fashion and home goods. Limited brick-and-mortar presence: Amazon has a more limited brick-and-mortar presence compared to competitors like Target and Walmart. But this is changing as Amazon adopts a strategy to move from pure-player to omnichannel giant. Amazon started this journey with its acquisition of Whole Foods grocery stores in August 2017 as its first foray into the world of grocery shopping. The company also recently announced it would open its own line of grocery stores that are separate from the Whole Foods chain. But Amazon doesn’t just have grocery stores; it also has four other types of physical shops around the United States: Amazon Books, Amazon 4-Star, Amazon Go, and Amazon Pop Up. Amazon Go is an especially interesting retail location. Consumers must have the Amazon Go app to enter the store, but once in, there are “no lines, no checkout.” Consumers can just pick the items they’d like off the shelf, then upon leaving the store Amazon will charge the customer’s Amazon account. What are opportunities for Amazon? Growth of voice: Alexa has been a strategic move for Amazon to get consumers even further locked into the Amazon system. While Alexa and the Amazon Echo both further the company’s mission of providing a great experience, the ultimate motivation for these products is to make the ordering process seamless. Amazon Basics brand: Amazon’s ultimate goal is consumer data, but it’s not some Doctor Evil plan to take over the world. Amazon sees consumer data as the key to providing more value to its customers. This is partially the motivation behind the growth of Amazon Basics, Amazon’s private label. What started out as the Amazon alternative for charging cables and batteries has exploded into all kinds of products, including kitchen accessories Right now, Amazon understands the whole customer journey from the moment they sign up for an Amazon account, place an order, all the way up until they receive a product. But as soon as the product enters the customer’s house, the company loses track of how customers use the products. The closest they can get is reviews. Technology and gadgets, notably the Amazon Echo and Amazon Alexa, let Amazon understand customers inside the home. Alexa began as a standalone voice assistant to answer questions, but Amazon has evolved the technology to be more useful, both for consumers and Amazon as a company. You can now connect Alexa to a number of Amazon Basics items, such as a voice-controlled microwave. Connecting voice with these products makes the product easier for consumers to use. But it also gives Amazon more insights into how you use the product. With the microwave, for example, Amazon knows how often you say “pop this popcorn.” It can then calculate how many times you’ve said “pop this popcorn,” compare that number to the number of popcorn bags in your last purchase via Amazon, and automatically reorder popcorn for you at a 10% discount. This isn’t necessarily a bad thing, and it does give consumers freedom to do other things. And, more importantly for Amazon, these products make it easy to order something new through the marketplace. What are threats to Amazon? Data and online privacy: One of the biggest threats Amazon will face in the future is the continued debate over what is private data versus what is public data. Legislation and regulations: Despite its power, Amazon is still subject to the laws and regulations of any country in which it operates. If any sweeping legislative changes are introduced in these countries, it could damage the company’s ability to operate as it does. An example might be a new data privacy regulation. If major reform meant that Amazon could not collect as much consumer data as it does, it could harm the business. At the more extreme end of the spectrum are antitrust laws that could force the company to break up its operations for the sake of competition. What is Amazon’s markup strategy? Amazon itself does not have a markup strategy. It’s up to Sellers to determine how much markup they want to add to their online products and set healthy margins. For low margin products, consider raising the price or strategically bundling the product with a high-margin product. You can also try to cut production costs. For high-margin products, it may be worth it to increase your marketing spend, shoot for cross- and up-sells, and devoting more time to the product. What is Amazon’s positioning strategy? Amazon’s brand is built on customer satisfaction. It wants to be known as the most customer-friendly company on the entire planet. This means Amazon wants to position itself as the most convenient company with the lowest prices and the best customer service out there. Amazon largely achieves this goal, and it’s developed a strong brand as a result. A 2019 survey of 2,000 US shoppers found that 89% were more likely to buy products from Amazon than other e-commerce sites. The same survey found that Amazon was indispensable through the customer journey, especially when it came to reviews. As Kiri Masters writes in Forbes, Two-thirds of respondents (66%) typically start their search for new products on Amazon, compared with one-fifth (20%) who start on a search engine such as Google…and when consumers are ready to buy a specific product, 74% go directly to Amazon. Amazon repricing strategies A successful repricing strategy should help you achieve your company goals. Here are 5 tips to build a successful repricing strategy: Define your commercial objective Build a pricing strategy (such as a charm pricing strategy) Choose your pricing method Establish pricing rules Implement, test, and evaluate the strategy To learn more about Amazon pricing strategies, check out the Amazon pricing article. Amazon sales strategies Being successful on Amazon comes down to working hard and thinking about the customer. The company rewards Sellers who put the customer first and offer a consistently great experience. But what does that look like in real life? If you want to sell on Amazon, you should have one goal: getting your listing into the so-called “Buy Box.” The Buy Box is the box on the right side of any product listing. It has two major calls-to-action: Add to Cart and Buy Now. If there are several third parties selling the same product, the Seller who “wins” the Buy Box is the Seller whose item gets added to shoppers’ carts when a customer clicks on either of these CTAs. Statista estimates that 82% of Amazon sales go to the winner of the Buy Box. This number is higher for purchases on Amazon’s mobile platforms, whether that’s the app or web browser. Winning the Buy Box is a complicated dance, and it requires work across all aspects of your Amazon business. Much like Amazon considers customer satisfaction in its every move, so to do its Sellers. To win the Buy Box, delivering an excellent experience should be at the top of your priorities. Amazon takes a holistic view of Sellers when considering who to feature in the Buy Box. If you craft your strategy carefully, you can create listings that consistently land in the Buy Box. So, how do you build a sales strategy for Amazon? There are four steps. 1. Define your commercial objective on Amazon What do you want to achieve out of selling on Amazon, and what do you want consumers to think of your Amazon store? Do you want to be seen as a luxury brand? Or do you want to have rock bottom prices? These are all questions that you’ll answer when you define your commercial objective: the explanation of why your company exists and what its goals are. 2. Create a harmonious strategy based on the commercial objective After defining your goals, you need to figure out how to make them actionable. This is where you’ll create a more traditional “sales” strategy. Some factors to consider include: Pricing Promotions and marketing Packaging Fulfillment method Delivery and handling time There are countless other choices to make for your sales strategy, but these are a good place to start. Use your commercial objective as a compass for making decisions around your strategy; everything you do should strive to deliver on those overarching goals. 3. Put yourself in the customer’s shoes Amazon is all about giving customers the best experience possible. In fact, Amazon wants to be the “world’s most customer-centric company.” And, if you can optimize your sales strategy to provide a great experience, Amazon will notice. This means you may need to lower prices or adjust your promotions to meet the specific desires of Amazon’s audience. 4. Use tools Finally, staying current with Amazon requires a lot of work. The only way to make it truly possible to stay up-to-date is to use automation tools. For advertising, you may want to consider using optimizing your listings for Amazon’s search algorithm and using Amazon marketing tools like the DSP platform. This service can automatically create ads for you and test the effectiveness of each. For pricing, consider using a competitive intelligence and Amazon repricing tool. These will help keep your store listed as the Buy Box option. Who are Amazon's competitors? Amazon is a tech company, media kingdom, and omnichannel retailer wrapped into one large conglomerate. Because of the varied types of products and services, Amazon has numerous competitors from different industries. In retail, some of Amazon’s biggest competitors include Target, Walmart, Best Buy, and Alibaba. For tech, IBM, Google, Salesforce, and Accenture all stand as competition. In the media arm of the company, competition comes from Netflix, Hulu, Disney, and Time Warner. Conclusion Amazon is a highly strategic company, and it has been since its inception. It will continue to use its customer-centric philosophy as a compass in the future. If you’re a Seller who wants to succeed on Amazon, it behooves you to remember Amazon’s overarching goals. If you can incorporate Amazon’s strategy into your own, you’ll be able to succeed on the platform as well.
09.03.2020
How Does Amazon's Search Algorithm Work?
Amazon’s search algorithm is a sophisticated system that has one goal: connect shoppers with relevant products as quickly as possible. If you can engineer your way to the top through organic search, it’s a free way to...
Amazon’s search algorithm is a sophisticated system that has one goal: connect shoppers with relevant products as quickly as possible. If you can engineer your way to the top through organic search, it’s a free way to improve sales and support brand visibility. And the good news is that this is possible through Search Engine Optimization (SEO). With some work and critical thinking, you can get your listings to appear favorably in Amazon’s search results. This article details everything you need to know about Amazon’s search algorithm: how it works, what’s important to consider, and how to boost your overall visibility. To learn even more about Amazon, check out our Complete Guide to Selling on Amazon in 2020. How does Amazon's search algorithm work? At its core, Amazon’s ranking algorithm is similar to Google’s search algorithm. It analyzes search queries for keywords, then tries to match customer desires with relevant products. Every day, Amazon tries to find relevant, informative, and trustworthy content to deliver to its customers. Amazon’s relationship with consumers is different than Google’s though, and as a self-contained platform it has access to a huge amount of data to use for search engine results. Amazon A9 ranking algorithm Designed by A9, a subsidiary company of Amazon, Amazon’s search algorithm’s sole purpose is to connect shoppers with the product they’re looking for in as little time as possible. It’s built around the same philosophy as Amazon itself: deliver the best customer experience possible. Since Amazon’s goal is first and foremost to deliver a spectacular customer experience, it analyzes several different pieces of information to determine which products appear at the top of search results. The information the algorithm considers when determining product ranking include: Keywords: does your listing have the search terms consumers look for? Sales conversions: do your products sell well? Customer reviews: are customers happy with your products and service? Performance history: do you have a record of sustainable sales? Delivery time: do customers receive their products quickly? Price: are your products priced competitively? Amazon’s ranking algorithm evaluates a broad amount of criteria to determine who appears on the first page of a search, which is a lucrative place to be. Your products will be seen by more people, and you’ll be more likely to win the Buy Box. How do I find my Amazon ranking? To find your sales rank, search for the product on Amazon.com, locate your listing, scroll down to the “Product Details” section, and find the information for “Amazon Best Seller’s Rank.” This number is the ranking of the product in the category in which it is listed. How do you increase visibility on Amazon? There are three fundamental parts to your overall strategy that will help increase your visibility on Amazon. 1. Optimize your listings for SEO Optimizing your listing for keywords is the easiest way to get started increasing your visibility across the marketplace. One of the main things Amazon considers when deciding which products to display for a search result is keywords. This is for the obvious reason that consumers will type certain keywords into the search bar and want to be connected with relevant products immediately. You should learn what those keywords are for your products so you can start getting your listings in front of the right consumers. There are two ways to do keyword research. The first way to do keyword research is completely free: it’s to think logically about what keywords your target market might use to find a product like yours. If you’re selling a camera, for example, a logical place might be to start with “camera” or your brand’s name. The second way to do keyword research is more scientific. It involves using tools that tell you exactly what consumers search for in Amazon. These tools, like KeywordTool.io, MerchantWords, Viral Launch, and others can give you detailed information like search volume, frequent words, and related products. Some keyword tools are free. Some keyword tools have costs associated with them. You’ll be able to find one at any price point. Once you’ve determined which keywords you want to use, integrate them into your product title and listing in a way that’s organic and informative. Don’t be spammy though, because it quickly makes consumers suspicious of products. Keep your writing natural, and user-focused. Always follow best practices for SEO writing. Take some time to dive into what your target market searches for on the platform, what your competitors do to capture sales, and where there are opportunities for your product to shine. 2. Build better pages for increased sales conversions Optimization doesn’t end with keywords. After driving people to your listing through keyword research, it’s time to convince them to buy from you. You can do this by creating better product pages that clearly explain the features and benefits of your product. One of the variables that the A9 algorithm evaluates when deciding who to list in the top results for a search query is sales conversions. It does this for two reasons. First, the listings with best sales conversions are the listings that customers seem to deem the best solution to whatever it is they search for. Second, listings with high sales conversions also make Amazon the most money, whether that’s through fees or advertising sales. This gives Amazon even more incentive to push these articles to the top to drive even more sales. How can I increase my online sales on Amazon? There are several ways to increase your sales on Amazon. One of the easiest is to make sure your product listings provide enough information for consumers to make informed buying choices. To do this, evaluate your product description. Does it have keywords tactfully incorporated? Is it interesting to read and compelling? Does it answer questions consumers may have about your products? Make sure that all these components are included in the product description, and add bullet points, if possible. Additionally, look at the photos in your listing. Are they bright, clear, and inviting? The best photos on Amazon show all the details of a product and how it should be used. You can also include video in your listing to showcase your product even more. When you create a listing on Amazon, you can add a maximum of eight product photos to the page. You can add more engaging content though by paying for Amazon A+ Content, a service that lets you add more images, video and other multimedia content to your page. 3. Get great reviews Reviews are another logical way to improve your visibility across the platform (and increase your online sales on Amazon). If you have a high number of reviews, it’s a signal to Amazon that people enjoy your product and find it useful. If it’s useful for customers, Amazon will favor your product over others. Reviews help with more than just visibility though. When you get honest reviews, you can learn what customers like about your product or what they don’t like about the product, all feedback you can incorporate into the next iteration of your product. Are Amazon reviews important? Reviews are important for ranking well in Amazon’s search algorithm. In many cases, they’re more important than the actual brand of a product, as Fred Dimyan, CEO of Potoo Solutions (an e-commerce consultancy), explained in an interview with Wired . In the interview he points out the rise of direct-to-consumer or direct-to-Amazon brands like Cali White toothpaste that crush industry giants like Crest and Colgate. But Amazon’s rating system is not as straightforward as it appears. The search algorithm doesn’t just take a simple average of the available ratings. Instead, Amazon uses advanced machine learning to look for relevancy of ratings. It looks at the average star rating, of course, but also considers (among other criteria): How recently reviews were posted How frequently people post reviews Whether the reviews are from “verified” purchasers The algorithm calculates a star rating based on all this information and displays it on your listing. Surprisingly though, reviews are not as important as you may think. Skubana analyzed the top 3,000 organically-ranked Amazon pages and found that the number of reviews varied dramatically among top-performers. The company found that quality of reviews was significantly more important than the quantity of reviews, and that all the top items had overwhelmingly positive reviews regardless of the absolute number of reviews. The lesson: don’t focus your energy on getting a huge number of reviews. Focus instead on getting the best reviews you possibly can by providing a great product experience. Authenticity Amazon’s A9 algorithm tries to verify the authenticity of reviews. It’s easy enough for sellers to hire a clickfarm or freelancers to go and leave false reviews on products to boost visibility. Amazon recognizes this, and tries to prevent it with sophisticated detection methods. To combat this, Amazon launched the Amazon Vine program where Sellers can give products away for free in exchange for unbiased reviews from verified users. To enroll in this program, you will need to contact Amazon directly. Amazon SEO is only part of your marketing mix SEO for Amazon is an incredibly powerful tool in your marketing mix, but if you rely exclusively on SEO, you might be disappointed with your results. The sad reality is that keywords can only take you so far. The importance of advertisements has skyrocketed in the last three years. Even big brands have increased their Amazon ad spend to stay at the top of search results. Check out our Introduction to Amazon Pricing article for more information on this. This doesn’t mean that SEO isn’t a worthy investment. It just means that it’s only a part of marketing on amazon.
05.11.2019
Why the Experts Hate the Word 'Omnichannel' (and Other Lessons from REINVENT 2019)
On October 24th, 2019, we held our second edition of Omnia REINVENT at the Volkshotel in Amsterdam. The day was inspiring, to say the least, and packed with information and insights about the current state of the retail...
On October 24th, 2019, we held our second edition of Omnia REINVENT at the Volkshotel in Amsterdam. The day was inspiring, to say the least, and packed with information and insights about the current state of the retail industry, as well as where it’s going in the future. The speaker lineup was first class, with main stage lectures from Sander Roose, CEO of Omnia Retail Nathan Johnstone, Chief Architect at Omnia Retail Berend van Niekerk, Product Manager at Omnia Retail Nicolas Kroeger, Associate Partner at Retail Capital Partners Piet Coelewij, former CEO of Wehkamp, board member at DisplayData, and industry expert with experience at Amazon, Sonos, Philips, and more. While there were many lessons learned throughout the day, in this post we’ll sum up a few of the biggest takeaways. 1. Winners move fast Sander Roose, CEO of Omnia, announced some exciting news from Omnia. As a company, we’ve sat on a treasure trove of 7 years of pricing information, and we’ve finally reached a point where we can access that data and uncover new retail trends. One of the trends that Sander highlighted was the sheer speed at which the top players are moving. The “winners” in retail change their product prices frequently and across their entire assortments. This has long been the case for the consumer electronics category, but other categories are catching up. The baby category, for example, only changed prices weekly on 18% of products in Q1 2017. That number has since grown to a whopping 25% of the assortment. The beauty and health category also shows an upward trend since Q1 2017, but has been slower to accelerate than the baby category. Thinking strategically Sander’s data also showed that winners think more strategically. Take a look at the following slide. At first glance, both winners and all other competitors in the market appear to have the same distribution in price ratio. This measurement is across all products within an assortment. But these graphs are deceiving. When you drill down further, you find that the winners actually drive profit on products with a lower price point (less than €20). The same winners are then extra aggressive on products that are more than €300. “Whatever you do, do it now” Sander’s data was powerful, and the sentiment was echoed by Piet Coelewij when he said, “Whatever you do, do it now. Move fast before it’s too late.” 2. The big guys “are going bricks” Piet Coelewij, our mainstage keynote speaker, believes that retail is in the fourth phase of innovation: as he so aptly put it, “The big guys are going ‘bricks.’” This is no surprise. If you work in retail or e-commerce, you’ve known about “omnichannel” for the last few years. And when Amazon purchased Whole Foods grocery stores back in 2017 for USD $13.7 billion, there was widespread curiosity about how the online retailer would use a grocery chain to sell more. Now, this practice is commonplace. Amazon has even opened its own standalone stores in several areas of the United States. The retail giants capitalize on these stores in unexpected ways. These stores are not just another point-of-sale for customers, nor are they simply a pick-up point for pre-ordered packages. Rather, these stores allow Amazon another way to interact with consumers and build a brand reputation - and gather data about their target market while they’re at it. Amazon — and other large global retailers — are following the same logic that many of the world’s largest brands are following: the most competitive advantage lies with the company who has the closest direct connection to consumers...and who can act on the data they gather from those consumers. 3. Big data is booming The increased number of pure players who are adopting omnichannel strategies to gather more consumer data illustrates the third lesson from REINVENT perfectly: big data is the most valuable asset to retail. One of the recurring themes at REINVENT this year was the power of data, which was a core topic for almost every presentation. This is for a good reason: there are now more ways than imaginable to collect consumer data, and that data is what sets the winners and the losers apart. Why? Because that data unlocks the consumer market in new ways. When you know who your consumers are in all areas of their lives, you can create better strategies to sell products to the relevant target audience. The need for data is so pervasive that it’s sparked the biggest brands in the world to open up direct connections with consumers. The brand-to-consumer channel is growing rapidly and shows no signs of slowing down. There is a plethora of data that can be an asset to your business. Some metrics to consider include: Product price elasticity, which will help you sell products throughout the day, week, month, and year Historical shopping data to build better promotions based on previous trends (which is especially helpful around the holiday season) Competitor price information so you can respond to the market Consumer preferences from purchase data and reviews to help you improve your products or promotion This list is by no means exhaustive, but it shows just how far data can go in your company. 4. The experts hate the word “omnichannel” Both Piet and Nicolas agreed - they hate the word “omnichannel,” but continue to use it because everyone understands it. Both experts argued the term simply didn’t cover what they expect the future of retail to look like. At its core, the word “omnichannel” facilitates the idea that there will still be separate retail “channels” in the future. Nicolas and Piet imagine a retail future where user experience is seamless and there is virtually no distinction between on- and offline experiences. Instead, the two domains will combine into one holistic store that consumers can access at all times. Nicolas mentioned the Nike+ SNKRS app as a shining example. The app effectively moves the buying experience for Nike beyond the walls of its brick-and-mortar store, merging the on- and offline worlds into one singular experience. Nicolas mentioned a promotion where runners could go to Central Park, run around the park three times and record the run in their Nike app, then get the chance to buy a certain type of Nike shoe after completing the challenge. Nike has been doing this already for a few years. In 2017, Nike held an event in Washington Square Park in New York that drew a sizable crowd, with each attendee holding their smartphone at the ready. As reported by Mashable: The company has joined the growing world of sneaker apps that use tech to sell shoes in an unconventional way (Adidas and Foot Locker both have experimented with apps, to varying degrees of success). On this day, it was a pair of limited PSNY x Air Jordan 12s, dressed in a wheat brown color from top to sole. About a week earlier, Nike had teased the release of the shoe and alerted patrons that they’d only be available through its new Nike+ SNKRS app in a specific location at a specific time of day. There was no other way to get it. You had to either be in one of three designated locations when the shoe dropped or you were out of luck. The tactic works well, and drives engagement with consumers in an exciting, fresh way. Not only does Nike sell a limited type of shoe to avid fans, but the company generates great press with it and gathers unique insights about its target base in the process. Final thoughts REINVENT 2019 was packed to the brim with insightful, data-driven information, and one blog post can’t begin to cover all the insights. Retail is at a critical junction as it heads into the fourth wave of innovation, and it’s an exciting time to see where the market goes. If you’d like to see the presentations from each of the speakers, feel free to view PDFs of each slide on this page. We’ll also cover each topic more thoroughly in the coming months. Curious to see what REINVENT was like? Check out the aftermovie below.
17.10.2019
4 Things to Know About Data Quality in Dynamic Pricing
There’s a saying in the data science world: “garbage in equals garbage out.” In other words, the data you feed any algorithm determines the quality of the algorithm’s output. And while this is true for all data science,...
There’s a saying in the data science world: “garbage in equals garbage out.” In other words, the data you feed any algorithm determines the quality of the algorithm’s output. And while this is true for all data science, it’s especially pertinent for dynamic pricing algorithms. Dynamic pricing tools are like any other algorithm: they need great data as input to to give you a great pricing output. What you put into a dynamic pricing solution matters and has a colossal impact on the price advices it creates. If you have bad competitor data that isn’t up-to-date, for example, then the tool will generate equally bad price advices. But what data do you need, and how do you ensure it’s at a high enough quality? Here are four key things you need to know about data quality in pricing. 1. You need both internal and external data How much data does a dynamic pricing tool need? The answer is: a lot. The first (and most obvious) type is the competitor pricing data. This is the price that your competitors advertise their products as on different online shopping channels. We’ll cover this more in the next section, but it’s important to have this data so you can keep your prices aligned with the overall market value. But just getting competitor pricing data isn’t enough to have a profitable dynamic pricing strategy. You also need to incorporate internal information like your purchase price and stock levels for every product. Without this internal data, you risk advertising a price below your purchase price, for example, and can lose out on margin as a result. This internal data shifts frequently for every product in your assortment, so you can’t plug this data in once and forget about it. If you do, the dynamic pricing tool will continue to make decisions based on flawed data, like old purchase prices or incorrect stock levels. While having some data is better than having no data, improperly managed data creates risks for suboptimal prices. 2. Competitor pricing data comes from two sources Competitor pricing data comes from two places in two different formats. First, the data comes either from comparison shopping engines or directly from your competition’s website. Each of these sources has its pros and cons. Comparison shopping engines are a great place to start because you can estimate the market value of every product. As a marketplace, CSEs give you perspective about how your competitors interact with other market players. With CSE data, you can deduce your competitor’s strategies. You might notice, for example, that Competitor X always prices 10% lower than Competitor Y in electronics products. CSEs give you perspective and show you accurate prices for a variety of competitors in one go, but your competitors also won’t advertise every single product in their assortment on a comparison shopping engine. If you want to make sure you match on every product — and get data like stock levels — you need to go a step further and scrape directly from competitor websites. Second, the format of that data can either be in a URL or a Global Trade Item Number, better known as a GTIN for short. Most often dynamic pricing tools will work with product URLs to match products. Your team will need to keep an accurate database of URLs for every product across every competitor website or CSE, and will need to check the links repeatedly to make sure that the URLs are functional and accurate. If the link breaks and your team doesn’t pick up on it immediately, the dynamic pricing engine won’t find or match that product. Most teams don’t have the manpower to keep up with the work required for URL matching. It’s stressful to manage because teams need to devote their limited time and energy to maintaining the URL for every product in their assortment. And when you have hundreds of thousands of products and only 8 hours in a day, resources get directed (understandably) to the high-runner products that sell frequently and are highly elastic. But in this scenario your long-tail products get lost and left behind. URLs break, and nobody notices. Your dynamic pricing tool isn’t able to find products and update prices. Your company loses money. That’s where a product’s Global Trade Item Number, also known as a GTIN, comes into play. With GTINs, just provide the software with this unique 14-digit code for every product in your assortment. The software can then scan the market for those codes and match prices based on this factor. In our experience, we’ve discovered the best way to balance hundreds of competitors and thousands of products is to use a mix of URLs and GTINs. In this blend, you use the main URL for your competitor’s website (such as www.CompetitorName.com), then use GTIN codes to search the website for your products. This means you only have one URL to track per competitor, and it’s a URL that is unlikely to break or change. This makes the data collection process somewhat more expensive, but it also means your data is consistently high quality and accurate. And the monetary investment in a proper data collection solution up front is typically less than the costs incurred from unmatched products, frustrated teams, and retroactive data validation. 3. It’s hard to get competitor data To get competitor or market data, your tool needs to go through a “scraping” process. A tool called a spider will “crawl” the internet and find the information you’re requesting. Your competitors know that you use a spidering tool to get information from their website. And they’re starting to make it more difficult for crawlers to extract that information. How, you ask? One example is by blocking IP addresses entirely. If your crawler uses an IP address to view a website, you leave a trace of your presence with your competition. If your competitor’s website notices the same IP address returning too frequently, it will block that address. To overcome this, crawlers often use multiple IP addresses to reduce the dependency on one single way of gathering the data. But this isn’t the only way competitors will try to prevent you from gathering pricing data. Crawlers are built to gather information from a website’s design. If that design changes significantly it will confuse the spidering tool. For a properly functioning spidering tool, you need a team of people monitoring the e-commerce landscape and updating the tool when these kinds of defenses are put into place. 4. There are a lot of vendors selling bad data. Data collection is an insanely popular and high-demand industry at the moment. Every retailer and brand wants to understand the internet marketplace, and are willing to pay something for that information. Entrepreneurs know that. And they want to capitalize on it. As with many things, that too-good-to-be-true price is just that: too good to be true. To offer data at an astonishingly low price, vendors skip out on some vital safety checks that keep your data clean, organized, complete, and up-to-date. Some cheap data sources might cut corners like: Automatic updates several times per day Scraping from both comparison shopping engines and competitor websites The use of GTINs in addition to URLs to reduce manual labor Proper tooling designed with your competitor’s defenses in mind System updates and maintenance Consistent development time to improve data collection Extra quality assurance checks for both internal and external data Without all the above in place, the price advices the dynamic pricing tool creates won’t be as powerful (or accurate) as they could (and should) be. And without consistent development to improve the data collection, a dynamic pricing tool will quickly become obsolete. Low-quality data is also easy to spot. For many of our customers who come to us with pre-existing data sources, the super users of dynamic pricing tools already knew the data was flimsy. They didn’t trust the price outputs that the system created, and the whole dynamic pricing tool was a waste of an investment up to that point. Here’s the thing: proper data collection is, by itself, somewhat expensive. But that’s because there is a ton of work that goes into making sure the data is reliable and usable. Quality assurance checks. Regular testing. Rigorous evaluations of suppliers. And more. When you pay more for data and use a quality validation process, you can trust the input that goes into the dynamic pricing tool...and therefore trust the output as well. Your team can relax knowing that the price advices the tool creates are based on accurate market data and understandable business rules. Final thoughts If there’s one thing to take away from this blog, it’s this: you can get the data you need for cheap, but there is zero guarantee on the quality of that data. Quality data collection takes time, energy, and investment, but the peace of mind it brings (and the price optimization capacity), are well worth the cost. Is validating all this data worth your time? Absolutely, because without it your dynamic pricing system will be more of a hindrance than a tool. But is it worth investing time and energy (and money) to develop the tools to validate this data in-house? Well...that’s up to you. As a retailer or brand, you want to sell your products. That’s what you’re good at, and it’s what you enjoy doing. The purpose of dynamic pricing is to help you achieve that goal by positioning yourself correctly in the market. But is dynamic pricing your only responsibility? No. You’re also in charge of procurement, purchasing, marketing, strategy, innovation...the list is endless. To be honest, your time is better spent focusing on your company’s goals — not worrying about the small (but extremely important) details that could make or break dynamic pricing. It’s much easier (and profitable) for you to outsource that task to an entity that focuses specifically on dynamic pricing and can do all the quality assurance for you. If you’re curious how Omnia can help you do that, reach out for a chat. We’re happy to discuss data with you at any point. PS - Already using a data provider and don't want to double up on costs? No problem. At Omnia you can connect your existing data provider to our system, have the data checked, and enrich it with data from our trusted partners. Interested? Reach out today to ask our team how it works (and try it free for two weeks). Click the button below to get started.
23.09.2019
What Makes Omnia Different: Customer Success
Your business is constantly evolving, and the tools you use should evolve with it. At least, that’s the theory. But in many cases, you might find that your software-as-a-service doesn’t adapt as quickly as you do....
Your business is constantly evolving, and the tools you use should evolve with it. At least, that’s the theory. But in many cases, you might find that your software-as-a-service doesn’t adapt as quickly as you do. Customer Success - the idea that a company should help customers achieve their ever-evolving goals - helps software vendors keep pace with their customers and deliver value at every step of the way. In this post, we’ll explain a bit more about Omnia’s Customer Success mindset, and detail the ways we’ve built our team around you. Why is customer success important? When you buy a software service, the tool is supposed to make your life easier. But with many softwares (like Dynamic Pricing, for example), the tool setup is actually quite complex. The tool can quickly become a daily battle that you need to fight every single day if you don’t have any guidance for how to use it. And in many cases, if your business goals shift or change, it’s a hassle to change those goals within the tool. Customer success removes the fight with the tool, and enables you to use the software to its full capacity. A Customer Success Manager is more like a coach than anything else: they check in with you, guide you through the process, encourage you to try new things, and support you in your journey. How does Omnia do Customer Success? Omnia’s Customer Success program is broken into four tiers: Onboarding, Customer Success Management, Knowledge and Strategy, and Customer Support. Onboarding The starting phase of using a dynamic pricing software is crucial period to deliver value. With a dedicated Onboarding phase, our goal is to help you do just that. Omnia’s Onboarding is unique because it’s highly personal. During this period of approximately two to three months, you’ll explore the tool, translate your pricing strategy into pricing rules, ensure that the software is set up with all the proper technical requirements, and more. But, most importantly, you will learn how to use the tool yourself with the assistance of a dedicated Onboarding Manager. Your Onboarding Manager will coach you through the ins and outs of dynamic pricing and help you feel comfortable with your strategy before you go live with your new pricing tool. Customer Success Management At the end of the Onboarding, you’ll be introduced to your Customer Success Manager (CSM). Your CSM is responsible for helping you achieve your goals within Omnia, even as they evolve over time. To do this, your CSM will conduct regular EBRs, Executive Business Reviews, to see whether your current pricing strategy matches what your system is doing. For the most part, your CSM will be your main point of contact within Omnia. They’ll reach out regularly to see how you’re doing, and will be the person who informs you of any major product updates or changes. Knowledge and strategy At Omnia, we have a lot of expertise on pricing, marketing, and our own tool. But as a software company, we don’t have the ability to provide this knowledge on a one-on-one basis to every single customer in our system. But since our goal is to democratize knowledge on pricing and marketing, we’ve created a couple of different ways in which we can share our expertise. The first is our Knowledge Base, which is accessible to our customers. This is a handbook written by our Consultants, Product Specialists, and Product Managers on how to get the most out of the Omnia tool itself. It’s a go-to spot for our customer base to find answers to their questions about the tool itself. In addition to the Knowledge Base, we also have a Blog and Resources center. These are where you’ll find podcasts, articles, e-books, whitepapers, and reports about all things pricing. It’s the hub for all of our advice about strategies and market trends. If you need additional support from Omnia, we also have several consultants in-house available to help you translate your strategy into pricing rules. Customer support The final pillar in our Customer Success model is Customer Support. Customer Support is different from Customer Success Management for a few reasons. The largest, however, is that Support is reactive rather than proactive. Where CSMs reach out to you and are focused on your long-term goals, Support is here to help if you ever encounter a problem within the Omnia solution. However, our Customer Support is not just a call center to handle customer complaints. Instead, its staffed in-house with Product Specialists who know every nook and cranny of the Omnia product. When you call the Support line, you’ll connect with someone who will do everything in their power to help you. Final thoughts Customer Success is a philosophy that puts the customer first across all areas of the organization. At Omnia, we’ve built our entire team around this mindset, and have a service designed to help you get the most out of dynamic pricing. Curious to learn more? Check out this podcast from our Vice President of Customer Success Haiko Krumm.
15.08.2019
How to Create Organizational Clarity around Dynamic Pricing
To get the most out of a dynamic pricing software, you need to look beyond your pricing department. As part of a bigger organizational transformation to a more agile way of working, dynamic pricing will affect several...
To get the most out of a dynamic pricing software, you need to look beyond your pricing department. As part of a bigger organizational transformation to a more agile way of working, dynamic pricing will affect several different departments in your company, from logistics, to merchandising and marketing, and more. But since dynamic pricing touches so many different elements in your company, how are you supposed to maintain organizational clarity around the tool? How can you make sure that every part of your company gets the most out of dynamic pricing without major conflicts? Keeping all parts of your organization aligned on dynamic pricing is crucial for the project’s long term success. Each of these teams can effectively use a part of the tool to make their own jobs easier - and move your organization forward to a new plane of strategic operations. In this post, we’ll explain why this organizational clarity and alignment is so important, then give you some tips on how to achieve harmonious alignment. What does lack of organizational clarity look like? Organizational clarity is an internal alignment on your goals and how you will implement and use the dynamic pricing tool. It goes far beyond alignment between the business and I.T., but also reaches down deep into various departments to make sure everyone understands the direction you are headed with dynamic pricing. When you don’t have internal alignment, two things happen within an organization. First, you will miss the full potential of the dynamic pricing tool. If the tool gets stuck in a silo, any changes that happen within your strategy will not be understood by your colleagues. The other departments won’t be able to harness the power of dynamic pricing, and your overall return on investment will be smaller. Second, you’ll also experience internal resistance to the changes around the tool. As Gijs Schuringa, our onboarding manager says, “For example, if you are an omnichannel retailer and the online department want to implement dynamic pricing, you can then stumble across the fact that you won't be able to update your prices in the physical shops as often as [your online shops]. This could lead to a lot of resistance within the offline departments which, in traditional retailers, are often also the powerful departments. This can really hinder the process of implementing dynamic pricing.” As another example, you might be an organization with a well-defined pricing department and a clear pricing strategy. And if that’s the case, you might feel that the dynamic pricing tool should be owned by the pricing team alone. But if you fail to include the marketing team in the conversations around dynamic pricing, for example, you can end up wasting marketing money. If the marketing team doesn’t know your pricing team is raising prices on a certain part of your assortment, they might bid aggressively on that product, just to display that you are outpriced. Multiply this mistake by thousands of products in your assortment, and you can quickly see how costly this misalignment can be. Marketing is just one example of many where organizational alignment can cost you money in unexpected ways. But just as misalignment comes with a cost, alignment creates new opportunities for growth that you didn’t know existed. The beauty of organizational alignment When you have internal alignment about dynamic pricing, you can easily overcome the internal resistance to the practice and give each department the tools it needs to succeed. And when you add in other areas of the organization, you can quickly see that dynamic pricing software can give an increased ROI in other ways. For example, if you include procurement and category management in the dynamic pricing strategies, you can ensure that your product’s purchase price is factored into the pricing strategy...and never dip below a healthy price margin as a result. You can also do the same with logistics costs and marketing costs. Each of these teams will help you set a price that’s better for your overall business, not just the pricing team. But adding these teams to the conversation also helps the other departments. If marketing knows your prices, they can make better bids. If procurement knows the performance of a product, they can led better negotiations. LEARN MORE → Improve your buying, supply chain and marketing with pricing insights How to align your internal goals around dynamic pricing So you know that you need to have organizational alignment. But how do you know who to bring to the conversation? Within an e-commerce pure player, it’s usually easy to get everyone together who needs to be involved. These companies typically have more clarity on who owns which aspects of the business operations. However if we look at more traditional retailers, it’s sometimes harder to determine which departments need to be involved. As a starting point, include your pricing, marketing, category, and IT teams. As you go through the implementation process you will discover who else needs to be at the table, whether that’s logistics, . You might even be surprised about the reach of dynamic pricing! Tips for getting the right people involved If you need more than your pricing department in the room, how do you know who to invite? Here are our top 4 tips for bringing the right people into the conversation. 1. Use your commercial objective as a compass As with anything related to dynamic pricing setup, we always encourage you to start with your commercial objective. Your commercial strategy should be the basis of any major decision you make as a company. Ask yourself how dynamic pricing will help you achieve your goals. What are your goals for your company, and how will dynamic pricing help you achieve those goals? Make sure that this is communicated clearly across your organization, not just to the teams you think might be impacted by dynamic pricing. The commercial objective should be a compass for all teams across every discipline, not just pricing. Read more → How to Define Your Commercial Objective by Omnia Partner Johan Maessen 2. Get external help There’s nothing wrong with getting help from a fresh pair of eyes. And in many cases, consultants and external help can totally transform your business. As long as the consultant understands dynamic pricing and your commercial objective, they can help you understand who in the company should be involved. Take a look at our Partners page to see who we have worked with in the past to successfully implement dynamic pricing. At Omnia, this external help is included as part of your onboarding program. For the first 90 days of your dynamic pricing journey you get a dedicated onboarding manager who will help you identify the gaps in your dynamic pricing strategies. The onboarding manager can also help you understand who should be part of the conversation. 3. Continue alignment outside of workshops Dynamic pricing is a tool that your organization controls. And most of the time you spend getting used to that tool will happen outside of a workshop with a consultant. To keep the alignment, we suggest you have internal sessions and workshops where you can test the tool and learn what is happening within it. You can then use these internal meetings to help you better prepare for the workshops with your consultants. 4. Test your ideas before Go-Live Testing is an important part of dynamic pricing, both before you go-live with the tool and after it’s fully implemented in your workflow. Pre-testing serves as an excellent opportunity to learn more about who needs to be involved in the process. As you test, you’ll often stumble upon things that affect different departments which you never would have thought of before. When this happens, you can then ask that department to be more involved in the dynamic pricing process. With the new department involved, you can more easily adjust your strategy to match your shared goals. Final thoughts Organizational clarity and alignment is key to the long-term success of your dynamic pricing solution. And making sure you have the right people in the conversations is crucial to reducing the internal friction around the practice.
05.08.2019
Why UK Retail Sales Slumped in H1 2019 (and How to Fix It)
New research from the latest IMRG Capgemini eRetail Sales Index shows that British online retail sales in the first half of 2019 have slowed down...and a lack of focus on omnichannel retail strategies might be to blame....
New research from the latest IMRG Capgemini eRetail Sales Index shows that British online retail sales in the first half of 2019 have slowed down...and a lack of focus on omnichannel retail strategies might be to blame. The retail index, which tracks the online sales performance of over 200 retailers with a combined annual spend of £28bn, discovered that retail delivered a year-on-year growth (YoY) of 5.4% in the first half of this year. And while 5.4% doesn’t sound low, when you compare it to last year’s 16.9% YoY for the same time period, it’s easy to see why the figure is so worrying. While 2018 was a big year for the UK in terms of public events that spurred spending (such as a Royal wedding and the World Cup), the somewhat slower news year isn’t the only reason for the slowdown. Consumer trust in retail is eroding as doom-and-gloom coverage of retail closures continues, and the looming mystery of Brexit plays a part in consumer skittishness. But while you can’t control Brexit or create another Royal celebration, one thing retailers can do is look at the connection between their online and offline connections. The importance of omnichannel retail According to IMRG, online-only retailers grew at a faster YoY than multi-channel retailers in the first half of the year (7.4% YoY and 5.2% YoY, respectively). And there are a couple of factors that influence that. For one, online-only stores can reach wider audiences, and can stay more agile in the market than brick-and-mortar shops. Additionally, people have simply gotten used to the convenience of ordering online, which means they might automatically go for an online-option over visiting a physical store. But that doesn’t mean that you need to close up your physical stores to accelerate your growth. As Andy Mulcahy, strategy and insight director at IMRG says, In this country we have a tendency to regard online retail and physical retail (high streets) as being completely separate; an idea that has been fed over the past few years by the consistent growth in online even as the high street struggled. What we are now seeing is that they are not separate at all, but in fact deeply interconnected – hence growth in the first half of 2019 was the lowest yet recorded. In other words, there is a disconnect for many retailers between their online and offline worlds. And the reality is that these two worlds are more interconnected than ever before. Make omnichannel an advantage If you’re a multi-channel retailer, chances are you feel overwhelmed by your two different stores. And if you’ve seen your growth slow, your not alone. But, if you think strategically, you can make your multi-channel store a competitive advantage. The key with omnichannel is to see your online and offline stores as complementary parts of a whole, not competing entities. And as two parts of a larger puzzle, they can work together to help drive more sales through improved customer experience. We’ve done a whole post on how to win at omnichannel retail, so if you want more specifics it’s worth checking that one out. But if you want some quick tips, keep reading. 1. Remember how consumers shop The first step to “winning” with omnichannel retail is to learn how consumers interact with your store...and remember that that interaction doesn’t exist exclusively online or offline. For example, almost 60% of American consumers use their phone while shopping in a physical store. And many of them are checking the price of the products on a shelf to the prices they find online. Shopping today is, in itself, a multi-channel experience. Smartphones have become so ingrained in our everyday lives that it is impossible to remove their influence on the buyer’s journey. Now, this can create problems for retailers or brands. If consumers find a different price online than they see in-store, it can erode trust in the product (and company). But it also works to your advantage if you use the power of the internet to create a seamless site-to-store experience. 2. Use technology to add value for your customers If you want to create an omnichannel experience for consumers, you need to think creatively. But you also need to think practically. How will this omnichannel experience improve the customer journey? When shopping for furniture, you can never tell what a piece will look like in your home until you bring it through your front door. At least, you couldn’t do that until IKEA created an augmented reality application that helps you discover which corner of your living room fits your new armchair. The IKEA Place app is an excellent example of filling a gap in the consumer journey: one that leads consumers directly to your products. But you also don’t need to sink money into developing an app. There are also some relatively inexpensive ways to use technology to your advantage. Some ideas? Use QR codes on physical shopping labels to provide shoppers with more product information Let a customer add something to their cart online (or in-store on their smart phone), then allow them to pick it up in-store Offer price-matches at the register No matter how you go about it, remember that the customer journey today offline includes online experiences, and vice versa. 3. Invest in measurement tools So if you use creative technology to improve the customer journey, how can you actually measure if your endeavors are increasing your revenue? To do that, you need the right tools that can measure online and offline sales, and their influence on each other. One example of a metric you can track to measure the influence of omnichannel is the ROPO effect, which stands for “research online, purchase offline.” Measuring ROPO allows you to evaluate your store’s performance holistically, and not in the traditional online/offline silos. These technologies do require an investment, both in time and money. But the insights that you can glean from this sort of measurement are priceless. Final thoughts Even though the UK retail market slumped in the first half of this year, there is plenty of opportunity for multi-channel businesses to thrive. With the right tools and strategy, multi-channel retailers and brands can connect their two stores, get a complete understanding of their customer journey,
25.07.2019
26 Stats About Amazon Prime Day 2019
It’s no surprise that Prime Day 2019 was another record-breaking event. Sales this year surpassed Black Friday 2018 and Cyber Monday 2018 sales combined, and the number of Prime members exploded. More and more stores...
It’s no surprise that Prime Day 2019 was another record-breaking event. Sales this year surpassed Black Friday 2018 and Cyber Monday 2018 sales combined, and the number of Prime members exploded. More and more stores are now offering their own major sales on July 15th and 16th as a response to Prime, and the sales holiday is quickly cementing itself within the retail cycle. To see how Prime Day 2019 played out, we’ve rounded up 26 statistics to get an overview of the holiday. Amazon Prime Amazon Prime is Amazon's wildly successful membership program. Members pay $119 per year for access to free two-day shipping, photo storage, video streaming, and more. More than 100 million US shoppers have an Amazon Prime subscription (that’s 62% of Amazon’s customer base in the United States) (CIRP) Prime Members spend an average of $1,400 per year on Amazon. Non-members spend an average of $600 per year (CIRP) Prime Day began in 2015 to celebrate the company’s 20th anniversary and bring more people into the membership program Prime Day 2018 Prime Day 2018 was a record-breaking year, and sales surpassed Black Friday and Cyber Monday 2017 sales. Prime Day 2018 was a 36-hour event Amazon sold over 100 million products on Prime Day 2018, surpassing sales on Cyber Monday, Black Friday, and the previous Prime Day (Amazon) Estimates suggest that shoppers spent over $4 billion on Prime Day 2018 (Bloomberg) 17 countries participated in Prime Day 2018 (Amazon) The most popular categories for Prime Day 2018 were Toys, Beauty products, PCs and computer accessories, Apparel, and Kitchen products. (Amazon) Prime Day 2019 Prime Day 2019 was a full 12 hours longer than last year, but sales never lagged. While Amazon didn't release any information about how much the company made, Prime Day once again surpassed Black Friday and Cyber Monday in sales. Prime Day 2019 lasted a full 48 hours Amazon sold over 175 million products this year and consumers saved over $1 billion USD (Amazon) Prime members in 18 different countries participated in Prime Day: the United States, the United Kingdom, the United Arab Emirates, Spain, Singapore, the Netherlands, Mexico, Luxembourg, Japan, Italy, India, Germany, France, China, Canada, Belgium, Austria, and Australia. (Amazon) Amazon spent $8.1 trillion (USD) on television ads marketing Prime Day (Broadcasting Cable) $1.6 trillion of that $8.1 trillion went to Spanish-language advertising (Broadcasting Cable) US shoppers also saved at Whole Foods Market on Prime Day, hinting at Amazon’s omnichannel strategy. Strawberries, red cherries, and blueberries were the most popular Prime Day products at the grocery chain (Amazon) Popular Products The product trends on Prime Day 2019 were fascinating, and reflect changing cultures and demographics. "We saw a huge surge in 'smart' products this year, but that wasn't unexpected," comments Hidde Roeloffs Valk, Solution Consultant at Omnia. "This category is growing rapidly at all our customers across the board, so it's no surprise these were popular products on Prime Day." Hidde also believes that the popular products are reflective of new demographics. "In the Netherlands, diapers were among the top sellers. This is because more millennials are having children." Smart home and IoT products were particularly popular this year. Top sellers included robotic vacuums, smart garage door openers, and smart plugs. (Amazon) The Instant Pot continued its reign as one of the top sellers in the US (Amazon) The most popular products by country include (Amazon): United States: LifeStraw Personal Water Filters, Instant Pot DUO60, and 23andMe Health + Ancestry kits United Kingdom: Sony PlayStation Classic Console, Oral-B SmartSeries Electric Toothbrush, and Shark Vacuum Cleaner United Arab Emirates: Al Ain Bottled Water, Ariel Laundry Detergent, and Fine Towel Tissue Roll Spain: yobola Wireless Bluetooth Headphones, Philips Multigroom Series 7000 All-in-One Trimmer, and DoDot Diapers Singapore: Meiji Fresh Milk, Coca-Cola Zero Sugar Soft Drink, and Kleenex Clean Care Bath Tissue Netherlands: Mama Bear Diapers, SanDisk 128 GB Memory Card, and Philips Hue White and Color Ambiance Light Mexico: Nintendo Switch, HP Monitor 22w Borderless, and Nautica Travel Sport Eau de Toilette Spray Luxembourg: JBL Charge 3 Stealth Edition Bluetooth Portable Boombox, Tefal Jamie Oliver Stainless Steel Pan, and iRobot Roomba 671 Japan: Happy Belly Water, Anker PowerCore 10,000 Mobile Battery, and Pampers Premium Protection Diapers Italy: NESCAFÉ Dolce Gusto Barista Caffè Espresso, Dash 3-in-1 Detergent Pods, and AUKEY Powerbank Portable Charger India: Syska 9-Watt Smart LED Bulb Compatible with Amazon Alexa, boAt Rockerz Sports Bluetooth Wireless Earphones, and Godrej Aer Pocket Bathroom Fragrance Germany and Austria: JBL Bluetooth Speaker, Tefal Jamie Oliver Stainless Steel Pan, and OSRAM Smart+ Plug Zigbee Switchable Light Socket France: iRobot Roomba 671, Lunii Story Telling Factory, and Oral-B SmartSeries Electric Toothbrush China: Dove Exfoliating Scrub, L’Oreal Rejuvenating Eye Cream, and Silk’n Permanent Hair Removal Device Canada: PlayStation 4 Slim with Spiderman and Horizon Zero Dawn, LifeStraw Personal Water Filter, and 23andMe Health + Ancestry kits Belgium: OSRAM Smart+ Plug Zigbee Switchable Light Socket, SanDisk 128GB Memory Card, and Brita Water Filter Australia: Mario Kart 8 Deluxe, Finish Powerball All-in-1 Max Dishwasher Tablets, and Huggies Ultra Dry Nappies Amazon’s proprietary devices also did well, including Kindles, Echo, Alexa, Blink and Ring devices, and more. (Amazon) Prime Membership Prime membership skyrocketed this year, with both days of the retail holiday bringing in thousands of new members. But what is the average life cycle of these new members? July 15th brought in more Prime members than any previous day in the company history. (Amazon) July 16th brought in almost as many subscribers as the 15th. (Amazon) Searches for “Canceling Amazon Prime” increased 18x on the 15th of July, compared to the 14th, suggesting that consumers were signing up for the trial membership, browsing the deals, then canceling immediately. (Business Insider) Prime Day response Prime Day has officially moved beyond the domain of the Amazon company. Many other companies offered their own widespread sales during the same time period to capitalize on consumer readiness-to-spend. Prime Day 2019 was also met with protest from consumers globally, who worry about worker welfare. Online retail traffic surged on Prime Day. In the United States... (Emarketer) Amazon’s search index increased 184% in the first 24 hours of Prime Day Walmart’s search index increased by 130% Searches on eBay increased by 72% Best Buy’s searches soared by 255% Prime Day 2019 was met with public protests against the retail giant. Within Europe there were protests in Spain, the United Kingdom, Germany, and Poland (CNET) Delivery days marred consumer experience on Prime Day, with many shoppers complaining about 3-4 day shipping (Atlanta Journal Constitution) The number of companies giving major discounts during Prime Day has exploded, indicating that Prime Day is quickly becoming a full-blown summertime retail holiday as big as Black Friday. (Business Insider) This prime day record is expected to hold until Black Friday and Cyber Monday 2019. Final thoughts In just four years, Amazon has managed to create an entirely new retail holiday that only continues to grow in importance each year. We can expect even more retailers and brands to launch their own sales next year on July 15th, and might even see the holiday spill over into the physical retail realm as well. Curious to read more Amazon related content? Check out some of our other articles below The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible.
18.07.2019
The Omnia Management Team is Expanding
Exciting news: we're expanding our management team. We're delighted to welcome Nathan Johnstone, Haiko Krumm, and Sjoerd Prins to the leadership team. Nathan Johnstone, Chief Architect, will be responsible for guiding...
Exciting news: we're expanding our management team. We're delighted to welcome Nathan Johnstone, Haiko Krumm, and Sjoerd Prins to the leadership team. Nathan Johnstone, Chief Architect, will be responsible for guiding Omnia’s technical future and ensuring the scalability and stability of the platform. This includes setting technical principles for the company, planning and prioritizing projects, and further developing the Omnia roadmap. Nathan has been with Omnia for one year, and he previously worked at Coolblue for 3 years as a Senior Software Developer and .NET Pathfinder / Architect. Haiko Krumm, formerly Director of Customer Success at Omnia, will now serve as the Vice President of Customer Success. In his new role Haiko will lead the Customer Success team to ensure customers get as much value out of the Omnia software as possible. This role is not new to Haiko, who served as the Vice President of Customer Success — and member of the management team — at the SaaS company inSided before joining Omnia. Sjoerd Prins, previously Senior Business Controller at Omnia, will now serve as Finance Director for the company. In this role, Sjoerd will manage the Omnia Finance team and monitor the financial health of the company. Sjoerd has previously worked as a Financial Controller for ABN AMRO and was a Senior Associate at GE. “We are extremely excited to welcome Nathan, Haiko, and Sjoerd into the management team,” commented Sander Roose, CEO. “Each brings a unique perspective to the team, as well as years of experience in their respective disciplines. All of them are role models of Omnia’s values ‘Never stop learning,’ ‘Free to be you and me,’ and ‘Obsession with excellence.’” “We’re happy to have Nathan, Sjoerd, and Haiko join us to make sure all areas of the business are represented within our team," says Andrea Lamelas Puga, COO of Omnia. "Welcome, guys!"
05.07.2019
Why Dynamic Pricing is Less Risky Than You Think
Dynamic pricing does come with some risk. But that risk isn’t actually all that big. In fact, compared to the rewards that come with dynamic pricing, the risks seem comparatively small. And with proper preparation,...
Dynamic pricing does come with some risk. But that risk isn’t actually all that big. In fact, compared to the rewards that come with dynamic pricing, the risks seem comparatively small. And with proper preparation, safety features, and support, you can easily limit (and in some cases eliminate) the amount of risk you take. Curious? Keep reading to learn why dynamic pricing is much less risky than you think. What are the risks associated with dynamic pricing? In our experience, customers are most afraid of a couple of key things before they start their dynamic pricing journey. The first major fear is the chance of a race to the bottom, which involves the vicious cycle of competitors lowering prices until the market crashes out at a price point of close to 0. This fast descent into profit loss looms over the minds of many executives and directors when they first confront dynamic pricing. This is a risk, of course, though it’s one that’s largely controlled by proper safety checks within your dynamic pricing system. No matter which dynamic pricing software you use, you should make sure the algorithm has limits that are easy to understand and set up. You should then install those limits on every product, and properly test these limits before launching. When done correctly, these limits help you avoid a race to the bottom with dynamic pricing. Secondly, there is the risk of handing your entire pricing system over to a fully automated software, especially if you don’t fully understand how the software works. Many people feel that automation in general is a sort of “black box” where you don’t know what’s happening behind the scenes. In some ways it’s sort of like a computer. The vast majority of people use their computer for a very specific purpose that’s relevant to their job, emailing, surfing the internet, gaming, etc. Most of us don’t understand the complete inner workings of the computer, and likely don’t know how to get the full potential out of the machine. This isn’t a bad thing, of course, it’s just the reality. We trust the computer to do these things for us, and also know that if something goes wrong, the stakes are relatively low. If you don’t understand the back end of an electronic word processor works, it won’t cost you your job. Dynamic pricing is a little different in that if you don’t understand it, the potential to lose your job or tank your profits is higher. The potential for disaster is greater and affects more than just a single person. Again, automation does present a risk, but proper safety checks and setup neutralize the threat.One easy way that we at Omnia help you understand what’s happening behind the tool is with our “Show Me Why” button, which details the logic behind every pricing decision. This makes sure you can explain every action that the tool took to arrive at a price. Risk of change Ultimately, the biggest risk by far with dynamic pricing is founded in a fear of the unknown. Most companies know that dynamic pricing will transform their operations across multiple departments, and this change is understandably scary. What happens when you ask your employees to change their way of working completely? How long will it take for your organization to get used to dynamic pricing software? What if the return on the investment takes longer than expected? These fears are completely valid, and like all fears they tend to be the loudest voices in our heads. But with proper planning, preparation, guidance, and tools, dynamic pricing can catapult your company into a more profitable future. The rewards of dynamic pricing Dynamic pricing software is more than just a software. It’s an opportunity to move your company squarely into the modern era of e-commerce with a clearer roadmap for where you want to go. Here’s the thing: dynamic pricing is a tool that you control. You have full jurisdiction over how it works, and control the risks within it. And you can’t use the tool properly if you don’t fully understand what your commercial objective is, how that commercial objective translates into a pricing strategy, and how to execute that pricing strategy effectively within your chosen tool. If you don’t take these steps before buying into dynamic pricing software, you won’t get the full value of the tool. That’s why our most successful customers - the ones who thrive in our system - use the implementation of dynamic pricing to evaluate their company goals and build a better plan for the future. When they do this, the first thing most see is more time. On average, our customers save about 10 hours each week within the first quarter of using Omnia. As each customer grows comfortable with the automation, they hand over more of the robotic, tedious tasks to our software. And while this saved time is an excellent benefit, it isn’t really the time that matters. It’s the ability to use that time to focus on building a better strategy that moves your company towards your goals, whatever they may be. For customers who are the first in their category to implement a dynamic pricing solution there is also a first mover advantage. The companies who are the most successful with technological innovation are the ones who move the fastest and make the largest investments in the sphere. These companies are not only able to get a grip on the technology before the competition, but they can also adopt future innovations much more easily because their systems are primed for it. The reality is that dynamic pricing is on most retail company’s radar. But that doesn’t mean you can’t reap the benefits of acting quickly. How to have more reward and less risk Moving from dynamic pricing may seem risky, but the rewards far outweigh the chance of failure. And the risks of dynamic pricing can be largely minimized with proper planning and preparation. So, how do you get more reward with less risk? We’ve rounded up our top 6 tips. First and foremost, you should be realistic when it comes to the adoption of dynamic pricing. Most retailers are beginning to adopt the practice, so the longer you wait, the further you’ll fall behind your competition. This brings us to our second tip: get started early, and look beyond your pricing department as the only one that can improve with software. When planning for dynamic pricing software you should make sure that all relevant stakeholders are at the table for all relevant discussions. This should include individuals from your purchasing, marketing, operations, and pricing departments. Third, you should go back to the basics. With Omnia, there are five key steps to successfully implement dynamic pricing, and the first three (which are arguably the most important), don’t involve the software at all. These steps involve revising your commercial objective, then defining a pricing strategy and pricing methods based on that objective. Only after you have a strategy and methods in place can you start translating these into business rules in your chosen software. To define your commercial objective and pricing strategy though, it pays to have outside help. That’s why our fourth tip is to hire a consultant to coach you through the process and give you clear direction. If you’re curious who Omnia trusts to help you through these steps, you can take a look at our partners page. The fifth tip is to start small. You don’t need to automate your entire store from the start. Start instead with one product or category, learn how the tool works, and eventually you will be able to add in more complex strategies. Finally, the sixth tip is to find the right tool for your business needs. Omnia is one of these tools, of course, and we’ve designed our Dynamic Pricing module to lower risk and elevate reward. You can also add in our marketing modules to get a complete overview of your entire online presence. But what really makes Omnia special is our Customer Success approach, which gives you a whole team dedicated to making your dynamic pricing journey a success. From the start you’ll go through a complete onboarding process that teaches you how to use the tool and work with consultants to set up the proper pricing strategies. After you learn how to use the tool, a Customer Success Manager will conduct quarterly review sessions to show you how you can get even more value out of the software. And of course, if you have any small questions in between, customer support is available. Final thoughts To have a big reward, you need to take some risk. And while there is a risk with dynamic pricing when it is implemented incorrectly, the proper safety measures (and the right people to show you how they work) can all but eliminate that risk. When you have the right preparation and process and a team to help you set up, dynamic pricing software is actually a low-risk, high-reward endeavor. If you’re interested in seeing these safety measures for yourself, sign up for a free two-week trial of Omnia today and see how Omnia works with you to make dynamic pricing a success. Click the button below to get started.
21.06.2019
Brands Can Differentiate Assortments to Improve Retailer Relationships
Whether you are transitioning into the direct-to-consumer (D2C) sphere, or simply want to build a better relationship with your retail customers, your assortment is the key to making your brand stand out from the rest...
Whether you are transitioning into the direct-to-consumer (D2C) sphere, or simply want to build a better relationship with your retail customers, your assortment is the key to making your brand stand out from the rest of the competition. In fact, it’s the ultimate do-it-all tool that helps you build a better brand experience, get consumer data, improve your relationships with retail customers, and more. But how do you make your assortment the ultimate tool in your toolbox? In this post, we’ll explore differentiated assortments — what they are, how brands can use them, examples, and more — and give you some actionable tips on building assortment strategies that make your brand shine. Curious? Keep reading to learn more. Why should brands differentiate their assortments? Differentiating your assortment is a way to manage your relationships with retailers and consumers at the same time. At its core, the strategic move to differentiate your assortment will help you build better relationships with your retail customers through strategic partnerships and clear expectations of who makes sales in which channels. Differentiating your assortment is also beneficial when you open a direct-to-consumer channel. Opening a direct-to-consumer line has numerous benefits, but it also creates friction between your brand and your biggest customers: the retailers who buy your products from you and sell them to consumers. If you sell the exact same products as your retail customers, it’s easy to see the reason for tension. If you price yourself lower than the market average, you effectively undercut your retail customers. And while that lower price can earn you more sales through your D2C channel, you risk damaging overall price perception and your relationship with your customers. But differentiating your D2C assortment from what you sell to your retailers reduces channel conflict and protects your relationship with your biggest customers. How brands can differentiate their assortments There are 3 specific ways that brands can differentiate their assortments, depending on your end goals. 1. Build unique SKUs Best for: Brands with strong retail partnerships and connections. One way to differentiate your assortment is by leveraging your relationship with retailers. In this strategy, you’ll build a unique SKU to sell through retail channels and forge a strategic partnership with retailers as a result. With unique SKUs you can: Build better relationships with retailers Enrich your own market knowledge with retailer insights Reach consumers through channels they already know and understand In this setup, you can still control your brand image, but you also build a strategic partnership with a retailer who has demonstrated an excellent ability to sell your products. The retailer will be more likely to share their market knowledge with you to build a more profitable relationship. There are two ways to go about using unique SKUs to your advantage: 1. Unique SKUs for particular market segments The first way to use the unique SKU strategy is to focus on a particular market segment. If you know a certain segment of the market is more likely to buy certain features, you can build a model of your product specifically for that market segment. You can then push that product through retailers who cater specifically to that segment and who have a history of high sales. Say you sell notebooks, for example, and notice that the red version of a particular model sells especially well on a certain retailer’s webshop. You can use those insights to create a unique version of the notebook that consumers can only find in that retailer’s store. This strategy is a win for both your brand and the retailer. Ultimately, the main benefit of this channel, beyond more sales, is a strengthened partnership. The retailer will get a unique EAN code that is difficult to match, and can also leverage its connection with you to boost its own market image. They will also earn more sales and become the go-to retailer for this target segment. A great example of a company that does this is Miele. According to Hidde Roelaffs-Valk, one of our consultants here at Omnia, “That was one of the things I saw [while working at Simon Kucher and Partners as a consultant for Miele]. They would make a special product, a special SKU for specific retailers where maybe one feature is added or the color is a bit different.” Miele taps into their retail customers’ knowledge bases and analyzes what consumers are buying through each retail channel. If they notice a strong pattern or trend, they will create a special SKU for that specific retail that has the features that consumers on that specific site tend to choose. 2. Unique SKUs for a limited time at high quality retailers You can also create a SKU that is available through a selective partnership with one retailer for a limited amount of time. An example of this might be a food item that comes in limited flavors and which are only available at certain retail locations, whether they are a physical brick-and-mortar store or an online retailer. You don’t need to keep your SKUs limited to that specific retailer forever. You can also stipulate that you will roll the SKU out to the larger market after a certain period. In any case, your original partner will get the first-mover advantage and become known as the place that sells that version of your product. 2. Embrace mass personalization Best for: Brands selling high volumes of stock with relatively low costs for production alterations. Mass personalization means you give consumers the chance to customize their product offers directly through your website, while leaving retailers the chance to sell the more “generic” versions of your product in-store. The benefits of the strategy are numerous. For one, it lets retailers do what they are best at: selling to the masses. This keeps your biggest customers happy, while also opening up a direct line to the consumer market. With mass personalization you can: Talk directly with consumers Gather more interesting (and specific) consumer data Exert more control over your brand image Build a better relationship with consumers Maintain relationships with retailers The best examples of mass personalization come Nike, which allows consumers to make their own products on an easy-to-use website, while they sell generic shoes through their retail outlets. The company is successful in this because they have some great manufacturing processes which make it possible for consumers to order shoes in specific colors and styles and receive them in two weeks. D2C differentiation isn’t just for brands with tons of money though. You can also look at smaller companies and see the same principle in place. An example of a small company doing something similar to Nike is Doppr water bottles. You can go into a store and buy a plain Doppr bottle, or you can order one online that’s customized with your name, logo, or design. 3. Provide a different service Best for: Brands in the Fast-Moving Consumer Goods (FMCG) space whose products have a plethora of alternatives. If your products can easily be replaced by a different brand’s offering, it can be hard to stand out in the market. Differentiating your product based on color or the materials can help, but in many cases it’s just not enough. This is where differentiating your brand based on additional services is especially useful. With a service differentiator you can: Stand out from the crowd Disrupt the traditional D2C channel Create a unique brand experience Foster your relationship with local retailers and service outlets Gather more consumer data There are a few ways to do this. Subscription models are on the rise in the FMCG space, with companies like Harry’s Razors and the Dollar Shave Club disrupting the traditional razor blade market. Philips also did something similar with their razor and shaving category. The company had an electric razor for women which was a great success and highly coveted, but the high cost of the product created a barrier for many women who wanted to buy. Philips decided to adopt this monthly subscription model for the razor and gave women the product for a low monthly payment. After several months of payment, the consumers would then own the razor outright. Sales exploded because people were able to afford the lower monthly payment instead of the high upfront cost. Subscription models are also on the rise in fashion, whether it’s from the brand itself offering a monthly subscription plan to receive more products or through some sort of monthly boxed assortment. If the subscription model doesn’t sound right for you, you can also think about product maintenance as a way to differentiate your assortment. This can be done in your physical stores, or through strategic partnerships with local repair and maintenance companies. This model can work for a variety of categories, from offering free in-store tailoring services for fashion or discounted repairs at local experience centers. Can price be a differentiator? When it comes to your D2C channel, price can be a differentiator, if you wish. But you should be strategic about it. Undercutting your retail customers not only hurts your relationships with your biggest customers, but it also undermines your brand price perception. So if you want to use price as a differentiator for your assortment, there’s one key thing to remember: your price should differentiate you from other brands selling similar products, not the retailers selling your products. In other words, your price should follow the retail market, but stand apart from your direct brand competition. To keep your prices aligned with the rest of the retail market, you need to follow the market and update your prices multiple times per day. But following the market takes significant time and resources if you do it manually. That’s why dynamic pricing is so important for retailers who are opening their own D2C sales channels. A software like Omnia will automatically check your product prices against the retail market, meaning your prices will always align with what retailers charge. This not only protects your brand perception, but it also protects your relationship with your retail customers. Brands: increase your sales, reduce tension with retailers, and maintain your brand image with Dynamic Pricing. Curious about how to use your price as a strategic tool in the consumer market? Try Omnia free for two weeks and see for yourself. Click the button below to get started.
13.06.2019
3 Things Brands Need for a Successful D2C Strategy
A new trend in retail is the rise of the number of brands entering the direct-to-consumer (D2C) space. Instead of selling their products to retailers, who then turn around and sell their products to consumers, some...
A new trend in retail is the rise of the number of brands entering the direct-to-consumer (D2C) space. Instead of selling their products to retailers, who then turn around and sell their products to consumers, some brands are now skipping the retailer and going straight to shoppers. And in a new marketplace where it’s easy to connect with consumers via e-commerce and social media, it’s easier than ever to do. The Internet and e-commerce have shifted how we shop, and brands need to respond accordingly to keep up with market demands. No matter the reason why more brands are entering this space, one thing is certain: this leap directly to consumers means brands are now in uncharted territory. The channel also creates some conflicts between brands and retailers, who might see your new D2C strategy as a threat to their bottom line, and a poorly-planned strategy can have disastrous consequences on your brand perception. So what do brands need for a successful transition into the direct-to-consumer world? Here are the 3 things you need before you get started. 1. A crystal-clear reason Before diving directly into the D2C world, make sure you have a solid understanding of why you want to enter this competitive marketplace. For some brands, it’s a matter of data. In the current marketplace, retailers tend to hold their consumer data close to their chests as their main competitive advantage. If you open up a D2C channel though, you can gather consumer data to help you improve your relationship with consumers, get product insights, and spur product innovation. Another reason many brands are making this move is to protect their brand name and offer a better brand experience. In a marketplace where product quality is evening out, brand loyalty and perception might be the key to many consumers’ hearts. Since retailers, not brands, dictate shopper experience in-store and online, brands can understandably worry about their image and price perception. The move directly to consumers, then allows brands to exert a certain amount of control over the market that they previously couldn’t attain. Finally, a new D2C channel can simply be an avenue to more sales. If consumers have more chances and ways to buy, it might boost your bottom line. No matter the reason, if you’re a brand and you want to move into the direct to consumer space you should thoroughly understand why you want to make the move. This will help you create better strategies within the market so you can achieve your goals and align your commercial strategy. Additionally, you might find that a retailer might be better suited to help you achieve your goals. If you want to ensure a better brand experience, for example, a retail partnership could help both parties grow. 2. A multi-channel brand strategy After clarifying why you want to go direct-to-consumer, it’s time to set up a multi-channel brand strategy to establish how you’re going to execute your plan. A strategy is all about a certain choices that you make in order to drive profitable growth. There are multiple moving parts to a strategy, but at its core is a goal of what you’re going to do, and a plan for how to achieve that goal. You should think about: Which channels do we want to cover, and how will we win those markets? What are my goals and aspirations for each of my channels? Is one channel better suited to achieve a certain goal than another? How do we want consumers to perceive our product in each channel? What do we need as an organization in order to make those wins? These are just a few of the questions you’ll need to consider. And without help, the multi-channel brand strategy can quickly get overwhelming. At Omnia, we recommend you use a consultant to help you sort through your strategy and come up with an easy plan to follow. To see who we trust to help you with this, take a look at our Partners page. Differentiating your assortment Your multi-channel brand strategy needs to cover all of your sales channels, not just your direct-to-consumer one. Your retail channel is a huge part of that. If you’re selling directly to consumers, you immediately become competition to many retailers. And when retailers are your biggest buyer, how can you reap the benefits of selling directly to consumers without fracturing your relationship with retailers? One of the easiest and best ways, according to Roger van Engelen and Jean-Paul Savelkoul of our partner marketing agency A.T. Kearney, is to differentiate your assortment. In other words, you should offer retailers different products than you offer to consumers. What this looks like in practice is creating personalized, tailored experiences for consumers who come directly to your brand, while the retailers take care of the mass sales of more generic products. In the end, you as a brand can still gather consumer information and protect your brand identity, while retailers can still make mass sales on your high-performing products. A great example of a company that does this exceptionally well is Nike. 3. A multi-channel pricing strategy A multi-channel pricing strategy is a natural result of a multi-channel brand strategy. As you figure out how each sales channel will benefit your brand, it will be easier to set prices and make marketing bids that reflect your goals. If you want to position your brand based on perceived product value, you’ll probably use higher prices. If you want your brand to be known as the cheapest source for goods, you’ll likely use charm pricing. Your price point in the D2C channel should reflect your overall commercial strategy, of course, but it should also align with the rest of the retail market for two reasons. First, your price affects your brand image. Pricing yourself drastically higher or lower than retailers and the rest of the market will confuse consumers and negatively affect your price perception. Consumers might feel cheated by one source or the other, and won’t know where to place the value in the product. If you make this mistake, regaining consumer trust and value is a hard hurdle to overcome. Second, pricing yourself dramatically higher or lower will also affect your relationship with retailers. If your D2C price is notably lower than the rest of the online retailers selling the same product, you instantly undercut your biggest customers. Brands, dynamic pricing, and the D2C market Keeping your prices aligned with retailers for every product in your assortment at all times is a daunting task, to say the least. That’s why Roger van Engelen, Principal at A.T. Kearney thinks that a dynamic pricing software is essential for brands that are creating D2C sales channel. “In my opinion, brands need to have dynamic pricing before they start selling directly to consumers because it will prevent them from agitating their retail customers. This, in turn, protects brands from triggering a price-markdown war, which helps protect brand price perception.” - Roger van Engelen. See interview. Most major retailers already use dynamic pricing to manage their online stores and keep their products competitively priced. Brands, on the other hand, can use the software to follow a market price within extremely tight limits. This not only keeps your relationships with retailers friendly, but also prevents you from kick-starting a market-wide race to the bottom. Protect your brand and your relationships with Dynamic Pricing Follow the online marketplace, automatically adjust your prices, and keep your prices aligned with your retail customers in just a few clicks. Dynamic Pricing for Brands keeps you aligned with your partners and strategy while giving you more data on your consumers. Try Dynamic Pricing free for 2 weeks and see for yourself how you can build a better brand-to-consumer strategy. Click the button below to get started.
06.06.2019
Why are More Brands Going Direct-to-Consumer? A Special Interview with A.T. Kearney
Why are more brands going direct-to-consumer (D2C), and how can brands use dynamic pricing to succeed in this new arena? This week we have a special interview to uncover the answers to these questions. I sat down with...
Why are more brands going direct-to-consumer (D2C), and how can brands use dynamic pricing to succeed in this new arena? This week we have a special interview to uncover the answers to these questions. I sat down with three industry experts: Roger van Engelen, and Jean-Paul Savelkoul, Management Consultants at our partner A.T. Kearney, and Jasper Wiercx, Solutions Consultant at Omnia Retail, to learn about brands, the direct-to-consumer world, and more. Hey guys, thanks for sitting down to chat. Could you all introduce yourselves a bit? Roger: Hi, I’m Roger van Engelen. I’m a Principal at A.T. Kearney Benelux, specifically focused in Consumer Products and Retail industry. I specialize in several functions, such as business transformation, end-to-end cost improvement, growth strategies, e-commerce…I’ve touched a lot of different areas of retail strategy in my 12 years of being in the industry! Jean-Paul: I’m Jean-Paul, and I’ve been with A.T. Kearney for less than a year. But before working with ATK I spent 8 years at Procter & Gamble, initially as a Brand Manager covering personal care, household care and health care brand portfolios, and later as a marketing manager across the P&G brand portfolio, with a focus on new business models and digital marketing and data strategy for (e-)retailers. During my period in P&G I worked on direct to consumer (D2C) strategy, and the launch of several propositions in this area. Jasper: And I’m Jasper, one of the Solutions Consultants with Omnia. I’ve become our go-to person for brand implementation within Omnia, and am currently working with a couple of brands to get them started with our Dynamic Pricing module. Let’s start with an overarching question: why are more brands moving into the direct-to-consumer sales space? What is changing? Roger: So, to answer that question we need to go back in time a bit. Back in the 1950s product offerings and brands were scarcer than they are today. Small retail chains were also abundant, and we didn’t have these massive retailers that we have today. Jasper: Exactly. Traditionally, brands’ biggest customers have been retailers. Retailers would buy products in bulk from a brand, then sell those items to consumers. Up until about 20 years ago, brands have had all the power in the relationship. They’ve dictated how much a product should cost and how retailers should sell it. Roger: Retailers have been gaining power quickly as they consolidated significantly, and the internet and e-commerce have accelerated this change. There’s now a power struggle between retailers and brands. Retailers have more control now than they’ve had before, and brands have less influence on their products once they are in the retailer’s store. That’s part of the reason brands want to sell directly to consumers now, but it also creates uncharted territory that both parties need to navigate. So is e-commerce the sole reason this new balance of power emerged? Roger: Not the sole reason. There are also several other factors that have created disruption in the market, not just the rise of e-commerce. For example, sourcing across borders has become a bigger opportunity for retailers, which adds pressure to a historically-grown margin structure. Furthermore, retailers have made huge steps in upgrading the quality and attractiveness of their private label assortment. On top of this, with e-commerce marketplaces now allowing small players with limited distribution capabilities to sell the same way ‘the big boys’ are selling, new competition has entered the arena. Jean-Paul: You also see the rise of new business models emerging. Subscription services are a great example, and the rise of disruptive companies like Harry’s Razors in the US mean consumer packaged goods (CPGs) face a new type of competitors. Companies like Harry’s compete through the D2C channel but are at the same time listed in traditional retail channels. This means they are better equipped to optimize for shopper behavior based on their D2C platform knowledge, while also leveraging the reach of large retailers to create scale quickly. Roger: Exactly. We’re sort of at a converging point for many different moving parts in the entire retail industry. And brands going direct-to-consumer is a reaction to that. The brands need to think more creatively to ensure they add value to consumers in a marketplace where diversity of assortment and points of sale is constantly increasing. Jean-Paul: The clear winner here is the consumer. Consumers have gained knowledge, price and ingredient transparency, an abundance of choice, higher levels of service, speed, and more relevant advertising. They’ve initially lost their anonymity but are now rightfully getting back in the driver seat when it comes to their personal data and privacy. Has the internet changed this dynamic? Roger: No, internet has added a new dimension to the retailer brand relationship that is only accelerating the change already in play. The rise of private labels, which retailers can now offer due to their economies of scale, was the biggest disrupter, in my view. A strong private label assortment gives retailers the means to impact both the brands market share as price levels in a category. Jean-Paul: The internet has also given consumers new power. A completely new level of “price transparency” has emerged, which lets consumers easily compare the prices of different goods and has driven the overall price for goods down between domestic and international retailers. Consumers can openly interact with brands through social conversation, compare products more objectively and leave product reviews, which increased consumer knowledge and control. Roger: The internet and e-commerce has given retailers a huge advantage because they hold all the data on consumer shopping habits. They currently fiercely guard this data from brands, because it’s one of the retailer’s main competitive advantages. However, retailers are starting data-collaboration with brands to jointly create value. For example, there is a lot to win in making loyalty programs really personal and attractive, and collaboration between retailers and brands helps both parties make a better experience. Is this another incentive for brands to go direct-to-consumer? To learn more about their customers? Jean-Paul: Yes. In order to stand out, brands need to create a relationship with consumers. Gathering consumer data gives brands insights into the profile of the shoppers, how they use the products, how they interact on brand platforms, and how they travel through the shopper purchase journey. This enables more relevant advertising, a smoother purchase process, and, in turn, better relationships between brands and consumers. Roger: As the playing field levels out in terms of price, brands need to be more innovative in driving brand loyalty. This comes from building a relationship with the consumer. There appears to be a disconnect with a retailer in the middle though, and brands can’t necessarily dictate how a floor display should be positioned in a store, for example. Selling directly to consumers allows brands to gather more information on what buyers want, test and learn from consumers, and drive product and brand innovation from those insights. And they can use these insights to help retailers sell their product better as well. Okay, so what sort of hurdles do brands need to overcome to sell directly to consumers? Jasper: To start, there is a conflict between brands and their biggest customers: retailers. When a brand sells directly to consumers, they’re essentially undercutting their own customers, which creates a huge amount of tension between retailers and brands. Roger: Yes, I’d say that’s indeed one of the biggest problems. Brands are afraid their retailer partners will disapprove of the move as it is seen as ‘direct competition’. This makes brands very reluctant as retail will remain the biggest share of turnover by far. However, it’s a perceived channel conflict as we strongly believe both channels should be complementary What doesn’t help is that many brand owners manage their sales per channel, thus already create ‘internal competition’ between channels that is not necessarily in the interest of the of the overall brand. That makes it hard to overcome. So, how can brands AVOID channel conflicts with retailers in this new arena? Jean-Paul: There are two parts to this. First, brands should create a clear channel strategy, indicating in which channels they want to play, with clear targets and tactics to win. Within this channel strategy, smart differentiation between channels is key to avoid conflict. Roger: For example, brands can differentiate what they sell directly through their own channels and what they sell through a retailer. Brands can focus their direct-to-consumer efforts on unique SKUs that require more explanation and a more elaborate brand story. They can then let the retailers take care of selling the more generic “mass” products, which is what retailers are good at doing. This hybrid channel model means that each company can play to their strengths, but both benefit overall. However, it is key to reflect this into the trade terms (pricing and discount schemes) brands offer to their different retail partners, as this is often the root cause of channel conflicts and margin leakage. Jean-Paul: Second, brands should use leverage and share what they learn about consumers and the shopping trip to improve the shopper journey in regular trade channels as well. Retailers and brands working together to jointly grow the total category will benefit both parties. Jasper: Brands should also take this as an opportunity to evaluate their internal governance and organizational structure. It’s a chance to build a more efficient internal structure to avoid cross-channel competition. What’s the role of dynamic pricing in all of this? Jean-Paul: A brand’s number one priority in going direct to consumer is to deliver on its channel strategy. Dynamic pricing is what makes this possible. Instead of undercutting retailers, brands can use a dynamic pricing software to follow their recommended selling price, only dropping their price when all key retailers are a certain percentage below your suggested retail price. Roger: In my opinion, brands need to have dynamic pricing before they start selling directly to consumers because it will prevent them from agitating their retail customers. This, in turn, protects brands from triggering a price-markdown war, which helps protect brand price perception. Jasper: Exactly. Retailers and brands will use dynamic pricing differently. The retailers will use it to stay competitive in the market. Brands will use the software to guard price perception and prevent hurting retail relationships. And both will use the software to make managing their online assortments easier. Okay, last two questions! First off, what are your top tips for retailers as they navigate this new relationship with brands? Roger: Retailers have a lot to offer that brands can’t access, such as a higher traffic and a larger reach. Once a retailer understands how they can help brands beyond straight sales and how they can benefit from insights from their brand’s D2C channel, they can create a powerful strategic partnership. And each side of the equation ends up happier than they were before. Final question. What advice would you give brands? Jean-Paul: Evolving from a transactional commercial relationship to a strategic multifunctional relationship is key to unlocking the potential of deep collaboration between brands and retailers. Building this relationship requires time, dedication, resources and, most importantly, knowledge exchange. When brands enter the D2C space, they should be open about their intentions, make it part of a fair and differentiated channel strategy and share insights with retailers to ultimately boost total category value. Great, thanks guys! Jean-Paul and Roger, what’s the best way for someone to get in touch with you about building a direct-to-consumer strategy, since this is your area of expertise? Feel free to reach out via LinkedIn or email. We’re happy to meet for a coffee in our Amsterdam or Brussels office. Get in touch with Roger or Jean-Paul Are you a brand looking for strategic consulting on the direct-to-consumer market? Feel free to reach out to Roger or Jean-Paul through their contact details below. Roger van Engelen, Principal: Roger.vanEngelen@atkearney.com Jean-Paul Savelkoul, Associate: Jean-Paul.Savelkoul@atkearney.com Brands, try dynamic pricing free for two weeks. See for yourself how valuable dynamic pricing is for maintaining your relationships with retailers and protecting your brand perception in the direct-to-consumer market. Try Omnia free for two weeks with your products. Click the button below to get started.
31.05.2019
The History of Dynamic Pricing in 7 Minutes (Or Less)
Dynamic pricing is nothing new. In fact, it’s been the norm for many years. But what's the story behind this pricing trend, and how did it come to define modern retail and e-commerce? In this post trace the path of...
Dynamic pricing is nothing new. In fact, it’s been the norm for many years. But what's the story behind this pricing trend, and how did it come to define modern retail and e-commerce? In this post trace the path of dynamic pricing and learn how we came to be where we are today. The historical origins of dynamic pricing Historically, prices have been mostly dynamic and consumers have haggled with shopkeepers to find the right price for a product. That price could vary a lot: if the product was in high demand and limited in stock, shopkeepers could raise the price on the spot. Conversely, if a shop owner wanted to get rid of an overstocked item, they could decrease the price to increase the volume of sales. Shopkeepers could also change their price depending on the person who was buying. If someone looked like they were willing to spend more money on a product, the shopkeeper would set the price higher than if the shopper appeared to have less money. But this system was inefficient, to say the least. And it quickly became too complicated and time-consuming to keep track of prices as businesses grew during the Industrial Revolution. For one, shopkeepers were key parts of the sales process, and businesses needed to train them accordingly. As Jacob Goldstein says on a fascinating Planet Money episode about the invention of the price tag, “If you are running a store, if you’re working in a store, you need to know a lot to haggle. You need to know how much you paid for the stuff, how much your competitors are selling it for. You need to know how much different customers are willing to pay... you couldn’t just hire some kid on summer vacation to come and sell stuff at your store.” Retailers often had apprentice shopkeepers who learned the art of haggling over a longer tenure, and it was a profession that required years of training. The “negotiation market” was also time consuming for everyone involved. Lines would grow long as shoppers waited for determine prices, and consumer resentment grew if someone two people ahead of you in line got a better price for the same product. In other words, it became too complicated to keep track of all the prices, and the system wasn‘t scalable for the industrial revolution. Retailers needed to find a new way to manage their prices…so they turned to the price tag. Invented in the 1870s, the price tag allowed companies to scale their pricing out to more complex assortments and meant that shopkeepers didn’t have to remember the price for every single product in the store. It also made checkouts faster and more fair for all. All retailers needed to do was decide about how much to charge for a product once, then apply that price to a price tag in-store. It was a return to an old Quaker model where stores would charge the same price for every product, regardless of who the buyer was. This model quickly became the standard model in retail, and it’s hard to imagine a world before price tags. For the last 150 years, they‘ve almost universally dictated how much we interact with retail stores. A post-price tag world Today, price tags are still relevant, at least the minds of consumers. Price is still the most important “P” for many shoppers, and many people don’t care which retailer they buy a product from, as long as they get the product at a good price. They also still serve a purpose in terms of scalability. But that doesn’t mean that the price tag isn’t changing, literally and figuratively. E-commerce and new technology is changing retail, and the traditional paper price tag is quickly becoming obsolete. As modern technology shapes how we buy and sell, it also has opened up the floodgates for increased price changes. Airlines were the first industry to transition from a fully price tagged world to one where the price can shift throughout the day and week. Before the 1980s, the American government heavily regulated airline prices. But that changed during the 1980s when the industry took over price-setting. At the time, former ticket clerks spent their entire day making this these price adjustments manually on computers. by former ticket clerks who spent all day changing ticket prices on computers. The price of a seat depended on a number of factors: what time of day the flight was, how close to the flight someone booked the seat, how long the flight lasted, and more, but it ultimately was the clerk who decided what the price would be according to their “gut feeling.” It was a wildly inefficient system, and the airlines lost huge amounts of money. But eventually the airlines realized they were using computers to make these changes…computers they could modify to change seat prices automatically based on known information about a flight path, not just gut feeling. So the airlines took the plunge and did what many retailers are doing today: invested millions of dollars in software to automatically update ticket prices based on a variety of factors. And it works well. This automated dynamic pricing helped pull companies like Delta out of a financial downturn. Shortly after this success, the rest of the travel industry, from hotel chains to cruise lines, followed suit. Dynamic pricing in retail When the internet made its debut in the 1990s, it started a revolution in the way we live and work. Companies invested in new technologies that would allow them to send and receive commercial and information electronically — technologies that became known as “e-commerce.” Several new companies sprang up to meet these new e-commerce demands, but folded with the collapse of the Dot-com bubble in 2000. But by 2000, the term “e-commerce” had morphed to mean the ability to purchase anything online...and retailers had noticed the obvious advantages of an online marketplace. Retailers could now expand their assortments beyond their physical store and reach entirely new audiences. Shoppers were also quickly taking to the convenience of online shopping. Amazon and eBay were the first two companies to truly push this idea of an electronic marketplace to an entirely new level. Each company found wildly innovative ways to capture the power of the internet in retail. Amazon, for example, created its Prime membership program and an affiliate marketing system to push products even further. As e-commerce grew, software technology co-evolved with it. And in some ways, e-commerce made price tags important again, albeit in a completely different way. As the e-commerce market has flattened, price has become, in many cases, the only thing consumers care about. As a result, retailers now need to battle to offer competitive prices at all times, and the market price for a product changes several times a day. Pre-internet, retailers needed to make about 4,000 pricing decisions every quarter. It wasn’t worth the energy to change prices multiple times a day to follow the market. And the market didn‘t change that often. But today, price changes happen several times a day for millions of products across an entire marketplace. And they happen instantly. (In case you’re curious, we did the math for you. It’s around 60 million pricing decisions every single day.) So this puts retailers in an awkward position. Like the airlines of the past, retailers are currently updating their prices manually. Entire pricing teams spend 2-3 hours a day simply following a competitor’s prices just to understand the market for every product in their assortment. Those pricing teams then need to calculate new prices based on their company’s strategy, then update their own web shops to stay competitive. They then need to start this process all over again to stay relevant. Physical stores also suffer from the fast pace of e-commerce, and without the proper technology retailers can easily offer two totally different prices for the same product depending on if it‘s online or in a physical store. There‘s no real way for retailers to keep pace with the new market without the help of technology. Manually managing prices requires a ton of time, effort, energy, and money…and it is still inefficient. Assortments are too big to manage, and the price changes happen too fast to keep up. That’s why they turn to a dynamic pricing software like Omnia — to get control of the assortment again. Dynamic pricing in today’s retail environment We’re unlikely to return to an era where you haggle with a storekeeper to get the best price, but we are shifting into a time where computers dictate the price through dynamic pricing softwares. Just like the airlines of the past, many retailers realize that there is an easier and more efficient way to manage their prices, and are making the necessary investments in the software technology. Sometimes retailers invest their time and energy into their own dynamic pricing method, but in other cases they outsource the work to a third party like Omnia. Omnia can help you on both sides of this. If you want to develop your own in-house solution, we can help you get the data you need for your dynamic pricing machine. If you want a complete end-to-end solution, our Dynamic Pricing module takes care of data collection, price calibration, and price adjustments for you. Curious? Try Omnia free for two weeks and see which product is the best for your company. Click the button below to get started.
23.05.2019
Meet the Team: Nathan Johnstone
This week in our Meet the Team series, we’re featuring Nathan Johnstone, Omnia’s Chief Architect and Oceania continent expert. A proud Kiwi with an entire closet’s worth of New Zealand-themed t-shirts, Nathan’s in...
This week in our Meet the Team series, we’re featuring Nathan Johnstone, Omnia’s Chief Architect and Oceania continent expert. A proud Kiwi with an entire closet’s worth of New Zealand-themed t-shirts, Nathan’s in charge of taking the Omnia technical architecture to the next level. We sat down and chatted about Nathan’s work, what he looks for in new hires, and where he wants to take Omnia in the future. Want to work with Nathan directly? We’re hiring. Check out our Careers page to see our open opportunities. Hi, Nathan! Can you introduce yourself a bit? I’m Nathan Johnstone, and I’m the Chief Architect at Omnia. So, what exactly do you do at Omnia? My job, in its most basic form, is to build the future vision for Omnia’s technical architecture. To do that, I work with a team of architects, engineers, and developers to determine what the priorities for the platform are and how we can improve the Omnia ecosystem. We are currently in the process of migrating high value pieces of the system to an entirely new architecture. All this hard work will help the Omnia system scale and grow, while also pragmatically improving and future-proofing the existing architecture for continued growth. So it’s a lot more than just tapping on a keyboard? It’s definitely a lot more than tapping on a keyboard! What’s your vision for the Omnia platform? Good question. When I think about the future of the platform a lot of different types of “-ilities” come to mind, mostly “stability,” “reliability,” “maintainability,” and “evolvability.” We also want to have “scalability” in there of course, but the bulk of my job right now is making sure we have a solid foundation that allows us to build amazing features for our customers. How did you end up at Omnia? Before joining Omnia, I worked on a variety of domains and systems ranging from distributed real-time control systems running aluminum smelting processes, embedded agricultural automation systems, document collaboration and large ecommerce environments. I was originally working for another company in the Netherlands, but after two years I felt like I needed something different. I wanted more responsibility for a complete system, harder technical challenges, and the ability to define an engineering culture within a company. As I was starting to feel this way I met Herman de Jager, one of the co-founders of Omnia. After chatting with him it seemed like Omnia’s needs matched what I was looking for, so I made the switch. This was in April of 2018. And what do you like about working at Omnia? To start, I got exactly what I was looking for: freedom. This was a step up in terms of scope, and I have tons of freedom to do what I want and think is best for the platform. There’s also lots of other freedom such as the ability to work from home whenever I want or even from New Zealand when I go back to visit. I also entered a new challenge at Omnia. We’re working in a legacy code base, so most of my day isn’t spent writing new code. Instead, we’re sorting through 8 years of old code to determine what works, then rewriting small parts of it and finding better ways to use what’s already there. I think the ability to take a legacy code base and safely morph it a better state is where developers find out how good they really are. Lastly, though not unimportant, I am really happy with my colleagues at Omnia. It’s fun to work in an international office and with so many different viewpoints. I think we’ve done a good job of hiring smart, capable people, and it’s cool to learn from everyone else. What do you think has been the key to your success I think there are two things, to be honest. The first is the fact that I’m gritty and tenacious. I don’t give up, and even when I get what I want I’m constantly applying those learnings to reach a higher skill level. Software development is kind of like being a doctor. It’s a profession that is always changing, and we have to keep learning to stay relevant. So I spend probably 6-10 hours each week on my own open-source projects. Second though, is the fact that I don’t actually come from a software background. I started my career as an electrician at an aluminum smelting plant owned by Rio Tinto, and a manager there realized I was pretty good with computers. They asked me to do some software work for them to help out with Y2K, and then from that point on I've been firmly on the path of software development.I think this gives you a broader set of metaphorical tools to use when you approach a problem. What do you look for in new colleagues? To me, the most important things are problem solving and critical thinking skills, and my advice to anyone applying for any role at Omnia, though especially for technical roles, is to come with examples of these skills. We’re at a scale up stage and everything changes, so anyone on the team needs to be able to think fast and break problems down in a systematic way that lets anyone else understand it. I also look for people who will do everything they can to solve a problem before they come to me. We’re all extremely busy here, so it’s nice to know that someone takes initiative before they ask me to help. It’s respectful of my time and also presents the best learning opportunities for the person involved. Do you give a technical assignment? Yes, we ask someone to come in for a day and do an assignment. We like to see how they interact with the team and what sort of code they come up with. We then use that as a starting point for a conversation, and in follow up interviews will discuss someone’s choices. Do you have any advice for people who might be applying to a development role at Omnia? I’d say come prepared with examples of your critical thinking skills. I like to hear about experiences in the past where you figured out how to solve a problem that seemed impossible. Now for fun questions! What do you like to do outside of work for fun? Oh man. I'm a sports loving kiwi, so growing up for me it was rugby, then boxing while I was at high school until my earlier 20s. After boxing came ice hockey, and I played ice hockey back in Christchurch before we came here. I didn’t bring any of my gear over to the Netherlands though. That's what I used to do, but these days I'm still involved with a lot of my kid’s sports. So this means I spend a lot of time practicing rugby and field hockey with my 3 boys, as well as going running and parkour. Admittedly with parkour I watch more than I participate! I also love board games and computer games with my kids. So we play a lot of Catan, Zombicide, Minecraft, that kind of thing. I’m teaching my kids to code as well so they’re building their own games now. Thanks for sitting down with me, Nathan! Happy to have you here. No worries! It was my pleasure. Want to work with Nathan directly? Head on over to our Careers page to see our open opportunities.
16.05.2019
What is Charm Pricing?
When I was a kid, I used to love weekends because I didn’t have a bedtime. Instead, I’d stay up as late as I wanted, and it wasn’t uncommon for me to fall asleep on the couch with the television still on. But I grew up...
When I was a kid, I used to love weekends because I didn’t have a bedtime. Instead, I’d stay up as late as I wanted, and it wasn’t uncommon for me to fall asleep on the couch with the television still on. But I grew up in the United States, the land of direct-response marketing. And I’d often find myself jolted awake in the early morning hours by the still-blaring TV. At some point in the night, the channels would have switched from traditional programming to late-night “infomercials.” Infomercials, if you’re not familiar, are long-form sales commercials. They could last as long as 60 minutes, and typically followed a “tell-sell” format: someone would stand on a set and demonstrate the product for 50 minutes, typically shouting loudly about the features and benefits of the item. The most famous of these hosts, by far, was Billy Mays, and it was a national tragedy when he died unexpectedly in 2009. These demonstrations were also adopted to shorter 2-minute time slots for regular television hours. Here you can watch Billy Mays’ most famous commercial. These commercials were memorable for many reasons, most notably their outlandishness. But their prices were also catchy...so catchy that they could grab your attention from across the room and stick in your head for a few days after. Inevitably, almost every product you could purchase through these programs cost anywhere between $9.99 and $69.99. And each price always ended in either 99 cents or 95 cents. These companies were using a tactic called charm pricing (also known as "psychological pricing"), a style meant to elicit an emotional response in their consumers and drive them to action. Charm pricing relies on the belief that an odd-numbered price can trigger emotional reactions in people. It's a powerful pricing tool that isn't limited to cheesy American commercials. In fact, almost any retailer can use charm pricing to their advantage. So what is charm pricing, and is it right for your organization? Keep reading to learn more. What is charm pricing? Charm pricing is also known as psychological pricing. It’s the belief that a price can have a psychological impact. Retailers can then use that psychological influence to sway customers to buy their products or perceive them a certain way. Odd numbers are the foundation for charm pricing. The most common ending numbers are 9 and 5, according to a 1997 study, which found that these cents endings accounted for 90% of the 840 prices they analyzed (60% ended in 9, 30% ended in 5). Why does charm pricing work? Nobody is quite certain. There are a number of theories, including: Specificity: Charm pricing offers a degree of specificity, which psychologically triggers an idea that the product is priced at the proper value. This is especially true if the product is priced fractionally, meaning that the charm price appears as a cent value. Perceived loss: Consumers value a product based on loss rather than gain. And since most consumers in the Western world read a price from left to right, they are more likely to latch onto the first number they see as an anchor point. This means that €699 can feel like significantly less than €700 from the first impression, even though there is just a €1 difference. Perceived gain: The opposite of perceived loss could also be true, and consumers could use charm pricing as a way to feel like they’ve saved money. The higher, rounded price serves as an anchor point (€700), while the lower price represents savings (€699, which means you save €1). This follows a theory that a .99 or .95 price ending triggers a “sale” cue in the consumer, who might believe the price is discounted. Are consumers immune to charm pricing? Charm pricing is ubiquitous. As a consumer you see it everywhere you go, whether it’s at the drugstore, the supermarket, or a clothing giant or gas station. Just yesterday I bought a book in the train station on my way home from work that cost €16.95. But does this omnipresence of charm pricing make consumers immune to the price? Likely not, otherwise retailers wouldn’t continue the practice. And although it’s a small difference between €16.95 and €17.00, chances are I wouldn’t have bought that book if it were going to cost me €17.00 in total. And evidence suggests psychological pricing still works, despite its high amount of usage. In a 2003 pilot study conducted by researchers from the University of Chicago and Massachusetts Institute of Technology, 3 different test groups received different prices for 4 different dresses. The control groups all had a price that ended in a 9, and the researchers tested whether pricing the dresses $5 higher or lower had any effect on the rate of purchase. The researchers discovered that the products displayed with a price ending in a 9 tended to outperform the other prices, even if the other price was lower. So a price of $39 resulted in more dress sales than the cheaper price of $34! Who should use charm pricing? The effectiveness of charm pricing depends on a number of things, but by far the largest consideration is the buyer and type of good sold. And while there are many factors that go into your price, the easiest way to get started is to ask yourself one question: do you want to be known for your prices, or your products? If you want to be known for your prices, then charm pricing might be a perfect strategy for you. This is especially true if your products are elastic, and consumers don’t necessarily care about where they buy the product. So if you have a lot of products and want to be known as the cheapest option on the market, charm pricing will work well for you. Charm pricing might also fit your strategy if you have products that people buy on impulse. The specificity of the price appeals to the “logical” side of the brain, and helps consumers justify their decision to add that small item to their cart at checkout. When won't charm pricing work? If you sell luxury goods you probably won’t want to use charm pricing. That’s because you want people to value the product itself, not the price. And in many cases, people won’t want to feel like they are getting a deal. As Nick Kolenda writes in The Psychology of Pricing Strategies, If you sell luxury products, you WANT people to base their decision on your product qualities. You DON’T want them to consider the economic value. Thus, for luxury items, show the product, and THEN show the price. Take a look at these Louis Vuitton handbags below. Notice that none of the prices are even remotely close to the typical “19.99” infomercial style. Nor will they ever have a price like that. Instead, Louis Vuitton uses nice, round, whole numbers, and draw your attention to the product before you see the price. Louis Vuitton has a high brand value, and their price perception is equally astronomical. When someone purchases a Louis Vuitton bag, they do so for the status of it. They don't care about whether they saved €10, and might even shy away from the discounted bags. So before engaging with charm pricing, you should think seriously about how you want people to perceive your company, then mold your pricing strategy around your goals. Additionally, charm pricing does require a bit of nuance and market knowledge. Comparison shopping engines are sorted based on price, so you may want to use the exact same price as the lowest one listed. For example, if 5 retailers use 49.95 and you use 49.99 you will be number 6 on the list. You'll also stick out to consumers as overpriced. You'll need to watch your market carefully, and adjust your prices often to stay relevant with charm pricing. And while this is time consuming if you manually update your prices and track the market, you can also use a software like Omnia to follow the market and adjust your prices for you. In Omnia, all you need to do is make a difference between prices <100 (.95 or .99) and >100 (no decimals). Then the algorithm will automatically adjust to that price whenever it updates. Final thoughts Charm pricing might seem like something restricted to bad American infomercials. But the reality is that it’s a powerful tool to have in your arsenal. Charm pricing helps draw attention to your products, and can give hesitant purchasers the small push they need to click “buy now." Maintaining your charm prices, however, does require some work. And that's where a dynamic pricing software (or even a competitor pricing insights software) can make all the difference. Either of these softwares will help you save hours of time and capture more profits.
02.05.2019
New Case Study with Profile
How do you build a stable pricing strategy in an industry that's rapidly changing? That's the challenge Profile faced when they first approached Omnia. The tire and auto parts service had a strategy that had grown...
How do you build a stable pricing strategy in an industry that's rapidly changing? That's the challenge Profile faced when they first approached Omnia. The tire and auto parts service had a strategy that had grown organically over its 30+ years in operation. But as the industry shifted and online pure players emerged, Profile needed to change its operations. Profile took the process of adopting Dynamic Pricing as an opportunity to dive deep and improve its internal processes. With the help of Omnia partner Johan Maessen of Commercieel Verbeteren, Profile improved its margins, centralized its pricing decision making, and improved its overall understanding of its pricing mechanisms. Interested in learning more about the process? Click here to get your free copy of the case study.
26.04.2019
How to Get Your Company Ready for Dynamic Pricing
So you’ve decided that you want to use a dynamic pricing software... But what happens next? It’s a reasonable question to ask. And it usually comes with countless more. What do I need to do besides install the software?...
So you’ve decided that you want to use a dynamic pricing software... But what happens next? It’s a reasonable question to ask. And it usually comes with countless more. What do I need to do besides install the software? Who do I talk to? How long does it take to get started? What is the process? If these questions are swirling through your head, don’t worry. In this post we’ll walk you through the “Roadmap to Dynamic Pricing,” a 5-step approach to organizational dynamic pricing success. Step 1: Define your goals for dynamic pricing Before you implement a dynamic pricing software, you need to have a clear idea why you want to use the software. Do you want to reduce the amount of time you spend updating your prices? Or just start updating your prices with the market? Do you want to build strategies at the category level? What about the product level? Gather all the stakeholders involved, and discuss the reasons why you’re bringing dynamic pricing software into your organization. You might realize you have more than one goal, which is fine. One of our customers, for example, wanted to: Optimize prices for margin Improve their price perception Reduce time spent on manual labor The more specific you can be with these goals, the better. They should also align with your overall commercial objective. Want more insights on how to define your pricing goals and build a strategy? Check out Five Steps to Successfully Implement Dynamic Pricing. You can also take a look at our Partners Page to see who we trust to help you define your goals and build a strategy around them. Step 2: Establish dynamic pricing responsibilities When you introduce a dynamic pricing software, many of the responsibilities on your team will change. Your teams will need to work together in new ways, and when you get the software up and running you’ll likely experience a reduced workload — meaning more time for your employees. So how do you manage all of these responsibilities and changes? And what happens to accountability when responsibilities change? Your organization is unique, so finding the right balance of responsibility will also be unique. In general though, the goal should be to have your buying, category, and pricing teams share responsibilities and the execution of price changes. Our advice? Start small with rolling out, beginning with just one product category or market. This way you can learn more about how your organization needs to change, and apply these lessons to future roll outs. Step 3: Build dynamic pricing strategies When you begin using a software to manage your pricing online, it’s an opportunity to dig deep into your pricing strategy, evaluate what’s working for your company, and discover areas for improvement. If you don’t take time to organize and plan your strategies, your pricing can quickly become complex when automated. Take some time to review pricing strategies, and make sure everyone in your organization knows your planned strategy. You can ask a consultant to help you with this step, or you can also subscribe to the Omnia blog to get free advice on pricing methods and strategies. And when it comes time to actually set up the strategy in your software, do it together with all relevant parties. This should also be a repeatable process: define your objectives, strategy, method, and rules for every product or category. Most importantly though, keep your strategies and pricing methods transparent across your organization. All involved parties should be able to clearly explain your strategy, and any changes should be easily accessible for all levels of the company. Step 4: Prepare your systems and data for dynamic pricing Before implementing dynamic pricing, most retailers have a pricing strategy that’s grown organically over time. And while you might still want to use the same basic strategy after implementing the software, chances are your current pricing system is spread out across different departments and owners. Just take a look at the question we got from one of our clients: “The process of changing prices takes about 3 days and data is scattered and not owned by any department. How can we be dynamic and accurate in this environment?” Dynamic pricing software lets you centralize this information into one, easy-to-use location. But it does take time to do this. We advise customers to start small with this part of the process. Much like we mentioned in Step 2, it’s useful to start small, learn from mistakes, and improve as you scale. Begin by focusing on one channel or part of your assortment, and invest in the system, process, and data during the pilot phase. Then apply those lessons to your next roll out. Step 5: Test and monitor your dynamic pricing methods You’re tuning the most important profit lever and investing heavily in both people as well as tools. How do you know if starting dynamic pricing was worth it? To answer this question, you need to test and monitor your results. One simple way to test is to establish a baseline before you fully implement Dynamic Pricing. You should look at all aspects of your business, including revenue, gross margin, logistical cost, marketing cost, FTE, and price image. Another option is to do some A/B tests against control groups. However, A/B testing does have some significant downfalls, so we suggest a slightly more sophisticated way of testing your online pricing’s effectiveness: compare across products within similar categories. Testing will ultimately help you build a business case for the software. Final thoughts Getting started with dynamic pricing software is a journey, and it’s never bad to have a little help. That’s why at Omnia, we invest heavily in customer success. When you use our software, you automatically will get a dedicated onboarding manager, solutions consultant, and customer success manager to help you navigate the road to dynamic pricing. Ready to try Omnia free for two weeks? Click the button below to get started.
19.04.2019
Meet the Team: Haiko Krumm
Today we continue our Meet the Team series with Haiko Krumm, Omnia's Vice President of Customer Success by day, and adrenaline-fueled daredevil by night. With more than 12 years of experience in the world of Customer...
Today we continue our Meet the Team series with Haiko Krumm, Omnia's Vice President of Customer Success by day, and adrenaline-fueled daredevil by night. With more than 12 years of experience in the world of Customer Success, Haiko's our go-to expert for making sure our customers get as much value out of their Omnia software as possible. We sat down and asked Haiko about his career path, why he believes so deeply in customer success, and where he wants to take the company in the future. Want to work directly with Haiko? We're hiring! Check out our Careers page to see our vacancies. Hi Haiko! How are you? I’m doing well, thanks! Let’s get started with your role at Omnia. Can you talk a little bit about what you do here as the Vice President of Customer Success? No problem. I think it’s helpful to start from my overall goal in the company, which is to help the customers get results with our product. To make sure customers achieve the results they want, we employ a Customer Success team that’s dedicated to helping customers reach their goals. My daily job is to lead this team and infuse a “customer success” philosophy into our thinking. So I’m responsible for coaching and supporting our Consultants and Customer Success Managers, as well as hiring new people to care for our customers. What did you do before coming to Omnia? Right before I came to Omnia, I took a 10-month long sabbatical to relax a bit. I spent most of my time renovating my house, hanging out with my son, and spending time with my father, but between that I took a week of holiday each month. I also got my boating license during this time and my wife, son, and myself spent the whole month of August in Croatia, part of which was on a rented boat. But before that my real job was at inSided, a SaaS platform I co-founded that helps companies scale their customer service teams and ensure customer success. Tell me more about inSided. How did that start? Before inSided, I was a marketing consultant doing customer contact, multichannel, distribution, customer experience, and digital transformation projects for larger enterprises. It was a nice job, but I was getting tired of my role. I wanted something that was more entrepreneurial and challenging than working for a large enterprise. You have to remember though this was back before “startups” were a thing, so it was harder to find that! While on vacation in New York my fiancée gave me some insight and helped me realize I needed to start looking for a new job. And a week after we got back from New York, I saw a job opening for a “community manager” on LinkedIn. And while the job itself wasn’t a great fit for me, I decided to get in touch with the CEO of the company, Robin van Lieshout, to learn more about what the value was of a “customer community.” At the time, “customer communities” were this new idea. Nobody really knew what to do with a customer community and while many companies liked the idea of a customer network, all the projects they ran to build and maintain them were unsuccessful. Everybody wanted to start a community, but nobody knew how to do that successfully. But Robin saw differently. And he met me for lunch one day and explained how he used communities to grow. During that lunch I instantly understood the value of online communities, especially with a peer-to-peer service purpose, so, for example, customers helping each other with WiFi and mobile internet settings. And I learned that it only takes a small group of 'super users' to actually make a huge community with millions of visitors work. Robin told me he wanted to shift his business model from managing his own community (and earning money with affiliate/bannering model) to facilitating communities for larger companies. He asked me to join some brainstorm sessions, and after the second brainstorm session he asked me to be part of this journey! I said yes, and I joined Robin and the other founder, Wouter Neyndorff, to build the company from scratch and make inSided a reality. Over the course of 7 years I grew to be Vice President of Customer Success. You’ve been involved in Customer Success for a long time! Why do you care so much about this field? Oh man, that’s a big one! I'm a huge customer advocate for a couple of reasons. First, from a business perspective, customer success makes sense, especially in SaaS. SaaS customers don't buy your tool up front. Instead, they pay you to use the tool. And your company’s sales and marketing costs to get a new customer can easily cost as much that customer’s first year subscription fee. So a new customer only starts to contribute to your company and product growth after they’ve been a customer for a year. But if a customer doesn't get value out of your product, they’ll cancel their subscription and stop paying for it. So if someone cancels after a year, you’ve basically only made back the cost of acquiring them, but not really any profit. If your customers get value out of your products, they stay customer and become brand advocates with great success stories that will help bringing new customers in. They’re also perfect candidates for cross sells and upsells, since they know your company and trust your product. So it’s not about making your customers happy, though we want our customers to be happy, of course. Instead it’s more about making sure they find your product to be a valuable addition to their lives. Second though, I also think it's just who I am as a person. I like to see people succeed. If I can help them along that journey to success, then it’s a good day, but it makes me happier to empower them to reach those goals themselves. I don't work for companies, I work for and with people. How do you define customer success? Like I said, Omnia is a subscription service, and we will only get value out of our customers if customers get enough value out of our product. So we need to make sure that customers achieve their goals with Omnia. And that’s the core of the Customer Success philosophy or mindset. It starts with our product, which is the core of Omnia and only really scalable value driver. But everyone can contribute to customer success. Marketing, for example, can contribute by targeting the right customers with content that’s really helpful for prospects and related to our product. Operations is probably the team that contributes less directly, but also helps in hiring people with the right mindset and facilitating the basics like the office and administration. What do you like about working at Omnia, and what’s your vision for the future of Customer Success here? I like the phase we are in at Omnia because there are clear proof points of success, but also a lot to prove and improve. It’s an exhilarating stage in a company’s growth because there are so many things happening at once. I also like the culture at Omnia, and everyone who works here is smart, social, and 150% dedicated to their specialty. It’s nice that the team is still small enough to really get to know everyone else. In terms of my vision for what we’re going to do here, I really want to make more information about how to build pricing and marketing strategies in our knowledge center, as well as more information on how to get the most out of the tool. As a whole, Omnia wants to be the place retailers come to for questions about pricing and marketing, and I think empowering our customers to better understand the platform is a big part of that. Next to knowledge, I’m also focusing on proactive customer success management. So that means really tracking customer health metrics like product usage, and also having periodic strategy sessions and executive business reviews to define the goals of the customer, track the results and give them insights and inspiration. As the Vice President of Customer Success, you lead the consultants, onboarding manager, product specialists, and, of course, the customer success managers. How do you define your leadership style? I follow a "serve first, lead second" mentality. I do my best to make sure that I'm helpful to everyone on the team and that everyone has the tools and support they need to succeed. I also try to get to know everyone on a personal level, because I don't think it's possible to truly separate your personal life from your work life. I want to be able to connect with my colleagues on a personal level and understand who they are, not just what they do at work. What do you look for when looking for new teammates? I think the biggest thing I look for is a willingness to learn from mistakes. One of the greatest things about Omnia is that we operate fast, and we hire for expertise. As a result, we trust our colleagues to do their best work, make informed decisions, act quickly, and be forward-thinking. This means there's a lot of responsibility on all of our shoulders, but it also doesn't mean that we can't make mistakes. We're all always making mistakes because we're human! Instead of pretending we're infallible, we should welcome those mistakes as an opportunity to learn and grow. Along these lines, I also really value honesty. I want people that I can give honest feedback, but who will also return the favor. I tend to fit the mold when it comes to Dutch honesty, so I won’t embellish something or pretend that something’s okay when it isn’t. Now for the fun part! What do you like to do outside of work? I love to do sports, especially anything that really gets the adrenaline pumping! Some of my favorites include skiing, kite surfing, mountain biking, and motorcycling. Besides that though, I also love spending time in Amsterdam and relaxing with my wife and son. I've lived in the city center for the last 15 years and there's no place in the world I'd rather be. Last question. Do you have any book recommendations for people interested in Customer Success? For sure. There are three that stand out to me. From Impossible to Inevitable by Aaron Ross and Jason Lemkin is great, and so is Multipliers by Liz Wiseman. But if you want my “Bible” you should check out Customer Success by Nick Mehta, Dan Steinman, and Lincoln Murphy.
12.04.2019
Everything You Need to Know About the ROPO Effect
It’s no secret that the internet has changed the way we shop. And for the most part, retail has done a great job of adapting to the online space. But despite adopting online stores and advertising, many retailers...
It’s no secret that the internet has changed the way we shop. And for the most part, retail has done a great job of adapting to the online space. But despite adopting online stores and advertising, many retailers overlook one key component: the modern customer journey. In this post, we’ll discuss way the ROPO effect, which is reflective of a larger seismic shift in how consumers get their information about products, then carry that information into their buying decisions. Curious? Read on to learn more about how your online presence impacts your offline sales. What is the “ROPO” effect? “ROPO” stands for “Research Online, Purchase Offline.” It’s a consumer phenomenon where shoppers will find all of the information they need about a product online, but will make the final purchase in-store. Traditionally, there hasn’t been any “online” part of the consumer journey. If you wanted to buy something, you needed to get in touch with a salesperson to discuss the features and benefits of the products, as well as the market-ready options. You’d likely have to go to a store to find this information, or book an appointment for a sales person to come to your house. You’d also probably search out some reviews, of course, but they might be harder to find. But that’s not the case anymore. Now all a consumer has to do before buying a product is search “[product name] review” on Google or YouTube and tap “enter.” They’ll instantly go to a new page filled with reviews and comparisons of different products. The majority of these reviews — the ones trusted by viewers — will be from independent channels, not from a company itself. In other words, consumers now do all the research online for themselves. So much so that Bazaarvoice reported 56% of online shoppers read at least one review before making a purchase. Many consumers will then take that research and purchase a product online. But, depending on the product, consumers might still need to go in-store for one reason or another. And this is where the “Purchase Offline” half of the ROPO equation comes into play. Why retailers should care about the ROPO effect If you don’t consider the ROPO effect in your sales, marketing, advertising, and pricing strategies, you aren’t really considering your entire assortment. Say your online marketing team wants to boost online sales. If they don’t consider the ROPO effect, they’ll probably discontinue advertising on all products that don’t result in a high volume of sales online. When you consider the ROPO effect though, you might notice that certain products — like running shoe — might perform poorly online, but drive a high number of in-store visits. Let’s imagine a more concrete example. Take a look at the graphic below, showing the number of online and in-store sales for a television and a pair of running shoes. You can see that the television is making multiple sales online, but is under-performing in-store. But you can also see that the shoes perform poorly online but sell like crazy in-store. If you were a marketer and you only looked at a product’s online performance, you’d probably redirect your Adspend toward the television. But if you look at your online and in-store sales holistically, you’d see that the shoes drive more overall sales. In this situation, consumers might know exactly which shoes they want to buy, search for the pair on a comparison shopping engine, then go to the nearest store that says they carry these shoes. So while the online sales are low, the advertisement drives people to the store to make their purchase. And there’s an additional benefit to this scenario: once someone enters your store, the chance for cross- and up-sells increases significantly. If this were the case, you’d probably want to continue advertising on this product, even if the online sales were low. The returns on ROPO Adjusting your strategy for the ROPO effect opens up a new world of possibilities because it allows you to see your entire assortment as one interconnected channel. Your online store becomes an extension of your offline store and vice versa. And optimizing for ROPO can have an enormous impact on your overall sales. What's the secret behind the ROPO effect? And how can you use technology to get more traffic and better, more profitable sales? Download your free copy of Why Pricing and Marketing Go Hand-in-Hand to learn more. Which categories are influenced by the ROPO effect? When it comes to ROPO, not all categories (or products) are equally influenced. In general, high-ROPO categories will contain products with a certain “feel” quality. Here’s a collection of high-ROPO categories, though this list is by no means exhaustive. Fashion Fashion is a category that’s extremely susceptible to the ROPO effect. That’s because unless you know your exact size and fit, most people want to try on clothes before they buy. Even though online fashion retail is booming, physical stores will still always be high-traffic areas for a few reasons. One is because consumers want to see (and feel) their clothes before they buy them. Consumers also want to avoid the hassle of returning clothes through the mail system. Beauty Beauty is another interesting retail space that has a high ROPO effect. Similar to fashion, there are wide swaths of consumers who simply enjoy going into a store and buying their beauty products. This is category also relies heavily on sales consultants and industry experts. Many makeup stores, for example, will have promotions in-store where you can get your makeup done for free by a professional makeup artist. The artist then uses that opportunity to educate consumers on the different products and demonstrate how the product works. Sports retail As we previously mentioned, sports equipment (and clothing) is heavily influenced by ROPO. Whether it’s running shoes or a new bike, consumers will research before they buy. And if it’s their first time purchasing, chances are they will go to a store to test out the product before purchasing. Household items Household items large and small are responsive to ROPO as well, especially small items like kitchen utensils, light bulbs, batteries, and the like. These are the kind of products that most consumers won't necessarily need (or even use) every day. But when the need arises, it's likely a pressure that needs to be filled immediately. If you decide to make a soup, for example, but realize you don’t have a ladle, you might look online at the nearest home goods store to see if there are ladles in stock. For most of us it doesn’t matter if the price is €8 online compared to €10 in-store — if you need it that day, you’ll pay for the convenience of an in-store pickup. Furniture and lighting The last high-ROPO category we'll cover is furniture and lighting. Whether it’s a couch or a standing lamp for the corner of your bedroom, it’s difficult to evaluate the look and feel of these pieces based on an online photo alone. This is especially true for high-ticket, pre-assembled items that are large and bulky. The cost and hassle of getting these pieces delivered is great enough to drive consumers to a store before they purchase. How to optimize for ROPO To optimize for ROPO, you need to do a few things: 1. Determine which products are most influenced by the ROPO effect Think about your customers. What is their journey through your store? Why are they purchasing your products? Your marketing teams will have some great insights into your consumers and be able to help you figure out what categories are susceptible to ROPO. But beyond marketing insights, which will only help you make an educated guess, you can also use hard data to better understand your customers and their buying habits. Here are 5 ways you can extract that data from your daily operations. 5 ways to measure the ROPO effect Here are 5 simple ways to measure the ROPO effect on your products and your store. 1. GPS tracking GPS tracking is the ideal way to measure the ROPO effect. That‘s because it‘s the most accurate way to see how your online advertisements influence physical store foot traffic. With a few Google tools, you can clearly see how many people view an advertisement online, then use GPS data to follow how many people enter your physical store after viewing the ad. 2. Soft Conversions “Soft conversions” let you estimate the influence of ROPO on your assortment. Place a button on the product page that allows the visitor to check your brick-and-mortar location and stock levels. If the visitor clicks on it, you can treat this as a “soft conversion,” which helps you know that the visitor is interested in your store. 3. Statistical analysis Perform an easy statistical analysis to experiment with the ROPO effect on your in-store sales. Simply take the amount of traffic on a product on your website then match it to the number of sales in-store. If you alter your marketing strategy to double the amount of traffic on a product listing and the number of in-store sales also increases, the ROPO effect might be the reason. 4. Link offline data Customer information like email addresses is extremely valuable to analyze the ROPO effect. Use this data and online customer profiles to generate insights about earlier steps in the customer journey. You can also link that data to your AdWords and Facebook profiles to connect your sales and advertising clicks. 5. Surveys Surveys are an effective (but expensive) way to measure the ROPO effect in real time. Ask customers at a cash register what prompted them to come to the store and buy the product. You need the data from 200-500 customers to generate a proper analysis. Here's an inforgraphic that shows you all the different ways you can measure the ROPO effect: 2. Find the optimum online price for those products After you’ve discovered which products are heavily influenced by the ROPO effect, you need to determine the optimal price for them. Your new price needs to be lower, or in-line with, your biggest competition on the market. The goal is to have these products proudly displayed on comparison shopping engines so customers can see that you carry the product. Even though you offer a discounted price, however, that price should still align with your overall commercial objective. 3. Adjust your online marketing efforts The final step to ROPO optimization is to adjust your Google Shopping bids and Adwords spend to ensure your competitive edge over your competition. The goal is for your product to appear at the top of search results to let interested shoppers know that you carry the product they are looking for. This step requires cooperation and coordination between your pricing and marketing teams. These two teams will need to work in tandem to find the right balance between a low price and high marketing spend. They will also need to monitor these products to make sure they are always competitive. If a competitor decides to drop their price, for example, you will need to adjust yours to match the market. Use software to optimize for ROPO If you want to optimize for ROPO — and other omnichannel strategies — the easiest way is with a software. So, instead of asking one person from the marketing team and one person of the pricing team to constantly watch your products and update bids and prices, you can just let the software take over this tedious part of the manual labor. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
08.03.2019
How Retail Seasonality is Changing
The seasons have always been a powerful influencer of retail, but do they still matter with the rise of e-commerce? In short: yes, the seasons still influence retail. Though the type of influence is changing...
The seasons have always been a powerful influencer of retail, but do they still matter with the rise of e-commerce? In short: yes, the seasons still influence retail. Though the type of influence is changing drastically. In this post, we’ll explore this “new” seasonality brought in the rise of e-commerce, and examine how you can adjust your strategies to match these changes. Two types of seasonality in retail Not all seasonality is the same, and it’s important to illuminate the different drivers of consumer spending. Seeing seasonality as two separate categories (holiday-driven seasonal shopping and climate-driven seasonal shopping), will help you understand your sales data and optimize for the next year. Seasonality and the holidays “Holiday shopping” is something that retailers can safely count on, regardless of where they are in the world. As long as you’re tuned in to your market’s holiday calendar and understand the history and traditions of a place, you can somewhat accurately predict high-traffic times of year. Some examples of holidays that drive traffic across Europe include Christmas, New Year’s Eve, and Valentine’s Day. You can plan on consumers shopping around these holidays, and can prepare your assortments accordingly. You can also go down to the local level and look for holiday traffic there. Here in the Netherlands, the weeks leading up to King’s Day are a great time to sell anything orange. Regardless of what the weather forecast says, the vast majority of Dutch people will celebrate on April 27th in full orange regalia. While a rainy day might mean celebrations move inside, the weather has little-to-no influence on how consumers prepare and shop for the holiday. Some categories are more influenced by the holidays than others. For example, you can almost guarantee that jewelry and chocolate sales will rise in early February for Valentine’s Day, regardless of the weather outside. Depending on the holiday, themed products are a great way to drive extra sales. Retailers can safely bet that reindeer-themed products will sell in December, heart-shaped boxes will trend in early February, and pumpkin-themed items will be popular around Halloween. Seasonality and weather Even though retailers can count on a certain amount of holiday traffic, the type of products people buy at different points in the year can vary greatly depending on the climate. Take, for example, the Christmas holidays. Here in Holland (and in most of Northern Europe), we associate Christmas with cold weather, warm fireplaces, gluhwein, cozy sweaters, and snow. The reason is obvious: the weather in this part of the world is typically cold around this time of year. This isn’t true for much of the world. Consumers in the southern hemisphere are in the middle of the summer when Christmas rolls around, so shoppers can have completely different associations of the holiday. If you’re in Auckland or Sydney, you might spend your Christmas Day on the beach, not tucked away under blankets with a steaming mug of hot chocolate in your hand. A side effect of this climatic difference is that you’re far more likely to find a Christmas-themed swimsuit in Sydney than in Stockholm or Oslo. You also don’t have to travel all the way to Sydney to see a change of climate, and even within Europe seasonal temperatures and weather patterns vary. Holiday-themed items aren’t the only products swayed by global weather differences. Certain categories are especially susceptible to weather changes, and are in fact even driven by the change of seasons. The most obvious category affected by this “climate seasonality” is fashion. Traditionally, a store‘s physical capacity limited what products brick-and-mortar fashion retailers could carry. They sold swimsuits in the summer, then as the season tipped over into the colder weather for fall and winter, they’d swap out swimsuits for cozy socks, thick sweaters, and heavy coats. But this seasonal cycle, much like retail itself, is changing in the 21st century. How retail seasonality is changing The seasons are still a major driving force in retail, especially for calendar holidays. And while they won’t disappear from your sales cycle calendars, the idea of a retail season is shifting for several reasons. Rise of online shopping Online shopping has changed retail in more ways than one. However, what’s notable for the discussion of seasonality is that retailers are no longer limited by the four walls of their physical store. This has an impact on the notion of ‘seasonality’ – particularly when applied to weather. Because online is naturally more nimble than brick-and-mortar, it is far less reliant upon the traditional “seasons” to drive sales. The online model means that retailers can react almost instantly to changing market conditions and fluctuations in supply and demand - which can occur daily, if not hourly. Today, no matter the season, retailers can sell any kind of product they wish. As long as they have a warehouse to hold and process products and orders, there are no limits on what they can sell. Now, a consumer can buy a swimsuit in the dead of January and get it shipped directly to their home in just a few days. Changing consumer behavior As retailers have become less concerned about limits on their products, so have consumers. Today’s shoppers won’t even bat an eye when it comes to ordering something “out of season” online. Instead, consumers expect to be able to find whatever they want, whenever they want. This is especially important for retailers to know as out-of-season shopping rises. One of the drivers behind this change is the fact that travel has become significantly less expensive in the last 25 years. There’s been a 300% increase in the number of overseas trips taken since the mid 1990s, and you can now book last minute flights to warmer destinations for just a few hundred Euros. Round-trip flights from Amsterdam to Los Angeles for as low as €333 This means consumers can now visit sunny or snowy places at any time of the year, and will order products out of season as they prepare for their vacations. Retailers should be stocked and prepared with any product a consumer might need, no matter the season. Unseasonable weather Consumer behavior and technology itself aren’t the only things changing seasonality: unseasonable weather can also seriously affect your retail sales. This past summer, Europe was hit by the 2018 European heat wave. The whole continent experienced an uncharacteristically hot summer that began earlier and lasted longer than we could have expected. A recent study found that unseasonably warm weather can cost retailers £40m per week for each degree that the temperature rises, and this was easy to see during the summer. Demand for summer clothes skyrocketed for much longer than retailers expected or were used to. In October, Superdry announced a 49% drop in their shares — part of which they blamed on the hot summer and their inability to sell jackets and coats. Uncooperative weather only underpins the reason retailers need to stay agile in their pricing and marketing. If the temperature soars unexpectedly, the demand for warm-weather clothing, for example, will also rise. The reverse is also true, and if the temperature plummets, consumers will search for more cold-weather clothes and indoor activities like board or video games. How retailers can adjust to the new seasonality There’s no point in trying to fight these changes: the world will only continue to morph and shift in the coming years. That’s why a pricing strategy is so important; it can help you navigate the rocky seas of changing society and new innovations. Pricing strategies are paramount to today’s success. Without one, you’ll get lost in the sea of e-commerce and can quickly veer off-course. But how are retailers supposed to execute any strategy across assortments with hundreds of thousands, if not millions, of products? Pre-internet, the average retailer had to consider around 4,000 pricing decisions per quarter to stay ahead of competitors. This number has now risen to more 60,000,000 daily decisions that you need to make in order to stay competitive. Dynamic pricing makes staying on top of your pricing strategy a possibility, and helps you stay agile in the face of a new seasonality. Omnia’s Dynamic Pricing software helps you manage your pricing strategy across an entire assortment. But what really makes our software different is our advanced tooling, including our weather API. With Omnia, you can combine your strategy with each product’s unique price elasticity...then factor in how its sales respond to changes in the weather. Interested in learning more? Try Omnia free for two weeks and see how Dynamic Pricing helps you take control of your assortment and stay agile in your pricing strategies.
07.02.2019
Our Year in Review: 2018 at Omnia Retail
It's a month into 2019, but things are moving fast here at Omnia. This is set to be a year of immense growth — and for you that means new features, better usability of the tool, and even more insights into your pricing...
It's a month into 2019, but things are moving fast here at Omnia. This is set to be a year of immense growth — and for you that means new features, better usability of the tool, and even more insights into your pricing and online marketing data. However, none of that would have been possible without the foundations we laid in 2018. Check out what we did in 2018 to support these new developments for the product, and learn more about what's coming this year.
31.01.2019
3 Ways Retailers Can Prepare For Valentine's Day
It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love,...
It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love, experiences, and gifts. The holiday is changing rapidly though, and if you’re wondering how to change your retail business with it, you’re not alone. How can retailers prepare for Valentine’s Day 2019? This year, the key is to focus heavily on customer experiences — both in your store and offline. In this post, we’ll give you 3 practical tips on how you can prepare for the holiday. Consumer Valentine’s Day trends Many consumers are tired of the over-commercialization of Valentine’s Day. In a 2018 survey, 77% of UK consumers said they thought the holiday was too focused on consumerism. When paired with changing social structures, many consumers feel that the holiday is outdated in some ways. However, that won’t stop consumers from spending. The same survey found that even though consumers felt Valentine’s was an artificial holiday, UK spending for the holiday in 2018 was up 3.2 points compared to 2017. The same was true in the US, and this year alone the National Retail Federation expects Americans to spend over $20 billion on the holiday. 3 ways retailers can get ahead on Valentine’s Day These two opposing forces (changing consumer attitudes but overall increased spending) means there is a lot of opportunity in Valentine’s Day. There is a growing shift toward experiences and personalization in Valentine’s shopping, as well as an overall broadening of the market. So how can retailers get behind these trends? Here are our top 3 tips to get ready for Valentine’s. 1. Think omnichannel experiences As a retailer, this shift toward experiences should trigger “omnichannel” in your mind. Instead of simply selling to consumers, create an experience they can buy into — one that extends beyond their screen and into the real world. One way to create these experiences is to partner with other companies that complement your assortment. If you’re a jewelry retailer, for example, you could partner with a local restaurant to include a complimentary 3-course Valentine’s Day dinner with each purchase. Want to know more about building a better omnichannel strategy? Check out our recent blog to find out how to win at omnichannel retail. 2. Expand beyond romantic gifts It’s true that Valentine’s Day has traditionally been about romance, but this has shifted in recent years. A great example? A 2015 report found that over 21% of Americans planned to buy Valentine’s Day gifts for their pets. And while they were only planning to spend an average of $5 on their animal, that added up to over $700 million in additional sales. There is also the growing trend for women to buy “Galentine’s Day” gifts for friends, and many retailers have noticed an uptick in the number of self-care purchases that people make for themselves for the holiday. Consumers now see Valentine’s as a day to celebrate love of all types, which means you now have multiple audience primed to spend. Embrace this and adjust your marketing and advertising accordingly. The easiest way to manage this is with an intelligent marketing automation software that can follow the market, then adjust your bids on Google Shopping and other channels automatically as opportunities arise. 3. Know which products are popular To properly prepare for Valentine’s Day, you should plan your marketing ahead of time. This means knowing which products are going to be most popular is crucial. Historically, categories like jewelry, flowers, candy, and clothing have performed exceedingly well on the holiday, and these trends are expected to remain stable in 2019. If you haven’t started campaigns yet though, there’s no need to worry. Most people procrastinate on their Valentine’s shopping. As many as 32% of consumers purchase gifts the same week as the holiday, and the number of online searches for Valentine’s-related terms peaks on February 12th! While there is still time to prepare profitable strategies, the small shopping window means that the process of managing prices and marketing will take a heavy toll on your staff. Like on Black Friday, tracking and adjusting your prices manually in the few days before Valentine’s Day is a waste of time. Many teams devote huge amounts of energy to chasing competitor prices, adjusting your own prices, then updating your marketing to reflect this new pricing. When prices change multiple times a day, this becomes a full-time job for many people on your staff. You can use automation software to give your team hours of their time back: time which they can then focus on strategy. A pricing insights software like Pricewatch is the easiest way to get started, and it delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your strategy. Automation can save even more time with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. Final thoughts Whether you want to experiment with a new omnichannel strategy, collaborate with local partners, market your new feline fashion line, or more, use Valentine’s Day as a chance to try something new. However, it’s important to think carefully about what the customer wants, then build tailored, personalized experiences to drive sales. However, none of these creative pursuits are possible if your team is wasting time manually tracking and adjusting your Valentine’s marketing and pricing. That’s why you need automation tools to liberate your team so they build the experiences that consumers are actively seeking. Interested in automation tools? Don’t wait. Get in touch today to set up a free demo of Pricewatch before Valentine’s Day, and see for yourself what’s possible when you aren’t chasing competitor prices. Click the button below to get started.
17.01.2019
What is a High-Runner Strategy?
How do companies like Amazon maintain such a huge market share and keep their prices low without losing profits? The answer is in their pricing strategy. Amazon — and many other organizations that seem to offer low...
How do companies like Amazon maintain such a huge market share and keep their prices low without losing profits? The answer is in their pricing strategy. Amazon — and many other organizations that seem to offer low prices while staying profitable — adhere to a special strategy called the “high-runner strategy.” So what is a high-runner strategy, and is it the right pricing strategy for you? In this post we’ll give you a short introduction to the high-runner strategy, then help you figure out if it’s the right option for you. What is a high-runner? A high-runner product is another term for the top-performing products in your store. These are the products that have the highest numbers of views, clicks, and purchases, and which are eagerly sought after by the public. They are generally highly elastic and extremely sensitive to market price changes. A great example of a high runner product is a top-of-the-line smartphone. A €50-100 difference between these products (a 10%-20% discount on a €500 item) will make a great difference in the number of clicks and purchases. The greater the discount, the greater the volume of sales Take a look at the example search for a Samsung TV— which listing do you think consumers will click on first? Most consumers will choose the cheapest option — in this case the €544 TV. The other retailers are severely overpriced for this product, even if they’re only priced 4.59% (€25) higher than the lowest competitor. The high-runner strategy With a high-runner strategy you discount heavily on these high-visibility products to increase the number of clicks to your site. This increases the amount of traffic on your site as well as the number of sales on that product. This is just the first step of the process though, and if you did this for every product in your assortment you’d end up losing money on margins. That’s why the beauty of this strategy lies in what you do with the increased traffic. Cross-sells and up-sells Once you have this traffic on your site, present consumers with up-sells and cross-sells on inelastic products at full price. This is where you make your margins. Going back to our television example, retailers could show customers a wall mount and an HDMI cable as add-ons during the checkout process. Many consumers who are already spending €544+ on a television won’t think twice about these products or stop to compare your prices to the competition. Instead, they’ll go ahead and add them to their cart and pay for the convenience of a packaged delivery. They’re also paying for the assurance that the products work well together so they won’t need to go through the hassle of returning a defunct product. Price perception Another way to use the high-runner strategy is to drive consumer perception about your store. This is Amazon’s strategy, and it’s partially what’s responsible for the company's global growth. If you consistently advertise yourself as the lowest price on a variety of high-visibility items, consumers will associate your store with low prices but high-quality products. As a result, you’ll become their default store for any of their needs in your niche and increase their loyalty to your store. Amazon has asserted itself as a one-stop-shop for almost any product a consumer needs. But if you look at its actual prices, many of its products are competitively priced with the rest of the market. The same is also true in reverse, and it has an even bigger effect. If you’re consistently overpriced on high-runner products, consumer loyalty will shrink. Final thoughts The high-runner strategy is a powerful way to change your company’s price perception and capture more sales. When done correctly, it’s an effective way to drive customer loyalty and increase profits through cross-sells and up-sells. But it’s not the right strategy for every retailer. If you want the public to see you as a top-of-the-line retailer with high prices, then this is not the strategy for you. Instead, you might want to charge premium prices as a sign post for your product’s quality. If the high-runner strategy is right for your business, you need a tool to help you manage prices and ensure that you stay competitive. Omnia’s suite of pricing tools help you keep track of your products and automatically adjust prices and bids so you are always priced according to your strategy. Want to learn more? Request a demo today to get in contact with our sales team. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
10.01.2019
How to Win at Omnichannel Retail
The rise of omnichannel is one of the most significant revolutions in the retail industry. But what exactly does “omnichannel” mean, and how should retailers adapt to this sphere of influence? Keep reading to learn...
The rise of omnichannel is one of the most significant revolutions in the retail industry. But what exactly does “omnichannel” mean, and how should retailers adapt to this sphere of influence? Keep reading to learn everything you need to know about omnichannel and get tips on how to build the right strategy for your business. What is omnichannel retail? Omnichannel retail is an approach which gives consumers a unified, seamless shopping experience across all physical and digital sales channels. This means your store is connected on all fronts — from the app your customers have on their phone all the way to the checkout counter at your physical location. It’s important to distinguish a truly omnichannel experience from “multichannel” retail. Multichannel retail is selling through multiple channels, such as desktop and a physical store. But what separates multichannel from omnichannel is the unified experiences across your platforms. Having an app for your customers is an example of multichannel. Connecting that app to their in-store experience or the open shopping cart on their desktop makes the experience seamless across the board and makes it a unique omnichannel interaction. Omnichannel is increasingly important in retail, and the modern, tech-savvy consumer is the driver of the trend. Because of our increasingly interconnected world, consumers expect interactions from their phones to run flawlessly. And consumers will ditch the app at the first sign of friction in the process. We live in a “golden age of user experience” according to Jason Spero, VP of Global Performance Solutions at Google, and that demand for ease of use bleeds into our offline lives. Why does omnichannel matter? Omnichannel retail matters for one major reason: consumers demand the experience. In essence, omnichannel retail provides consumers with what they crave – convenience. Namely, omnichannel gives consumers reassurance they will receive the same seamless experience no matter where, when, or how they shop. However, just because consumers seek omnichannel experiences isn’t the only reason retailers should care. Looking at omnichannel data opens up a whole new world of opportunities for cross and upselling and illuminates a range of missed sales opportunities. In other words, by adjusting your thinking to an omnichannel mindset, you might uncover hidden opportunities for profit and margin growth. Some examples of omnichannel retail The phrase “omnichannel strategy” is an umbrella term, and, in truth, there is no single “right” way to optimize your business for omnichannel. Instead, there are numerous ways omnichannel expresses itself. The ROPO effect The “Research Online, Purchase Offline" (ROPO) effect is one of the shining examples of omnichannel retail. In the information age, consumers have access to everything they need to know about most products you sell from sources you do not control. As a result, by the time they get to your webshop, they likely know exactly which model they want. For many types of products though, many consumers won’t purchase online. Instead, they’ll visit your webshop (or see your Google Shopping advertisement), then go to your physical store to make the final purchase. The reasons why vary. Sometimes consumers want the product immediately, and they simply check your online store to see if you have it in stock at the nearest location. Another common reason is consumers want to see and feel the product before buying. This is particularly pertinent for fashion products where consumers want to check the fit before paying. Regardless of why a consumer does it, the effect of your online presence on your in-store sales might be extraordinary. That’s why you need to consider in-store sales data in your online marketing decisions on products where the ROPO effect is high. Even if you don’t sell a lot online, it might be worth investing heavily in the marketing to show consumers you carry a product in-store. Retailers can also embrace the “order online, pick up in-store” model that is gaining popularity. Crafting user experience through augmented and virtual reality Many retailers and companies are creating interactive omnichannel experiences for their customers with augmented and virtual reality. These experiences not only cultivate customer loyalty and interactivity, but they are also effective commercial sales points. A shining example of this is the IKEA Place app, which uses augmented reality to help consumers understand which IKEA products will look great in their home. This “try before you buy” concept reduces major consumer frustrations that are an inherent part of the furniture-shopping experience. Just check out their video below to see how it works. Pure online players opening physical stores A third example of omnichannel is the high number of traditional, online-only retailers who are opening physical locations around the planet. From Amazon to Warby Parker, “pure players” around the world are adapting their businesses to capitalize on the growth of omnichannel. This last example is interesting because it illuminates how mainstream omnichannel is: internet companies want to create physical experiences for their clients while brick-and-mortars strive to reach customers beyond their physical walls. Companies from both ends of the spectrum are adopting strategies to end up somewhere in the middle. Tips for developing your omnichannel strategy Omnichannel is the future of retail, but how do you build a strategy that meets your company’s goals? Let’s look at our top tips for winning at omnichannel: Tip 1: Think about your commercial objective Implementing an omnichannel strategy for the sake of joining the omnichannel sphere is a risky venture. Omnichannel can quickly become expensive if you don’t think about it strategically. Ask yourself why you want to implement an omnichannel strategy. Do you want to: Increase customer loyalty? Capture more sales? Solve a customer pain point? Drive more foot traffic to your store? Answering these questions should give you an idea of what kind of strategy you should implement. And as with all new strategies, use your commercial objective as a compass to guide your decision making. Tip 2: Ensure the same prices across all platforms One of the easiest ways to disrupt the consumer experience is to display one price on your app, a different one on your webshop for the same product, and a third price in-store. Since consumers are interconnected and research heavily before purchasing, they’ll notice these differences instantly. This rips them out of the experience you’ve crafted and leaves them with more questions than answers. Keep your prices are the same across all platforms so your customers stay captivated with the experience. An easy way to do this is with electronic shelf labels. Tip 3: Centralize and integrate your pricing and marketing data Omnichannel is an entirely new area in retail. So the historic ways of thinking about the industry won’t lead to a successful strategy in this new realm. The traditional silo mentality of pricing and marketing as two different departments doesn’t translate well into this new, 21st century model of retail. Instead these arms of your organization need to connect and collaborate. Click here to download your free copy of Why Pricing and Marketing Go Hand-in-Hand Software can centralize all of your pricing and marketing information in one place. You can then use this software to change your pricing or marketing strategy according to your omnichannel strategy. Software can also help you centralize all your data points, both in-store and online, so you can have all the information you need to make more strategic decisions. With Omnia you can include internal information like your stock levels or purchasing prices with external data to build a more informed omnichannel strategy. Final thoughts To execute a successful omnichannel strategy, you need the right tools. Without the ability to collect, store, and analyze data points on all of your products, you won’t be able to build the best strategy possible. Omnia’s tools give you the building blocks for your omnichannel strategy. By helping you organize and evaluate your pricing and marketing information, Omnia illuminates different opportunities that are useful metrics as you enter this new sector. Interested in learning more? Reach out today to request a demo of our software and speak with one of our consultants about your omnichannel goals.
13.12.2018
What's the Difference Between Dynamic and Personalized Pricing?
When it comes to automated pricing, retailers have several different strategies to choose from. Two of the most popular, however, are dynamic and personalized pricing strategies. Both capture the power of big data to...
When it comes to automated pricing, retailers have several different strategies to choose from. Two of the most popular, however, are dynamic and personalized pricing strategies. Both capture the power of big data to provide competitive pricing on key products, but the difference between the two might be unclear to some retailers. In this blog post, we’ll highlight the key things you need to know about each of these methods, as well as the pros and cons of each. What is personalized pricing? Personalized pricing is the latest automated pricing model available to retailers. In essence, it uses automation to target each individual website visitor with a price that matches their personal buying threshold. A great example of personalized pricing is used by the hotel website Orbitz. The company uses data such as zip code, type of browser, and even type of device to determine the spending threshold of a website visitor. Then they display prices for each user depending on the data. For example, Mac users can expect to see higher prices for hotels on Orbitz than their PC-using counterparts. Personalized pricing is a growing trend in retail. By pricing for the individual and not for a broader demographic group, companies can earn extra sales that they might otherwise lose. Personalizing the shopping experience can also increase customer loyalty and happiness, and companies can reward returning customers with lower prices and other incentives. However, personalized pricing does have some downsides. This model is complicated to implement because it needs to use data from each individual shopper as well as the broader market. It also has some problems concerning publicity. When consumers find out that they might be paying more than their friends for the same product, overall trust in the retailer might drop. What is dynamic pricing? Dynamic pricing, on the other hand, looks at the broader market rather than the individual customer. Read more: The Ultimate Guide to Dynamic Pricing With dynamic pricing, the changes in price are not dependent on the individual customer at all. Instead, prices change because of outside variables, such as the weather, time of day, or available stock. McKinsey reports that retailers who use dynamic pricing report sales growth of 2%-5%, as well as margin increases from 5%-10%. These retailers also report higher levels levels of customer satisfaction. A fantastic example of dynamic pricing that you’ve likely interacted with is Uber’s “Surge Pricing.” During peak hours when the demand for a cab is higher, the company automatically creates a “surge rate” that everyone in a given city must pay. This surge rate applies to every user, regardless of whether they are a loyal Uber customer or a first-time rider. Dynamic pricing has numerous benefits, mostly derived from the fact that it synthesizes internal product and sales data with external market and consumer data. Retailers can choose how they want to price themselves, such as whether they want to match their competition’s pricing model or vary pricing based on the customers’ perceived value of the product. In fact, it’s even possible to combine multiple pricing methods into one algorithm to ensure that your pricing remains competitive at all times. However, there is one main drawback of dynamic pricing: retailers can’t use data to incentivize individual customers into action. Personalized pricing allows you to look at individual behaviors and characteristics and pinpoint promotions for that specific person. Final thoughts Both personalized and dynamic pricing use data to give online products a competitive edge, but personalized pricing methods are still in their early adoption stages. At Omnia, we use dynamic pricing to help retailers offer the most competitive and attractive prices in the marketplace. By using automation, the process of increasing profitability in a constantly-shifting marketplace becomes significantly easier. And with a clear 5-step implementation process, Omnia makes it easy for retailers to get started. To get started with competitive pricing, sign up for a free trial of our software. You can also contact us at info@omniaretail.com or call +31 085 047 9240.
06.12.2018
New Report: Retail Pricing in the UK
What’s the state of pricing automation in the UK retail industry? Omnia surveyed 150 retailers across the country to uncover the answer to this question. We asked these retailers how they use technology in their pricing...
What’s the state of pricing automation in the UK retail industry? Omnia surveyed 150 retailers across the country to uncover the answer to this question. We asked these retailers how they use technology in their pricing and market strategies, then analyzed the results to create a full Retail Pricing Wars report. The results were quite interesting. In all, the data suggest UK retailers struggle to keep up with the rapid pace of e-commerce, and many fight the tide without the proper technological tools. This reflects recent findings from Microsoft that UK retailers fall behind in integrating AI and automation into business. Notably, we found: 96% of the top UK retailers have a pricing strategy, but almost half base that strategy on their competition’s prices 88% of those surveyed carry out price checking, but less than 50% react when their competitor changes the price of a product 34% of retailers feel pressure to change their prices regularly, but only 15% make those changes frequently UK retailers lose roughly 1.97 million hours (that’s 246,000 working days) each week on competitor price checking Want to read the full story? Click here to download your version of Retail Pricing Wars for free.
28.11.2018
You're Invited to a Google & Omnia Webinar!
Today’s retail marketplace is chaotic, to say the least. Chasing product information and manually adjusting bids is time consuming and labor-intensive, not to mention inefficient. Pricing insights make the marketing...
Today’s retail marketplace is chaotic, to say the least. Chasing product information and manually adjusting bids is time consuming and labor-intensive, not to mention inefficient. Pricing insights make the marketing process a little easier. By combining competitor price information with your own internal data (such as stock numbers and purchasing prices), your marketing team will gain new perspective for their strategic decision making. We’re excited to announce that we are hosting a joint webinar with Google on how to use pricing insights to ease the pains of online marketing. On December 12th, 2018 at 13:00 CET, Lisa Wedsberg from Google and Thijs Algra from Omnia will spend 45 minutes helping you understand how the retail marketplace is changing and how you can prepare for the future of omnichannel. Interested in learning more? Click here to sign up! Note, the registration form is in Dutch, but the webinar will be in English. Can’t wait to see you there!
21.11.2018
How to Avoid a Price War on Black Friday
There is growing frustration among shops about Black Friday. This is most notable in the fashion industry, because of a consumer tendency to purchase several items of clothing at a discounted price, try the clothes on...
There is growing frustration among shops about Black Friday. This is most notable in the fashion industry, because of a consumer tendency to purchase several items of clothing at a discounted price, try the clothes on at home, then return 14 of the 15 pieces to the store. This phenomenon makes the holiday frustrating for several reasons: It clogs up the distribution network and overwhelms mail rooms around the world It fuels customer frustration when they need to wait for their products because of this pipeline error It falsely inflates retailers’ sales from the day and shows inaccurate stock levels Because of these frustrations, several retailers in the U.K. have chosen to forego the sales holiday this year. And since some evidence suggest that consumer trust in the holiday is declining, it might seem like Black Friday is a passing fad. So why should retailers continue participating in Black Friday? The reality is that the psychological impact of Black Friday on consumers is enormous. One of the most significant benefits of this holiday for retailers is the fact that consumers are primed - and ready - to purchase. McKinsey reported that over 70% of consumers in the U.S., Canada, U.K., and Germany are planning on participating in Black Friday this year. And in the Netherlands, the number of searches for “Black Friday” has increased from roughly 250,000 to almost 1,000,000 in the span of 3 years, according to BlackFridayDeals.nu. Those are high numbers, and shops would be ill-advised to dismiss these consumers who are ready to spend. Instead of avoiding the holiday because of the frustration and lackluster sales, shops should look at how they can optimize their pricing and marketing strategies to capture the increased consumer desire for Black Friday deals. In fact, many of the frustrations that companies voice over the holiday are easy to counteract with a smart pricing strategy. How to make Black Friday work for you If shops should participate in Black Friday, how do they make the holiday work for them? In this section, we’ll detail four steps to take to make the hype around the holiday do the hard work of attracting ready buyers to your website while maximizing your profitability. Build a promotional strategy around your commercial strategy Black Friday is largely a day about price perception. As a result, your promotional strategy for the day should reflect your overall commercial strategy. To get started with this, you should ask yourself two questions: 1. Do I want to do promotions? Depending on your corporate strategy, you might not want to participate as heavily in Black Friday as other organizations might. If your overall commercial strategy is to be seen as a premium store, then you might not want to compete with companies that pride themselves on always having lower prices. Listen: Which categories have the highest price pressure on Black Friday? A great example of this (though not related to Black Friday) is the Dutch department store de Bijenkorf. For many years they had an extremely successful promotional sale called “Drie Dwaze Dagen” (“Three Crazy Days”) - three days of steep discounts across the assortment. However, a few years ago the company changed their corporate strategy. They wanted to cultivate a more prestigious price perception among consumers. So the Bijenkorf got rid of Drie Dwaze Dagen, despite its popularity and success. The lesson: if steep discounts don’t align with your overall commercial strategy, don’t waste time trying to compete with companies that will discount on everything. Instead, you need to be more strategic, which brings us to Question 2. 2. Which assortments will you discount...and by how much? Since Black Friday is all about price perception, you need to be smart about which products you discount. And even though many consumers will participate, many are also questioning whether or not they are actually receiving the best deal. That’s because in many cases, they aren’t. A recent article from the Telegraph pointed out that for nine out of top 10 product categories, there were lower prices on other days of the year. This isn’t because retailers are trying to “rip off” consumers. Instead, it’s because they don’t have the proper data to know whether a product’s price was lower in the last month than what they advertise on Black Friday. Historical pricing data gives you the insights you need to decide which products you’ll discount and by how much. By understanding a product’s fluctuations over the course of three months across your competition, you can see who has offered the lowest price and then use that as a starting point from which to build your discount. This data then allows you to offer consumers some amazing discounts on great products while also optimizing your margins. Leverage the power of price elasticity Price elasticity measures the change in demand of a product with changes in price. Products can either be elastic, where a small change in price will lead to a great change in demand, or inelastic, where a small price change won’t significantly impact demand. The example we like to use at Omnia to illustrate this idea is a TV and a TV wall mount. Televisions are highly elastic products, and a discount on a TV will typically result in increased sales. A small change in price on a wall mount, however, won’t see the demand change. Price elasticity is a powerful tool to use on Black Friday, especially if you combine it with a high-runner strategy, where you discount heavily on a few popular items to draw traffic to your site then price the rest of your assortment regularly. Once you have traffic on your site, you can then cross- and upsell more effectively and drive profitability - all without discounting your entire assortment. Don’t forget about omnichannel experiences Though the vast majority of consumers plan to participate in Black Friday online, shops shouldn’t forget about the omnichannel experience. According to the previously-mentioned McKinsey report, roughly one-third of all consumers across the U.S., Canada, the U.K., and Germany will expect some online retailers to also have in-store offers. Amazon is already capitalizing on this by opening up several “pop up” stores around Europe this holiday season. This is especially true for fashion vendors where consumers prefer to test the product before buying. For example, you might research a pair of running shoes online and know exactly which pair you want to buy, but you’ll make your final purchase in-store after trying the shoe on to find the right size. The increasing influence of the “ROPO Effect” (“Research Online, Purchase Offline”) means retailers need to think about how to measure sales across both channels. Use dynamic pricing Finally, one of the easiest ways to make Black Friday work for you is to use a dynamic pricing software. There are four main reasons shops should consider this investment. Dynamic Pricing helps you: Focus Black Friday on strategy, not on manually chasing and adjusting prices throughout the day. Analyze historical data to evaluate which products you’ll discount and by how much. Track and optimize your online marketing. Reduce the manual labor involved in pricing and marketing. It’s also the best thing to prevent a pricing war to the bottom. Dynamic Pricing allows you to set limits based on your commercial strategy, so your products will never go below a comfortable level. Conclusion Black Friday is a day all about price perception. Shops should use it as an opportunity to reinforce their overall commercial strategy through calculated promotion discounts on key products, not arbitrary price slashes on an entire assortment.
08.11.2018
4 Ways Omnia Helps You Get the Most Out of Black Friday
Black Friday is growing in importance around the world. In the Netherlands alone, interest in the retail holiday grew 2,000% from 2012-2017. And with over 70% of shoppers in the U.S., U.K., Germany, and Canada aware of...
Black Friday is growing in importance around the world. In the Netherlands alone, interest in the retail holiday grew 2,000% from 2012-2017. And with over 70% of shoppers in the U.S., U.K., Germany, and Canada aware of Black Friday and planning to take part, retailers and brands are under pressure to slash their prices to stay competitive, both online and offline. But with thousands of products and hundreds of competitors, how can shops know what the best discount is for each product? Better yet, how can they stay competitive on Black Friday itself when prices shift throughout the day? If you’re asking these questions, you’re not alone. Black Friday is stressful, but pricing insights and automation might be the solution you’re looking for to help you tackle the day with confidence. Curious to know more? Here are four ways Omnia’s products can help you get the most out of Black Friday. 1. Focus Black Friday on strategy, not chasing prices. On Black Friday itself, many shops waste time manually tracking and altering their prices. Many on your team will devote their entire day to following the market, including manually comparing prices for multiple products several times. Automating the process with a pricing insights software cuts the work in half. Instead of asking your team to crawl the internet looking for prices, the software delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your your strategy. Automation can even take this process a step further with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. 2. Analyze historical data to build a pricing strategy. For most shops, a backlog of pricing data is not necessary for much of the year. But this information is useful for establishing a pricing strategy around the holidays, and especially for Black Friday. Historical pricing insights allow you to monitor products over the months leading up to Black Friday. This data reveals an abundance of information about the product market, such as the price ranges offered by yourself and your competition and the lowest price over the last few months. Your pricing team can then use this data to determine the best promotional price for key products. Instead of arbitrarily discounting every product by 20% just to give a discount, your pricing team can determine which products your company has an advantage over and what they should price in relation to the competition. This way you offer the best price on the market for a consumer on Black Friday, not the same price another store charges on any other day. This practice not only reduces the risk of a competitor undercutting you on important products on Black Friday; it also helps maximize your profits and margins overall. 3. Track and optimize online marketing. Retail automation doesn’t have to stop at prices. Instead, you can use pricing data to make informed online marketing campaigns. Notably you can use pricing data ensure your online advertising budget isn't wasted on out-priced items. By combining competitor pricing insights with your own internal product information (such as purchasing price), your marketing team knows which products are competitive and in-stock, and can ensure that they advertise competitively as well. This connection between pricing and marketing is important, because one small miscommunication between the two channels — especially on a high-profile day like Black Friday or Cyber Monday — can lead to a product appearing significantly overpriced compared to the competition. This can dramatically affect the price perception of your company, though it can be used strategically to sway public opinion. Additionally, automation can help your team track keywords in the weeks leading up to Black Friday itself. This then gives your organization a better understanding of where to advertise online and how you should allocate your resources. In other words? Automation helps your team focus on marketing the products that will have the biggest advantage for your business. 4. Reduce manual labor. Ultimately, one of the most significant benefits of retail automation software is that it reduces the overall manual labor for your team, both on Black Friday itself and in the weeks leading up to the event. By taking over much of the “grunt work", automation gives your team more freedom to create high-impact Black Friday promotions. Final thoughts Automation tools like the ones offered by Omnia help your teams make faster, smarter pricing decisions. And while the tools give your organization superpowers every day of the year, those powers are especially pronounced on Black Friday. Interested in testing out retail automation this Black Friday? Don’t wait. Get in touch today to set up a demo of Pricewatch and see for yourself how pricing insights help you get the most out of the day. Click below to learn more.
26.10.2018
3 Lessons on Innovation from the First-Ever Omnia Reinvent
Last week we hosted the first-ever Omnia Reinvent—an exciting afternoon of conversation and networking at our Amsterdam headquarters. The highlight of the event were three different presentations from Omnia, Google, and...
Last week we hosted the first-ever Omnia Reinvent—an exciting afternoon of conversation and networking at our Amsterdam headquarters. The highlight of the event were three different presentations from Omnia, Google, and Nextail. Each speaker opened a discussion about how retail is changing in the 21st century and left us with plenty to think about. In case you missed it, here are 3 major takeaways from Omnia Reinvent. 1. Get excited about innovation Artificial Intelligence has a negative public image, but this technology will transform our world in ways unimaginable to most of us. Sander Roose, CEO of Omnia dedicated an entire presentation to this and convinced us to be excited about this new wave of innovation. The first Industrial Revolution liberated people from dangerous work and increased global productivity exponentially. In short, the 19th century’s widespread adoption of machines gave people superpowers. By adopting innovation, humans could devote themselves to more creative pursuits and enjoyable work. Sander believes artificial intelligence will have the same global impact. In fact, he wholeheartedly considers this moment the second Industrial Revolution. Instead of fearing AI and the changes to come, we should recognise and seize the opportunities it offers. 2. Embrace automation in business To succeed like Google, you need to think big. For Google, “big” is a factor of 10. According to Floris van de Peppel’s presentation at Omnia Reinvent, Google credits their success to a constant drive to “10x” whatever they do. This “dream big” attitude, combined with a focus on the end-user and high employee freedom, catapulted the company from a search engine to a technology leader. 10x growth isn’t easy to achieve, but Floris confirmed that rapid adoption of technological innovation makes it possible. Automation is one of these technologies that propels your company forward in two ways. First, automation frees your employees from boring repetitive work and allows them to take on more creative pursuits. You can then use this recovered time for making your business more profitable by focusing on strategy. Second, automation allows you to meet a growing consumer demand for instantaneous and personalised experiences. As consumers demand more and the retail ecosystem changes, the only way for retailers to keep up is to include automation in their operations. 3. Start small, but start now Embracing automation is easier said than done. No matter your industry, making the switch to automation involves a significant investment of time, energy, and money at all levels of the organisation. However, the longer you wait to innovate, the more difficult it becomes to catch up. That’s why it’s critical to get all executives on board for a business overhaul. At Omnia Reinvent, Nextail’s Jos Mulder detailed his own journey in successfully convincing Blokker Holding to adopt automated pricing. His advice? Start small, get results, and then re-discuss the level of investment. Final thoughts Overall, we loved the first ever Omnia Reinvent. We left feeling inspired about innovation in retail, and we’re filled with ideas for next year’s event. Thank you so much to everyone who joined us, and we can‘t wait to see you again next year! Can’t wait for next October? No need! Check out the after movie here.
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