Price Points by Omnia Retail

Here you can read more about Omnichannel Retail, Direct-to-Consumer Strategies and Retail Trends. Learn about the Implementation of Dynamic Pricing and Pricing Strategies.

What e-commerce players need to begin their pricing software journey (Part 1)

When the concept of retail first began in ancient Greece in 800 BC with traders selling goods and food at markets, merchants needed to keep track of their stock in a similar way retailers do so today. It began with...

When the concept of retail first began in ancient Greece in 800 BC with traders selling goods and food at markets, merchants needed to keep track of their stock in a similar way retailers do so today. It began with writing things down with a simple book and some ink. A couple thousand years later, that book turned into spreadsheets and tables; and a few decades after that, spreadsheets turned to software and digital systems. As a software creator and provider, it is awe-inspiring to see how far systems and processes that support retailers have come since the days of paper and quills. In a four-part series, we will dive into an overview of both the technical requirements and learnings for retailers and brands looking at investing in pricing software. We will also cover some of the processes our teams drive, from data scraping, sharing potential pricing strategies to the onboarding process. Let’s start at the beginning The basis for many larger e-commerce businesses is an enterprise resource planning system (ERP) like Oracle, SAP, or Microsoft Dynamics 365. In some cases, a Product Information Management Systems (PIM) and Shopsystem like Shopify are added to this set up. Smaller and medium-sized enterprises (SMEs), especially those that started online first, might only have a Shop-system like Shopify, which can fulfil all the essential tasks in the e-commerce context that an ERP-system does. As the e-commerce market is characterised by high volatility, any online stores, striving to keep up with today’s competitiveness, cannot possibly track vital data like stock volumes, sales orders, supply chains or inventory by hand. Tim Avemarie-Scharmann, Omnia’s Head of Knowledge & Scalability says, “While my cheese trader Helmut at the farmers market might be fine using Excel for most of his calculations and data flows, modern businesses, especially in e-commerce, need to integrate advanced systems that perform specific tasks automatically. This applies to your price setting as well, while Helmut can sell his cheese at 4.99€ per 100g, sometimes taking a peek at the prices from a competitor retailer will likely find themselves a much bigger market, and in some cases identifying hundreds of competitors.” Where dynamic pricing fits in When it comes to new technology and its usage, one of the first questions in people's minds is, “Is it trustworthy?” And, if you transfer this to implementing dynamic pricing software within your business, the question most people have is: “Can I trust those automatically calculated prices?” In representing the overall setup of your business and the integration of a dynamic pricing system, we think of it as a star-shaped figure, where the segments could represent the different external software services a brand is using, and the core of the star is the leading ERP/Shop system or a combination of both. Marketing, logistics, shipping, payment and pricing are just some of the additional services one has to integrate into your data flows. Even though a brand or retailer outsources the application of pricing rules to Omnia, the retailer will be in full control of the prices, as the ERP or Shop system is still at the core of your overall set-up. In a nutshell, the dynamic pricing system will receive input from your Shop/ERP system that is the signal for calculating a new price for a product. The calculation of the new price is based on the parameters that are defined with our Customer Success and Consultancy team, based on the markets and competitors monitored and pricing strategies implemented. Thereafter, the dynamic pricing system will import the new prices back to the Shop/ERP system. This way, the retailer is always in control of their price calculation. How accessible is this data? A big part of the technical implementation is establishing a connection between Omnia and the customers' Shop- or ERP-system. While in some cases a one-time, manual upload of a product list is sufficient, for example, if a brand wants to track a stable set of products in the market, some setups do require more flexibility and automation. That is the case for most retailers, where the conditions of selling can change at any time. For this, you need at least one daily data transfer, so all systems are synchronised. This can be done via simple https-feeds or by exchanging data via FTP-servers. Most Shopsystems used in e-commerce provide the option to export data via feeds and do not require coding skills. Additionally, you need to synchronise the export and import of data via the feeds with other internal processes. For example, when the new prices are calculated at 8am in the morning, you don't want them to be in your systems at only 6pm. For users of Shop- and ERP-systems such as Shopify, Shopware, Plentymarkets, JTL, Magento, we provide plugins, which make the data transfer part much easier. The plugins are designed especially for the case of transferring pricing data to-and-from our Dynamic Pricing Portal, and have pre built-in features that allow a retailer to import price updates only for products where the recommended price actually changed or to only import the price updates for certain product groups, for example, those where you have checked the results and want to make the newly-calculated price recommendation live. These cases can be covered by transferring pricing data via feeds, but with the plugins, they are easier to set up for SMEs who may not have a dedicated pricing department like larger enterprises do. Data security Especially for larger enterprises, but essentially for all of Omnia’s customers, the question “How trustworthy is the software?” does not only relate to the aspect of how to be in control of the price calculation process which we described above, but also how data is stored and processed. For this, we are currently in the process of becoming ISO 27001 certified and aim to be ready by the end of 2022. This certification ensures that we take many precautionary measures, so that all of Omnia’s users receive the highest quality standard when it comes to security and data protection. A guided process This may sound overwhelming or time-consuming for a business who is first learning about the importance of pricing software, but the opposite couldn’t be more true. Omnia’s Customer Success team are involved at every stage of the process, providing knowledge, expertise and guidance during a structured on-boarding process. As this article is the first part of a four-part series, stay posted to our next chapter on how we collect competitor and customer data. Read now Part 2: How we collect vital data for our customers

Google Analytics and Omnia

Over the years, Google Analytics has become an undeniable ally to many retailers and brands engaging in ecommerce. The tool can provide a gold mine of data and insights on your website’s performance. For instance, page...

Over the years, Google Analytics has become an undeniable ally to many retailers and brands engaging in ecommerce. The tool can provide a gold mine of data and insights on your website’s performance. For instance, page views and units sold data can be captured for each of your products. These insights can be leveraged to add depth and sophistication to a pricing strategy that can then further drive business results as well. Now, what if I told you that you can use the Google Analytics data to create more profitable and demand-driven pricing strategies? And that Omnia offers you the possibility to connect a Google Analytics API to your portal? If this sounds tempting then keep on reading. In this article, we will walk you through the benefits of connecting GA to Omnia, and how you can use the data in pricing your assortment. Which data and insights from Google Analytics should I start tying to my strategy? Conversion rates: As mentioned above, Google Analytics provides you with insights on ecommerce on a broader scope. However, as a first step, it would be wise to determine which features can be relevant to your pricing strategy. Let’s first take a step back: Imagine a potential customer that clicks on a specific product on your website. They might go through all the steps in your sales cycle but never actually click on the ‘buy product’ part of your website. In this case, the conversion rate is low. If your price is not attractive and in-line with the market, you might end up losing market share. This is where connecting your Google Analytics API to Omnia can truly bring in added value. Conversion rates are an interesting metric to look at and to tie back to your strategy. In a study by a Marketplace Optimization Platform, it was found that conversion rates can have a reverse correlation with your prices. Indeed, in analyzing the prices from Amazon using two-years' worth of data, they were able to see a clear negative relationship between prices and conversion rates. However, this does not necessarily mean that lowering your prices would automatically increase your conversion rates as this analysis doesn’t take into account other factors such as elasticities. Page views/traffic: Your page views are also a good indicator of how popular a product is. Indeed, you can use this data to determine which products are popular and bring traffic to your website. Additionally, the Omnia Pricewatch export data can even provide you with insights on the market and popularity scores. Could it be that your competitors are not selling something or that they ran out of stock? Gaining this perspective can help you in adjusting your strategy and perhaps consequently gain extra margin on these products. The traffic on your website is also a metric that could influence your strategy as it can indicate which products are most attractive. An extra layer would be to cross-check the low conversion rates with the high page views as it can surely indicate that something is making your prospect click away rather than buy from you. In this case, it will most likely be a higher price than anticipated or a price too low that might impact your price perception, lowering the trust of your audience. Units sold: Another important metric that Google Analytics provides is units sold, which help to measure the popularity of your products. Also, a product that has high page views but sells a few is typically one that you might need to look into. Naturally, one would ask themselves why is this product not selling? The same applies to products with low conversion rates and low units sold. Are those products worth discounting or would it be wiser to find a way to make them more visible on your website and incentivize the customer to buy them? All in all, the metrics presented here are just a few of the ones that you can take advantage of when connecting the Google Analytics API to your Omnia portal. However, the true value lies in analyzing these metrics with respect to one another as they are, more often than not, interdependent. How to include conversion rates and page views in your strategy? Now that we know which metrics are to be followed and can have a direct correlation with your pricing strategy, let’s look at how to include them in your strategy. High-runner strategy: A high-runner strategy essentially focuses on the products that have ‘the highest numbers of views, clicks, and purchases, and which are eagerly sought after by the public’. Naturally, flagging these products using Google Analytics is easy. You would want to focus on products that have the highest number of page views, but also the ones with the highest conversion rates. The idea behind this strategy is that you would be competitive enough to maximize traffic on these products. However, in order not to lose margin, the high-runner strategy also entails trying to push your low-selling products (low page views) as add-ons to the highly elastic ones. Therefore, in order to make the best of this strategy, you need to obtain data from Google Analytics and use it in Omnia to flag these products and include them in your strategy. Bundling: Another strategy that can be optimized by adding conversion rates is bundling. As bundling is mostly about selecting one high-performer product as an anchor and adding in extra (low-selling) products to be able to sell more off. The bundling strategy is an interesting one as it gives you the opportunity to sell more of your long-tail products, but also provides the customer with the opportunity to get the best value for money with regards to a set of products. So how can Google Analytics data help you achieve this? It’s simple, in a similar manner to the high-runner strategy, you will need conversion rates and page views. In this case, you can either choose a popular product and build your bundle around it. For instance, a Samsung TV (with a conversion rate of 11%) with its wall mount (conversion rate of 4%) and corresponding HDMI cable (with a conversion rate of 6%) . Another idea is to go for one that can’t be considered your best seller but building a bundle that includes it could boost up its sale. Another good example is a Philips epilator that you can bundle up with all of its accessories. Indeed, these might not get the best traffic but if you add them to the bundle, you will be able to sell more units. Stock-based strategy: As its name indicates, a stock-based strategy is one that is entirely built around the stock levels of your products. Indeed, in most cases, a product that is low in stock would not be priced the same as one that you have many units of. However, with Google Analytics data, you can add more depth to this otherwise simple strategy. Let me explain: combining your stock levels with page views can provide you with a different perspective on how to price each product. For instance, a product with low stock and high page views surely indicates that it’s one where margins can be maximized. On the other hand, a product with low conversion rates but a high stock probably calls for a reduction in price to make sure to dispose of some units and save on logistics cost. By taking into account simple measures such as conversion rates and website traffic, the stock-based strategy becomes more accurate as it includes the intricacies of a product’s popularity. Where can you see this data in Omnia? Performance screen: Once you configure the API, you can find your Google Analytics data in the Performance tab in Omnia. This is a truly insightful dashboard as it enables you to cross-check multiple variables that are all related to your ecommerce performance. For instance, you can monitor a category’s revenue vs. its conversion rates. Indeed, you will be able to see which categories of products achieve the highest or lowest conversion rates and how your revenue is impacted by it. This will give you insights on which pricing strategies to use for them. For example, a product that has a high conversion rate but shows low revenue. If you cross-check it with page views, you might have a perfect candidate to test out the high-runner strategy (i.e. drop the price on that product to achieve higher volumes without forgetting to cross-sell it with other low-conversion rates products). In short, the Performance dashboard is your first step into defining what strategy to pursue based on the conversion rates and traffic, but also the best place to have a holistic view of the Google Analytics data with regards to your sales and revenue. Even though most associate conversion rates and website traffic with marketing, these metrics can be relevant in pricing as well and enable you to have a strategy that is more tailored towards online performance. Connecting Google Analytics’ data to your pricing tool is bound to offer you valuable insights on not only how you are positioned in the market, but also on how to adjust prices to increase performance. Reports: Omnia offers various reporting possibilities, and it would be a shame not to use them to their fullest. The good news is that all the data points we have discussed can be aggregated in reports. Below are a few ideas of reports you can create using the Google Analytics data: Overview of products with high page views but low sales: Two variables that are interesting to look at side-by-side are page views and units sold. Indeed, one can tell you a lot about the popularity of your products while the other one opens your eyes to their potential. By adding the page views to your reports, you can see which products have the potential to sell more (high page views) but which are underperforming (low sales). The same applies to popular products that are low in stock. It might be the trigger event you need to restock to stay ahead of the curve. Overview of most popular products: A report that could prove beneficial to your marketing team is one that groups all your most popular products. As mentioned earlier, conversion rates combined with page views are a good indicator of the popularity that a product has. Therefore, the idea is to create a report that highlights these metrics per product. As the possibilities are endless, you could also add data such as stock levels and marketing costs to these reports and have a clear overview of which products are worth investing in marketing campaigns for. Final thoughts The data from Google Analytics can be truly insightful in helping you build a more sophisticated pricing strategy that uses performance measures. It allows you to be more proactive with regards to your products’ trends and split your assortment based upon live and legitimate interest from customers. Hence, it is highly advised to experiment with this data in Omnia to gauge which strategy can help you achieve your desired business goals. If you are interested in any of the things mentioned in this article, our CSM team and Customer Service will be happy to help!

Winners vs. losers: how important is the price change frequency?

Value based pricing, price change frequency, marketing cost incorporation, elasticity calculation.... There is an abundance of factors to take into consideration and an unlimited number of strategies related to pricing....

Value based pricing, price change frequency, marketing cost incorporation, elasticity calculation.... There is an abundance of factors to take into consideration and an unlimited number of strategies related to pricing. Want to find out where you are leaving the most money on the table and how to maximize profits? It’s related to how often you change the price of offered products and services. Let’s discuss price change frequency! Price change frequency In 2019, Spread Networks spent over $300 million to install 827 miles of fiber-optic cable from Chicago to New Jersey, reducing transmission time from 17 to 13 milliseconds. Why spend this high amount for such a small latency decrease? Because the currency exchange traders benefit from those milliseconds. When a FOREX arbitrage opportunity presents itself, you want to act as soon as possible - timing is everything. Think of pricing in the same way. Theoretically, any product or service has a certain selling price resulting in the highest revenue (or profit) for the retailer. This price, the pMax, depends on factors such as competitor prices, stock levels, marketing spend, and price elasticity. These factors change quite often, influencing the pMax. When a current price is no longer set at an optimal level, it contributes to lost revenue and profit. Changing prices more frequently ensures maximum value. Many retailers are reluctant to change prices at a frequent pace. Others think repricing applies to core offerings. This type of pricing strategy results in stagnation and an inability to regularly adjust prices in the future. Big retail winners generally have a high rate of price change frequency. Over a week, winners changed prices related to 24% of their assortments. Whereas, others changed prices on just a limited number of products (just 9%), and it cost them... The optimal price change frequency Retailers benefit from changing prices more often. However, it is possible to have a price change frequency that is too rapid. So what is the optimal price change frequency? It depends on a number of factors. 1 - Consumer Psychology Theoretically, a higher price change frequency is better; products spend less time at suboptimal price points. But there is an adverse psychological effect related to frequent price changes. Multiple studies and investigations show changing prices too frequently results in: Delaying purchase to wait for a better price Fixating on price rather than a product’s benefits Instigating and facilitating a race to the bottom (two retailers in a bidding war) 2 - Cost (implementation) Price changes get costly when you need to synchronize prices with physical stores. To allow daily price changes in the majority of your in-store assortiment, ESLs (Electronic Shelf Labels) are going to pay off in the long term. However, if you don’t have ESLs yet, it may be better to stick with physical (paper) tags at first, and settle on a lower price change frequency that is workable in the in-store processes. 3 - Indirect Cost Lastly, consider indirect cost, how frequent price changes influence other portions of the organization and market. If you are one of the market leaders, your pricing influences your competitors. This can initiate higher prices (enjoyed by all competitors) or a “pricing war,” forcing competing parties to continuously reduce prices. And, the more frequent the price change, the faster the race. Omnia helps address this in several ways, adjusting your price after multiple competitors have already changed theirs. Secondly, we leverage automating pricing, making sales more predictable. As soon as a price change opportunity presents itself, Omnia’s automated software capitalizes on it while maintaining your set margins. This leads to more sales for each related product. A modifying factor: price elasticity Business owners come to understand the value of assigning a pMax to each product. However, price change frequency is counterbalanced by real-time reactions of consumers and how sales figures are influenced by price changes. It largely depends on the industry. In some industries, changing prices are common, even anticipated by customers, such as with airplane tickets. In such industries, owners expect less of an adverse reaction to price change frequency. The price paid for not assigning a pMax depends on price elasticity. If a product has a low price elasticity, the effect of being outpriced/overpriced has little effect on volume. However, if the product has a high price elasticity, a small price change will have a large effect on volume. You want to change the price of these items more frequently. Omnia best practice Given the analysis outlined above, as well as our own experience from helping retailers optimize their pricing for the last 10 years, we have come to a range of frequencies that we believe is the best. As a general rule at Omnia, we recommend changing prices: at least 1 time a day and at most 4 times a day. Eager to find out how Omnia can help you determine your optimal price change frequency? Or if you want to discuss how we can advance your pricing strategies with our software - please let us know by contacting us!

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.

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

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.

What Do You Need to Build a Dynamic Pricing Solution?

Something we see often, especially from larger clients, is a desire to build a dynamic pricing solution in-house. The draw of keeping your pricing information in-house is obvious, and at first glance, it might seem...

Something we see often, especially from larger clients, is a desire to build a dynamic pricing solution in-house. The draw of keeping your pricing information in-house is obvious, and at first glance, it might seem relatively easy to do. But what actually goes into a dynamic pricing solution? The short answer is: a lot. If you’re thinking of building your own dynamic pricing solution in-house, we understand. But with 7 years of experience, we thought we would share some insights on what you should consider in your home-built solution. The 4 ingredients in a dynamic pricing solution No matter what sort of dynamic pricing system you want to build (or how complicated you want to make it), there are four main components in the process you should consider: The data The pricing logic The automation The user interface The first two components make your dynamic pricing functional. The second two components makes dynamic pricing a success. Data Data encompasses many different data points, both internal and external. Internally, consider product purchasing price, stock levels, sales information, and more. Each of these data points help you decide how to price your products based on known information. The most important external data source is your competitor data. You want to understand which competitor is selling the same product against what price and with what kind of delivery costs and times. This data can come from a variety of sources, such as scraping data directly from competitor websites or via comparison shopping engines. Collecting this data sounds easier than it actually is. To have a full overview of the markets, you need: Connections with multiple data suppliers (the more the better), for a complete understanding of your market An internal data collection program for collecting purchase price, stock levels, marginal and logistical costs, product lifecycle, and more The knowledge to understand what that data means for your business The technical ability to validate data and ensure quality Data suppliers are especially important, and the general rule of thumb is the more connections you have, the better. Sometimes one data source can’t match all GTINs and you need to supplement it with another. Ideally you will get data from two sources: direct scraping data from competitor websites for accuracy, and comparison shopping engine data to understand where your competitors are advertising. Rates for data partners (like scrapers) can be expensive, and going with a cheaper partner will cause data quality issues. And data quality is of the highest importance when it comes to dynamic pricing. You also need the ability to process that data multiple times per day, because some of these variables are subject to frequent changes. Competitor prices, for example, update repeatedly throughout the day, so it’s easy to fall behind the market. Pricing rules and pricing logic Once you have a dataset of all your competitors and internal data, it’s time to make decisions about how you want to react to changes in the market or changes in internal variables. In a dynamic pricing tool, these decisions can be made by pricing business rules or by more advanced predictive algorithms. We’ve seen that a combination of both works best. The collection of all these rules and algorithms forms your pricing strategy. Pricing rules, at their core, tell your dynamic pricing module how to act in a given situation or when a data variable changes. Some examples of simple pricing rules are: Always be the lowest price on the market by 5% Always be the highest price on the market by 5% Match Competitor X’s price In reality though, your pricing rules will get more complex than this. You can follow a group of competitors, use historical data and past performance to calculate new prices, and even include weather information to react to sudden changes in demand in the market...there are a lot of opportunities! Your tool should use these rules to suggest “price advices” for every product in your assortment (or any product that you run through the dynamic pricing software). Your team should trust these price advices, understand how the tool calculated the price, and be willing to use those prices without a second thought. You can build pricing rules and pricing logic, but doing so requires some imagination. You need to think about your entire strategy upfront, then ask your IT department or BI team to build rules for every situation. Once they build these rules, you’ll have a library at your disposal. It is key that a particular pricing strategy can be applied to each subset of your assortment, as different commercial strategies can apply for each part of the assortment (for example, a year round electronics category vs. a seasonal garden category). However, building these pricing rules does take time because they are so complex, and your development team needs to build them in a way that’s also easily explainable. If these rules are not transparent, your pricing teams won’t trust the price advices. Additionally, once you implement those rules there is one element you can’t control: how the market will react to your changes. Your system needs to be smart enough (and agile enough) to use these reactions in future price updates. Automation The first two steps of the process are crucial to getting a price advice that you trust and which reflects your overall commercial strategy. But for a system to truly add value, you need to automate all price changes. The first point for automation is the data collection, specifically the competitor pricing data collection. Competitor prices change continuously and you need to be able to adapt over your full assortment without any manual steps. Manually validating price checks cost pricing teams as much as 10 hours per week per person, and the work is tedious. You should automate this part of the process to not only save time, but to also improve the overall working life for your team. You also need to automate price updates to your online store. After your software calculates the new price advices, it can upload those prices into you e-commerce platform that displays the prices on your website, comparison shopping engines, or even electronic shelf labels. This automation step also saves crucial time and allows your store to stay agile as the frequency of market changes increases. Data validation Automation is obviously an important part of the dynamic pricing system. To get the most out of dynamic pricing, you should automate your entire process, from data collection to price updates. If you don’t automate the entire process, you’ll quickly fall behind the market. But doing so removes the points for manual data verification and validation. Data validation is a crucial aspect that makes pricing automation a success. Without it, your team won’t be able to trust the recommended prices or use the insights to build more profitable strategies. So before you begin with automation, you need to trust the system completely with your pricing data, and feel comfortable that your shop is safe. And to do that, you need to build data validation into the system, and go thorugh comprehensive data validation tests that let you evaluate the entire chain, from input to export. Some areas to ensure safety include: The consistent quality of the data you import into the system. How will your dynamic pricing tool access high quality data? Price advice boundaries. What is the maximum or minimum price acceptable for each product? Failsafes. What should the system do if the chain breaks? Building a basic infrastructure for data validation is difficult, but not impossible. But the reality is that if you want to build an agile system where pricing rules can easily be added or changed, the data validation process quickly becomes complex. User experience and interface Up to this point, we’ve focused on the back end of the dynamic pricing tool. But now it’s time to think about the daily use of dynamic pricing. How can you encourage the adoption of dynamic pricing and make it an integral part of your teams’ workflows? The answer lies in the user interface of the portal you build to manage the dynamic pricing system. You can’t discount the value of user design and experience, and it might even be the biggest barrier to adoption beyond building a platform. Your end user is your pricing and category managers. From an interface perspective, there are two goals to help them : Give the end user insights that make their job easier Allow the end user to continuously iterate on the strategy without the barrier of IT Insights give your end users confidence in the tool, as well as the information they need to build better pricing strategies. These insights will help your team react to market trends, for example, or quickly respond when a competitor runs out of stock on a popular product. Pricing and category managers should also be able to use the tool freely and make changes to pricing rules as needed. They should be able to do this without calling in development or your BI team every time they want to make an adjustment. Additionally, design makes a difference. While the interface doesn’t need to be pretty, the better designed it is, the easier it will be to use. To build a proper that suits your user’s needs, you can hire consultancy agencies or do your own internal tests with your team. IT investment for dynamic pricing So how much time and labor does it take to build a proper dynamic pricing solution? A conservative effort is 1-2 years for a team of developers, and it takes work from both IT and the business side of your company. This period will result in the minimum viable product for the data collection system, establishing the pricing rules, building price advice algorithm, portal, and a repricing tool (if you choose to automate your repricing). Building the infrastructure for dynamic pricing is a time-consuming and laborious task. However, this two year period is just the start of the journey: you also need IT and development resources to maintain the tool after you’ve built the infrastructure. And for the tool to stay relevant and useful, you need to invest development time into iterating and improving the tool continuously as business demands change. So the short story is that your dynamic pricing tool requires a significant investment from your developers in house. And as Berend van Niekerk says in Episode 5 of Price Points: That's a lot of work. And for every company the I.T. resources are really scarce. So then it's a question — do you want to invest four or five developers full-time into building dynamic pricing system? Or do you want to invest those guys into building your e-commerce platform or anything that's important for you or for your everyday sales? That question is one that you can only answer for yourself. Final thoughts Building a dynamic pricing software is a much bigger beast than most companies expect. It requires significant investment in time, energy, and money, and is an ongoing process that you need to continually maintain and update. Now, that doesn’t mean you can’t build your own tool in-house. And for some companies, that might be the best choice for you. But there are tradeoffs to consider — namely in the development capacity you need. In many cases, a third-party dynamic pricing solution makes more sense economically, and it also allows your development team to focus on what really matters: your e-commerce platform.

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.

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.

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.

How to Build a Pricing Strategy

This week we have a guest post from Johan Maessen, owner of Commercieel Verbeteren. Johan has over 10 years of experience in strategy consulting, and works tirelessly to help businesses grow with deliberate, strategic...

This week we have a guest post from Johan Maessen, owner of Commercieel Verbeteren. Johan has over 10 years of experience in strategy consulting, and works tirelessly to help businesses grow with deliberate, strategic goals in mind. In this post, Johan talks about the importance of a commercial pricing strategy and how you can build your own framework for commercial success. Over the last 5 years as a commercial advisor, I've met dozens of companies with historically-founded pricing approaches. Born out of their traditional way of setting prices, their pricing is based on costs or follows a competitor who seems to have a pricing strategy. Read more: The Ultimate Guide to Dynamic Pricing Additionally, instead of documenting their strategic choices, many companies’ pricing strategies are stored in employee heads. This means it’s difficult to share the strategy with (new) colleagues. But imagine if you had your pricing strategy on a single sheet of paper, ready to implement, share, and iterate. It might seem like a far-off dream, or even unimportant, but the reality is that a practical pricing strategy helps you take control of your business. The remainder of this article describes the benefits and steps involved in setting up such a practical pricing strategy, specifically for retail companies. What is a pricing strategy, and why is it important? Without a steering wheel, controlling the direction of a car is impossible. You can end up anywhere, and the impact could be disastrous. The only thing you know is the outcome is highly unpredictable, and that there is an increased risk of accidents along the way. I like to think of the pricing strategy as the steering wheel to your business: it helps you direct where you want your business to go and gives you full control. At its core, a pricing strategy takes your company’s commercial strategy and turns it into a more actionable pricing objective. With a pricing strategy, just as with a steering wheel, the chances that you’ll veer off-course are significantly reduced. It delivers commercial peace of mind, as different scenarios are thought through and incorporated in the direction up front. In addition, the pricing strategy includes the different levers you’ll use to keep your business on track. When something changes in your market, you can adjust the business rules around each lever to maintain stability. Let me illustrate how a pricing strategy will work out in practice with an example. Imagine your main competitor drops prices of products in a certain customer segment. What do you do? Here are two possible scenarios: 1. No pricing strategy After some stressful ad-hoc meetings and internal escalations, your company decides to respond with a price drop. In fact, to prevent volume losses, you give an even steeper discount than your competitor for all of your affected products. How do you think your competitor reacts, and what does it do with your margins? This could easily be the start of a price war, which will always have more losers than winners. 2. Practical pricing strategy in place Instead of following the competitor all-in, your company looks to your pre-established pricing strategy before making any decisions on how to proceed. This strategy, which considered your positioning in relation to this competitor, has a clear framework for what to do. You just need to apply the business rules of your framework. Here you determined a percentage price bandwidth towards this competitor. In addition, you determined up-front a minimum margin per customer segment/product category. It appears that the majority of the affected products remain within the competitor bandwidth, so no action is required. The products that do go below the competitor price bandwidth are still above your minimum margin threshold, and will be adjusted according to the business rules in place. This leads to price changes for a reduced set of products and keeps margins constant for the remaining products. This way of working enables you to stay in the driver’s seat of your pricing. You stay ahead of competition by iterating the initial pricing strategy along the route and making your business rules more specific. At the same time, you probably realize an uplift in your margins compared to the initial situation. How to set up a pricing strategy There are two ways to determine your pricing strategy: from the top-down or the ground-up. Top-down, you can extract a pricing strategy from the commercial strategy. Bottom-up, you can construct it from your transaction and customer data. A pricing strategy should be practical and contain at least the following two elements: A framework The framework element means that your pricing strategy has a structure that includes all the relevant pricing levers required for your business. An example of such a lever is seasonality. For hotels this implies that the price for a hotel room could go up a bit during holiday seasons. Having such a framework gives you piece of mind, because it helps you visualize the different instances where your prices might need to change. Often this structure is missing, and with my company ‘Commercieel Verbeteren’, I often help customers create this framework for a comprehensive overview of their pricing. Business rules When the framework is ready, my customers often feel like the pricing beast finally got tamed. But to build a true pricing strategy you need to go one step further. After the framework is set, you need to discuss how these different levers should work for your company through business rules. This means putting a minimum, maximum, and/or bandwidths to the different levers. In this way you, or your pricing software, can act upon them. Together, the framework and the business rules provide you with a practical pricing strategy ready for action. The 3-step approach to a pricing strategy Ok, I get it. I also need a pricing strategy! But how to proceed? Well, there are three steps involved in setting up your pricing strategy. 1. Assess your place in the market Much like the previous blog post in this series on defining your commercial objective, developing your pricing strategy begins with self-reflection. I call this step the As-Is Situation. Before you start building a new pricing strategy, you need to understand what you are already doing for pricing. Gather the relevant stakeholders and try to answer the following questions during your review phase: What does our current price model look like, and what are the pros and cons of this model? Where do you stand in the market? Is your company the leader or the challenger? What is the current commercial focus of your company? Are you more concerned with volume of sales or the overall profit? There are certainly more questions you should ask yourselves, but these will help start the conversation. 2. Build your pricing strategy framework Subsequently, involve relevant internal stakeholders in solution sessions. The first goal of such a session is to share the common understanding of the As-Is situation. In my experience, this is often regarded as “known” information — meaning it’s a step that many clients breeze over or ignore. But in reality, it’s not safe to assume that everyone has the same understanding of your existing pricing tactics. That’s why I encourage clients to use this time to go over the findings of the As-Is analysis and refresh everyone on the existing pricing strategy. The second goal of this solution session is to create the first draft of the previously mentioned framework. This requires good knowledge of your business from sales and segment managers, combined with pricing knowledge on options and viable alternatives. Use all the talent in your organization to develop a strategy that matches your commercial objective and consumer expectations. 3. Set business rules When you know the levers of your framework, you can work on the business rules and create what I call the To-Be situation: how should your pricing work in the future? This involves setting the levers of your framework and finding the right calibration based on all the information you have available. Start iterating and testing After you’ve set your business rules and are internally aligned, the fun really starts. You can take those rules and put them into a tool like Omnia to start testing what works and what doesn’t. What does it bring me? Recent input from a case study If you have a large product assortment, it’s most practical to use pricing software like Omnia to implement your pricing strategy. Recently, I worked with Profile to set up their pricing strategy, which they implemented in Omnia. The pricing software helped them (dynamically) set prices, and save time by doing so. At the same time, it contributes to future iterations of the pricing strategy, based on realized data points and competitive behavior. In this case, it led to double digit margin improvements within a month of going live, with more potential to come based on the framework developed. You can grab your copy of the case study here. Final thoughts As the second step in the Five Steps to Successfully Implement Dynamic Pricing, your pricing strategy is extremely important to your company’s growth. A pricing strategy sets you up for success and gives you more control over unexpected changes in the market. Curious what a pricing strategy can mean for your business? Contact me directly on johan.maessen@commercieelverbeteren.nl, 0641369590 or discuss the possibilities with your Omnia consultant.

How to Define your Commercial Objective

In our blog Five Steps to Successfully Implement Dynamic Pricing, we encouraged you to start by defining your company’s commercial objective. But how do you determine your business goals? And how do those goals relate...

In our blog Five Steps to Successfully Implement Dynamic Pricing, we encouraged you to start by defining your company’s commercial objective. But how do you determine your business goals? And how do those goals relate to your pricing strategy? A good commercial objective needs work. In this post we’ll explore the process of defining this objective and give you practical advice on how to get started. What is the commercial objective? The commercial objective is an explanation for why your company exists and what customers can expect from your organization. In many ways, the objective is a compass that helps you make business decisions that align with your brand, goals, and consumer interests. Creating a commercial objective might seem easy at first, but it’s actually difficult to pin down exactly: Why you exist What makes you unique What your overarching message is Who you’re targeting But once you have the answer to these questions, you can make more strategic decisions that match your organization’s goals. An example of a commercial objective Home Depot has a great example of a commercial objective: “The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices.” This simple sentence clarifies several aspects of the company. They target consumers working on do-it-yourself projects around the home. It’s also clear what they want to achieve: quality service, numerous choices, and competitive prices. What does a commercial objective have to do with pricing strategy? A defined commercial objective is crucial for both your internal and external aspects of business. Internally, it helps to add measurable objectives for your departments. For example, Home Depot’s internal goals could include: Our service need a Net Promoter Score (NPS) of at least 8 (Operations team) We always offer 10,000 products per store (Category management) Our prices will never go above the market average (Pricing team) An important link with pricing already starts here: it’s hard to combine low prices with high service offering. Services cost money, so if a high quality of service is part of your objective, you need to factor these costs into your product prices. Looking back at Home Depot, you can see this in action. Notice that the company specifically keeps its language about prices vague with the words “most competitive.” This is because they need to factor in their high-level services, consumer perception, and more into their prices. If they promised to have the lowest prices, they could never provide the same level of service to their consumers. Since your commercial objective manifests in your prices, it also is crucial for the external aspects of your business. Price points act as signposts for consumers, and customers know what to expect from a service at every price point. If consumers see high prices for your products, they’ll assume that it includes a certain amount of service. High prices with low service offerings will brew customer resentment and be detrimental to your business. Your competition will either out-price you or offer a better value-for-money option for consumers. How to define your commercial objective There are two major steps in the process of determining your commercial objective: market research followed by business introspection. Both reach to the foundations of your business and serve as the base for your commercial decisions. Step 1: Analyze your market How do you want consumers to perceive your company? What is your ideal position and image? Before you can answer these questions, you need to analyze your market and see where you stand among your competition. There are numerous ways to do a market analysis, but for our purposes it’s important to drill down what you want to know about your competition. Consider the metrics you’ll use for bench-marking, and which companies you’ll analyze. At a minimum, evaluate your competition’s: Product prices Service agreements with customers Assortment size Specialization levels Use this information to evaluate different stores in your industry, then categorize them broadly. The graphic below is an example of how you can organize the data in a benchmarking map. This graphic looks at the number of products vs. price and service across a market: A matrix like this clarifies who your direct competition is and where there are gaps in the market. Step 2: Think about your goals After examining the market, it’s time to turn inward and focus on where your company stands in relation to the rest. Ask yourself what kind of company you want to be, and how you want to achieve those goals. Do you want to be a discounter with loads of products? Or a specialist in one product category (such as bags and suitcases)? Or somewhere in between the two? As a specialist you could have a higher price and a better value offering through services (such as fast delivery and product knowledge), but you will also make fewer sales. As a generalist you’ll make more sales, but you can only raise your prices to a certain point. Other good questions include: What are the opportunities in the market? Are their gaps in the above matrix? What are your current strengths and weaknesses? How do consumers perceive you now? How large is the gap between your current position and your ideal position? The answers will help you decide where you want to be in the market. Remember to write your goals according to SMART principles: Specific, Measurable, Achievable, Relevant and Time-bound. These principles help ensure your goals are actionable. Mission Statement vs Vision Statement What is a Mission Statement? A business mission statement describes the purpose for existing. For example, a company may exist to solve problems related to education, healthcare, or society. Defining and promoting such helps educate investors, employees, customers, and the general public. Let’s examine Amazon to survey a mission statement example: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customers the lowest possible prices.” What is a Vision Statement? A business vision statement articulates aspirations and intended impact upon consumers, society, the globe, etc. It entails what a company is, yet is more interested in establishing what it aspires to become. IKEA’s is often among vision statement examples: “Our vision is to create a better everyday life for many people.” Difference Between Goals & Objectives Let’s first define a goal in a business context to distinguish a goal vs objective. A goal is a set outcome a business seeks to achieve. This could be more general, as to have a profitable year. Objectives seek to be more specific. For example, factoring a dollar amount and amount of time to define “profitable.” So, what is an objective? Business objectives are specific steps taken toward achieving company goals combined with a clear method of measurement. An objective is described in more quantifiable terms. Organisational strategic goals are more qualitative, such as aspiring to increase the quality of customer service. But, objectives can be measured, such as to reduce response times of customer inquiry to four hours by the end of the first quarter. Goal statement examples: We will maximise profits We will increase employee revenue We will be an industry leader Strategic objective examples: Increase profits by a minimum of 20% in the next fiscal year Average salary within the company will rise 15% in the next five years We will penetrate an additional 30% market share by the second quarter Move on to your pricing strategy After you’ve done the work of determining how you want the public to view your brand and what level of service you plan to offer, you can build a strategy that reflects your goals. We’ll cover this more in another post, but this is a good time to think about how your business goals translate into monetary needs. Conclusion Since your commercial objective should drive your pricing strategy, not the other way around, this process is an important foundational step towards automated pricing. As the overarching goal of your company, it should answer the question of how you want consumers to perceive your company and what they can expect from you. It’s an important step towards achieving your maximum profitability, and it’s the basis for everything to come. Have you defined your commercial objective and are interested in automated pricing management? Click the button below to request a free demo of Omnia today.

How to Test the Effectiveness of Your Online Pricing

“Testing” is a buzzword in the world of online work. If you have a company that interacts with customers in the digital sphere, it’s likely that you want to consider testing in some form. And that’s a good thing....

“Testing” is a buzzword in the world of online work. If you have a company that interacts with customers in the digital sphere, it’s likely that you want to consider testing in some form. And that’s a good thing. Testing gives you insights into consumer behavior and helps you make smarter decisions on your webshop. Web developers and marketers often use A/B testing to experiment how different web layouts influence consumer behavior. When consumers land on a site, they are randomly redirected to an A or B page, each of which has the same goal in mind but which varies in messaging or design. Developers and marketers then evaluate differences in conversion or bounce rate between the two pages to determine which performed best. Just like web developers, retailers can use testing to learn how prices influence the overall conversion rate for products. You can then use these insights to optimize your display price for margins and conversions — a crucial part of your company’s marketing plan. But testing prices online is not as easy as testing a website design. To start, several factors influence the validity of your data, and testing at the product level is time-consuming and inefficient. As a result, A/B testing prices on the product level is a risky venture, and retailers should approach it with caution. So what’s a better way to test your pricing method? Especially since it's a crucial stage in the Five Steps to Successfully Implement Dynamic Pricing? Read on to learn everything you need to know about price testing and the best way to manage your tests. Testing pricing online is difficult Testing prices on a product level is difficult for several reasons, regardless of which method you use. Some significant barriers to online testing include: 1. Cross-elasticity Product prices don’t live in isolation; instead, they are part of a broader system of price elasticity. Raising prices of Product A can increase the demand for the substitute Product B. It could also decrease the demand of the complementary Product C. There’s no way to be certain that cross-elasticity didn’t impact your test. But if you don’t consider this effect, your results will skew to one side. 2. The marketing effect Pricing and marketing are interconnected in modern e-commerce, but many companies don’t treat them as two halves of a whole. Marketing teams and pricing teams have different KPIs and success indicators, so they ultimately have different goals when it comes to displaying the product online. If you want to test prices, you also need to consider the impact marketing will have on the product. For example, say your pricing team wants to test a price cut on Product A but doesn’t tell the marketing team. Without that knowledge, the marketing team might aggressively push that product on a platform like Google Shopping and generate a high volume of sales. However, in this case, it’s impossible to tell if that increase in sales resulted from the marketing campaign or the lowered price. 3. Statistical validity Testing hinges on one key component: you need a high volume of sales to gather enough information about the test. This is especially true for A/B tests, where the sample size for Price A and Price B need to be significant. There are also several other validity threats to account for in your testing, such as selection bias, the effect of seasonality, and more. Because of these factors, many small- and mid-sized retailers won’t generate enough traffic to make sure their data is valid. 4. Competitor pricing Much like cross-elasticity, your product’s price doesn’t exist in a vacuum on the internet. The uncontrollable factor of your competition’s price for the same (or a similar) product will affect your ability to test a price. If you are priced higher than your competition for a test, consumers will naturally choose the lower price. As a result, you miss out on both valuable sales and important testing data. Additionally, your price and its relation to your competition impacts your overall price perception. This is a massive driver of consumer action and one you should consider carefully. Why you shouldn’t use A/B tests to evaluate your pricing method Just because it is difficult to test your pricing doesn’t mean that you shouldn’t do the tests. Since price is one of the best ways to improve your overall earnings, it’s worth taking the time to experiment and determine the right spot for your products. However, A/B tests of prices offer a unique set of challenges, each of which makes the venture risky. 1. Consumer resentment Consumers see the act of charging different prices to different people as discriminatory, regardless of how the prices were assigned. This has been the case for years: in 2000 Amazon created a PR-nightmare when they tested optimal prices on different customers. Consumers were outraged, and the company ultimately refunded money to 6,900 customers. Today, consumers understand that prices will change throughout the day. But with social media just a few taps away, consumers will find out quickly whether or not their price for a product differs from someone else’s. Any discrepancy they find will embroil their resentment toward a company. This sentiment is the same reason personalized pricing remains unpopular among consumers. Many feel the practice is predatory and discriminatory. 2. Data privacy issues In line with consumer resentment, the general public associates price discrimination with the unfavorable usage of customer data. As an increasingly important topic on the global stage, and it‘s at the forefront of many consumers' minds. Data integrity is crucial to controlling customer resentment. And while you might be able to truthfully say that A/B tests and prices were assigned randomly, customers will grow to mistrust your organization. 3. Decrease in customer loyalty When consumers resent your company for price differences, and when they feel their personal data was somehow used to determine their display price, their loyalty to your organization will waver. And just like consumers communicate about price online, they also communicate about their satisfaction with a company through social media. In the age where customer experience is essential, A/B testing could tip the balance to create unhappy customers. Disgruntled customers are not only detrimental to your long-term business goals, but they can also harm your reputation. 4. Inefficiency Finally, A/B testing is time-consuming and inefficient. For an A/B test to be accurate, you need to monitor the tests on a product level. If you’re doing the tests manually, this will eat up significant amounts of time, energy, and money to the testing process. Additionally, if you run an A/B test on a product, but carry other similar products, your test results will skew. For example, let’s say you want to test a pricing method on televisions. You could carry out an A/B test on Model X television to see which pricing method works best. But if your store sells more than one model of television, consumers could just buy a different TV. They could even buy a tablet to use instead of a TV — the functionality is essentially the same. The better way to test your prices online Considering testing is already tricky, and that A/B testing has significant downsides, what’s a better way to evaluate your pricing method? The answer is to look broader than individual products and expand to categories. Instead of testing a price change across a single product, it’s better to test your price methods on different products categories. As long as these categories are similar in elasticity and customer perception, you can evaluate which pricing method works best for your store. Let’s take an electric kettle and a toaster as an example: both serve the consumer in a single functional way (a kettle serves boiling water, and a toaster serves toast - no more, no less). They are also both kitchen appliances, so they both serve the same customer segment. Even though they are entirely different products, consumers view them in the same regard, so they have similar elasticities and price points. This strategy helps reduce the general risks of online testing and eliminates the risks of A/B testing: Individual customers won’t receive different prices for the same product You can track the effects of marketing more easily You can better control for cross-elasticity Getting started with this testing method is pretty easy with a user-friendly tool: 1. Select the products to test Select two similar product groups, such as electric kettles and toasters. What’s important is that the products have similar functionalities, price perceptions, and elasticities. You can use historical pricing and conversion data to guess which products have similar elasticities, but an easier way is to use a tool to calculate the elasticity for you. 2. Implement the pricing strategy across these products There are several types of pricing strategies you can test. Once you choose the ones you’d like to test for effectiveness, you can apply the new prices to those products and market them as usual. It’s important to remember though that you can’t control your competition’s prices. As a result, when you change your price online, you’ll also change your relationship to your competitors. One way to control this aspect is to use automation that locks in your price position on the market. 3. Test, monitor and analyze After you’ve implemented the new pricing strategies, you can run your products normally and compare conversion data. It will take some time to see results and the data depends on the size of your assortment, but you should be able to evaluate the test after 2-3 months. A world without price testing Testing your pricing strategy across similar products gives you insights on which pricing method you should use. However, it’s also a time-consuming process and requires a significant investment to track manually. Software like Omnia can provide a solution that eliminates your need to test pricing strategy at the product level. Our Dynamic Pricing algorithm optimizes prices for every product and makes testing less relevant. Read more: The Ultimate Guide to Dynamic Pricing The algorithm looks at each product’s elasticity, historical conversion data, and competitor prices then combines that data with internal factors such as stock levels and your commercial strategy to determine the optimal price. It then automatically adjusts the product price online to reduce the manual labor of making price changes. Additionally, fully utilizing the Omnia algorithm enables your prices to fluctuate predictively based on market insights. Final thoughts When it comes to testing a pricing strategy, A/B tests won’t make the cut. To make sure your data is valid and reduce the risk to your company, you need a more complicated test. It's possible to create one of these analyses manually, but it costs a significant amount of time, energy, and money to execute correctly. Tools like Omnia make testing easier. By taking over the manual labor and helping you test more effectively, Omnia frees up time for you to focus on strategy instead of monitoring. Interested in learning more? Click the button below to sign up for a free demo of the software today.

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.

Improve Your Buying, Supply Chain, and Marketing with Pricing Insights

As a retailer, the only way to reach your full potential is to apply data-driven pricing. Otherwise you’ll be paying too much for your products, holding too much stock and wasting money on marketing. Using three...

As a retailer, the only way to reach your full potential is to apply data-driven pricing. Otherwise you’ll be paying too much for your products, holding too much stock and wasting money on marketing. Using three examples we can illustrate how pricing software can give different departments the insights they need to take the right decisions.Many companies (particularly the bigger ones) have a silo mentality when it comes to pricing, procurement, supply chain and marketing. Although pricing is a crucial factor in optimising profit, departments rarely share pricing data and insights. 1. Buying: conduct data-driven negotiation with suppliers In many retail organisations the buyers negotiate with suppliers once or twice a year. Traditionally buyers have tried to obtain a small percentage discount on purchase prices for full ranges. Using pricing software creates room for improvement in two areas. In the absence of pricing insights, a buyer will attempt to obtain the highest possible discount percentage, but will be unable to explain why such a discount should be given. Pricing data can be used as a trump card: the buyer can base the proposed discount percentage or amount per product on the lowest price in the market. Rather than sitting down with suppliers once or twice a year, the procurement department can align the frequency of negotiations more closely with daily or weekly changes in market prices. Pricing software can provide the buyer with a daily or weekly report on all products whose minimum price in the market is below the zero-margin price. This report can then be used as the basis for data-driven negotiations with suppliers. 2. Supply chain: estimate sales more accurately In the absence of data, most retailers and their buyers don’t take the price position of a product into account when deciding how much of it they want to stock. With pricing software reports that provide insights into the price position of each product, your buyers will be able to make more accurate estimates of the number of products that will be sold. For instance, such a report may show that you’ll need to negotiate on a better purchase price before buying new stock. 3. Marketing: only advertise for competitive products It may seem strange, but at most major retailers there’s no communication between the marketing department and the pricing department. As a result consumers may see adverts in which your products are more expensive than your competitors’ products. This results in lower conversion rates and negative price perception. Pricing software allows you to take pricing data into account in offers on Google Shopping. For instance, you can exclude products for campaigns where the price is more than 20 percent higher than a competitor’s average price. Another smart option is the possibility to reduce the offer when the price position in Google Shopping is higher than number 5. Conclusion Unless you’ve got a monopoly, you need pricing insights to make effective procurement, supply chain and marketing decisions. In practice, however, retailers’ departments rarely (if ever) exchange sufficient pricing data. Pricing software fills in this gap. It means that departments are no longer dependent on each other for information – they always have all the relevant pricing data on hand. Omnia Retail helps retailers and brands automate and optimize their pricing. Pricewatch gives you a 360° view of the entire pricing landscape. Dynamic Pricing automates your pricing for individual products. Want to find out more? Ask for a demo and try Omnia for two weeks free of charge.

Five Steps to Successfully Implement Dynamic Pricing

Getting started with dynamic pricing can feel overwhelming. There are loads of options and functionalities, which can lead to choice overload. A successful dynamic pricing setup relies on 5 core steps: Define your...

Getting started with dynamic pricing can feel overwhelming. There are loads of options and functionalities, which can lead to choice overload. A successful dynamic pricing setup relies on 5 core steps: Define your commercial objective Build a pricing strategy Choose your pricing method Establish pricing rules Implement, test, and evaluate the strategy In this post we'll cover each step briefly, but for more information be sure to check out the corresponding blog post for each element. Step 1: Define commercial objective To start, define what you want to achieve with your company or category. This is called your commercial objective, and it’s an explanation for why your company exists and what customers can expect from your organization. Some shops have a clear market penetration strategy to capture market share as their company objective. Other shops offer value-added services such as free quick delivery, great customer support, or long payment periods. Regardless of what your offer is, you should understand it thoroughly before starting dynamic pricing. The commercial objective is, in many ways, a compass for your business, and will help you form a dynamic pricing strategy that helps you reach your specific goals. Take time to develop your commercial objective, and make sure all stakeholders have the same understanding of your goals. Read more: How to Define Your Commercial Objective Step 2: Build a dynamic pricing strategy The second step towards dynamic pricing is to determine your pricing strategy. A pricing strategy uses your commercial objective to make smarter pricing choices. In other words, it makes your commercial objective possible through the power of your product pricing. For example, if your commercial objective is to increase visibility but also capture profits, you might want to follow the “high-runner” strategy commonly used by Amazon. In this strategy, you draw traffic to your store through extremely competitive prices on a small selection of your most popular products while capturing margins on your less-competitive products. It’s counterintuitive, but once visitors are in your store for one specific product, they’re less likely to navigate away for a smaller, less popular product. At Omnia, we advise users to have a clear pricing strategy before fully implementing Dynamic Pricing for two reasons: Easier to implement. When you know what you want, and how you want to achieve it, it’s easier to get started with dynamic pricing. Easier to evaluate. If you know your goal, you can keep track of how your dynamic pricing strategies move you towards that goal. Think about what you want to achieve, and how you want the public to view your company, and how it’s linked to your prices. Read more: How to Build a Pricing Strategy by Omnia Partner Johan Maessen Step 3: Choose pricing method(s) As a third step, you should choose how you will achieve the formulated pricing strategy. There are a multitude of methods to choose from, but three of the most basic are: Cost-plus pricing, in which you take the cost of producing a product then add the desired margin on top to find the sale price Competitor-based pricing, in which you follow your competition’s prices Value-based pricing, which considers the consumer perception of the product in the pricing process These pricing methods aren’t mutually exclusive, and it’s likely you’ll use a combination of these methods to create your own unique strategy. Choose what is necessary to implement the chosen pricing strategy. For instance, with a price penetration strategy you could undercut certain competitors (competitor-based), while staying above a certain margin level (cost-plus). Read more: 3 Dynamic Pricing Methods and How to Implement them in Omnia Step 4: Establish pricing rules Following on from selecting the pricing methods, we now create implementation ready pricing rules. If you choose to price based on elasticity, you let the algorithms make most of the decisions and there is less to set up in the pricing rules. In general, there are two steps involved: 1: Choose the products: Choosing the products can be anything from a category, stock, or whatever data you have. For instance: “for OLED televisions with a stock >10, apply pricing rule X”. 2: Formulate the pricing rule Now that we have the products, we can make an applicable pricing rule, which would fill in “Pricing rule X” in 4.1, for example: “follow average of competitor X & Y” or “price based on price elasticity”. Step 5: Implement, test, and monitor dynamic pricing On completing steps 1 to 4 for all products under your management, you are ready to implement them into your pricing system. For validation purposes, be sure to ask colleagues to check the implemented pricing rules and make sure they match the pricing strategy and methods. Before going live, you should go through a robust testing phase to verify you have implemented the correct pricing settings. It is important to check whether your pricing strategy is applied correctly, so you can be sure the system is actually doing what you intended to do. A good automated pricing system should never be a black box, all decisions should be transparent in order to trust the system. After going live, it is important to monitor the pricing strategy and evaluate if it is helping you reach your objective. If your goal is to capture more market share, but are not able to increase your volume of units sold or your overall sales, it might be time to re-evaluate the objective. Read more: How to Test the Effectiveness of Your Online Pricing Final remarks To conclude, a clear commercial strategy and objective is essential input for a good Dynamic Pricing implementation. It helps setting goals and keeping track of reaching those goals. We recommend a five-step approach to go from your commercial objective to a successful dynamic pricing implementation. However, it’s worth noting that you should create different dynamic pricing strategies for different categories because the nature of consumer shopping changes across products. This is where a software like Omnia is useful: it helps you manage every product in every category and intelligently adjusts prices when the market changes. Want to try out dynamic pricing for free? Click the button below to sign up for a free two-week trial of Omnia.

Dynamic Pricing: Relevant for Every Retailer?

Prices from large retailers are rarely static anymore. More often, retailers make use of dynamic pricing: they use intelligent software to adjust prices multiple times a day. Prices may be automatically adjusted when,...

Prices from large retailers are rarely static anymore. More often, retailers make use of dynamic pricing: they use intelligent software to adjust prices multiple times a day. Prices may be automatically adjusted when, for example, stock levels at competitors are decreasing, when there is shown more interest in a product or when the weather forecast changes. Large retailers such as Amazon change their prices as often as every ten minutes. The success of industry leaders like Amazon shows that Dynamic Pricing is critical when organizations want to succeed in the e-commerce and omnichannel retail industry. But how does Dynamic Pricing work? And is Dynamic Pricing equally relevant for all retailers, big and small? Using a dynamic pricing strategy is not a new thing. It became popular in mainstream business years ago when the travel industry adopted the practice. Today, dynamic pricing is also common practice in the retail industry. Some of the largest retailers in the world, including Amazon and Alibaba, all employ the strategy in their e-commerce online stores. Dynamic pricing is also being used more and more in physical stores. Mediamarkt, for example, was one of the first retailers in the Netherlands to introduce digital shelf labels. How does it work? In short, dynamic pricing is a pricing strategy which applies variable prices instead of fixed prices, with the aim to increase a companies profit and margins. New, optimal prices are calculated and recalculated periodically, up to multiple times per hour. Dynamic pricing uses multiple sources of data, including internal and external data variables to find the optimal price. Internal variables, such as stock levels and sales data are enriched with external variables such as competitor pricing and Google Analytics data by dynamic pricing software. As more data is analyzed, the right price at the right time can be calculated for each product. Before starting with dynamic pricing, it’s important to have set a clear pricing strategy. An intelligent dynamic pricing software will combine your chosen pricing strategy with all the described data sources, to find optimal prices that fit your business pricing strategy; whether that’s market penetration, maximization of revenue or something else. In general, dynamic pricing will yield a growth in contribution of 10-20%, compared to static pricing. However, there are notable differences in performance between the different types of dynamic pricing. A basic type of dynamic pricing is a rule-based pricing system. When dynamic pricing is used this way, prices are adjusted according to certain rules, such as: follow prices of competitor X. Another, more advanced method of dynamic pricing, is a value-based pricing system. In a value-based system, price elasticity of products is an important factor in calculating the optimal price. The latter, more advanced type of dynamic pricing often yields better results than the basic, rule-based dynamic pricing system. One basic way a rule-based dynamic pricing can add value, is to implement pricing rules based on stock levels. Such rules can help protect a retailers margins if a competitor should decrease prices, potentially caused by a surplus of stock. If stock levels are lower than the beforehand determined limit for stock weeks (stock / sales per week), it’s not necessary to follow the lowered price and thus lose margins. Conversely, the same is true: by implementing rules to decrease price as soon as stock levels exceed a set limit, a retailer can make sure they’re not losing sales. Who benefits with dynamic pricing? Whether Dynamic Pricing is relevant for a retailer is partly dependent on it’s competitors pricing strategy. Do competitors deploy a dynamic pricing strategy, but the retailer keeps its own prices static? It’s very likely the retailer is losing sales. An increasing amount of retailers, both large players and smaller niche businesses in different industries, are making use of dynamic pricing. In order to quantify the potential added value of dynamic pricing, a retailer can start with systematically comparing its own pricing to the pricing of its biggest competitors, in order to assess if and how many times a day competitors are changing their prices. A retailer can also track to what extent competitors react to its own price changes. This may lead to the conclusion that one or more competitors are using dynamic pricing. If that’s the case, the retailer can benefit from taking action in dynamic pricing too. An often-heard concern is that when all companies in the same industry would use the same dynamic pricing software, wouldn’t that result in a race to the bottom? Fortunately, this is not the case. Since both the commercial strategy as well as the input variables (e.g. purchase price, inventory) vary per company, there is no reason to end up in a race to the bottom. A retailer’s commercial strategy influences pricing, because the consumer is generally willing to pay a premium price for extra services such as fast delivery, customer service, or the possibility to pay by invoice. Often, the most optimal price is not the same as being priced the lowest in the market. To answer the question whether it’s interesting for the smaller retailer to start with dynamic pricing? It depends on their competitors pricing strategy, the industry and their commercial strategy. In most cases, we know from experience that retailers can achieve quick wins by gaining insights in competitor pricing, and by implementing a basic rule-based dynamic pricing system with rules based on stock levels. Do you want to learn more about dynamic pricing? Subscribe to our newsletter to receive our new blogs in your inbox, or request more information here. You can also give us a call at +31 (0)85 047 92 40.

Will the EU Limit Google Shopping? Use this 5-Level Campaign Structure to Maximize Your Traffic Share

Google Shopping has been thriving over the few last years and on average retailers are already spending over 50% of their paid search budget on shopping. The EU's recent verdict will cause some changes to Google...

Google Shopping has been thriving over the few last years and on average retailers are already spending over 50% of their paid search budget on shopping. The EU's recent verdict will cause some changes to Google Shopping in the EU. How this will exactly effect the consumer and the retailers is still unclear. However, given Google Shopping's current market share, they are most likely to remain, by far, the most dominant party. The pie may become slightly smaller in the short term, forcing retailers to fight harder for their traffic share. Having a solid campaign structure to deal with the challenges of Google Shopping is crucial in maintaining and growing one's traffic share. Lets dive a little bit deeper into the challenges of Google Shopping and the campaign structure available to deal with these challenges. Challenges of Google Shopping One of the main benefits of Google Shopping is that it is easy to set up and that products are automatically shown on relevant keywords. Therefore, it is very easy to generate relevant traffic with Google Shopping. However, this also has a major disadvantage. Namely, it is not the retailer who determines which keywords a product will be displayed for – like in traditional AdWords text campaigns – but Google itself. Google decides this mainly on the product content delivered to the Google Merchant center by the retailer, but also on general knowledge about the product. Not being in control of which products are displayed on which keywords creates two challenges: Challenge 1: How do you increase bids for more specific keywords? Some search queries are more specific than others. For more specific queries, it is clearer what customers are looking for and chances are higher that you show will the right products. This will result in higher click though rates (CTRs), that in turn will lead to better quality scores in Google Shopping and eventually a better ROAS. In addition, more specific queries are used further down the customer journey, where chances on conversions are higher. Both are good reasons to bid higher on more specific keywords. Challenge 2: How do you control which products are displayed for broad keywords? Google just decides which product to show based on a combination of the relevancy and the CPC bids. How can you, as a retailer, make sure that your best-selling products are shown for broad keywords? And preferably those products that are also profitable to sell. Both challenges can be managed by combining the campaign priorities and filters with negative keywords lists. The 3-level Google Shopping structure It’s quite common to use a 3-level Google Shopping structure to cope with the first challenge of increasing bids for specific keywords. Step 1) Split campaigns To solve the first challenge – increasing bids for more specific keywords – you need to split the traffic into 3 campaigns, thereby making keywords more accurate: Product terms - all terms that contain a product name: e.g. Samsung UE40KU6400. Brand terms - all terms that contain a brand name: e.g. Samsung 40-inch television or Samsung Led TV. Other terms - all terms that do not contain a brand or product name: e.g 40-inch television or LED TV. In the product terms campaign, we now exactly which product to show: a Samsung UE40KU6400. In the Brand terms campaign, we know at least what brand to show: a Samsung. In the other terms campaign, it is now always clear which product to show. Step 2) Add Priorities and Negative lists To split the campaign in these three traffic groups, you need to use the priority settings in the Google Shopping campaigns. There are three choices: high, medium and low priority. These priorities decide determine which campaign Google first tries to serve a keyword. If you got three campaigns with the same product (no filters), priorities by itself will not do much. Google will serve all keywords to the campaign with the highest priority: in this case, the Other terms campaign. But once you start combining the priorities with negative keywords/keyword lists it becomes interesting. Two types of negative keywords lists need to be created: Brand terms - containing all brand names: e.g. Samsung or LG. Product terms - containing all product related terms: e.g. UE40KU6400 or Sonos play 1 Adding these negative keyword lists to the Other terms and Brand terms campaigns will suddenly provide an interesting dynamic between the three campaigns. Let’s take 3 keywords as an example: “LED television”, “Samsung LED television” and “Samsung UE40KU6400”. Google Shopping first tries to serve all 3 keywords to the campaign with the highest priority: the “Other terms” campaign. The “LED television” keyword can be served, but the other two contain the brand term Samsung, which are on the brand terms negative lists. These keywords cannot be served to that campaign and will continue to the campaign with a medium priority: the “Brand terms” campaign. The “Samsung LED television” keyword can be served on that campaign, but the “Samsung UE40KU6400” contains the product term UE40KU6400, which is on the product terms negative list. This keyword will continue to the “Product terms” campaign, to which it can be served. Step 3) Optimize CPC bids With this structure, the traffic is automatically split into 3 campaigns based on the accuracy of the keywords. The bids of the campaigns can be optimized separately, allowing you to bid higher on more specific, more valuable, keywords. Splitting traffic on keywords types is necessary to increase the performance of the campaign, but will also make it more difficult to manually manage it. Google Shopping should already be managed at the product level and splitting the keywords types complicates this even further. It is, therefore, crucial to think more strategic and to translate these strategies into rules and then automate them. Disadvantages of the 3-level structure The 3-level structure solved the first challenge, but does not solve the second challenge: how to control which products are displayed for broad keywords. The Other and Brand terms campaigns contain both rather specific search terms (“40-inch LED television”) and broad terms (“LED television”). Broad terms generate lots of traffic, but are often not profitable as it is hard to control which products to show. There are 3 possible ways to make these products profitable within this 3-level structure, but all three solutions have their downsides: Solution 1: Lower CPC bids, so the broad terms are profitable. Missing lots of traffic: low impression share on broad terms. Bids too low for other more valuable, specific terms. Solution 2: Add the broad terms to negative lists. Missing all traffic on broad terms Solution 3: Filter only popular products into Brand and Other terms campaign. Much lower number of impressions, as products in campaigns do not match all keywords. These problems can only be resolved by extending the 3-level structure to a 5-level structure. I would, therefore, like to introduce a 5-level structure to be fully in control of the keywords and get the most out of Google Shopping. The 5-level Google Shopping structure Step 4) Splitting the campaigns even further In the 5-level structure, the broad keywords are moved into two separate campaigns in which they can be managed separately, allowing you to have control over these keywords and providing the opportunity to resolve the problems that are present in the 3-level structure. These two campaigns will focus on the following broad keywords: Brand & Category Terms - terms like Samsung television or Sonos sound system. Category Terms - terms like television and sound system. Step 5) Adding Priorities and Negative keyword lists: To make sure that the broad keywords are served on these campaigns, an extra negative list must be created and added to the campaigns with the 3-level structure: Broad terms - containing all broad terms: e.g. [Samsung television] and [Sound system] etc. (note that this must be an exact negative keyword: [keyword]) Broad terms are now served to the broad “Brand and Category Terms” and “Category Terms” campaigns. Adding the right priorities and the already existing “brand terms” and “product terms” negative lists, will, in a similar way as for the 3-level structure, make sure that the “Samsung television” keyword is served to the “Brand & Category Terms” campaign and the “Television” keyword is served to the “Category Term” campaign. Note that you will also need to add the product terms list as a negative list to the broad campaigns, as the product terms campaign has a lower priority. The broad terms are now divided properly over the two extra campaigns, but we have not yet solved the second challenge: How to control which products are displayed for broad keywords. Step 6) Adding smart filters: The second challenge can be solved by adding smart filters to the campaigns, so that only products present in the “broad terms campaigns” are those that you want displayed for the broad terms In Omnia, we have created the Top-X functionality to support this. The Top-X functionality consists of 2 parts: Grouping the products Selecting Top-X products within that group, based on a customizable popularity formula: The product groups must be chosen in such a way that it best suits the broad keywords corresponding to the additional campaigns: Brand & Category Terms campaign -> Group by Category & Brand combination Category Terms campaign -> Group by Category Now that you have grouped the products, you need to select the top products for each of those groups based on a popularity score. In Omnia, you can use all fields and historical data to create a popularity score that best suits your targets. A few examples of commonly used popularity scores are: Absolute max profit in the last 4 weeks Formula = [# Unit(s) sold Online last 4 weeks] * [margin] Most PDP page views in last 4 weeks Formula = [# of UPV PDP last 4 weeks] Weighted online vs Store units sold Formula = [# Unit(s) sold Online last 4 weeks]^2 * [# Unit(s) sold Store last 4 weeks] Only price competitive products, sorted on turnover in the last 4 weeks Formula = If ([Price Ratio] < 1, [# Unit(s) sold Online last 4 weeks] * [Selling Price], 0) Where [Price Ratio] = [Selling Price Retailer] / [Average price competitor(s)] Based on these popularity scores you can mark the Top X (e.g Top 2 or Top 5) products for each group by assigning them a label. In the AdWords Google Shopping campaign settings, you can filter on these labels and select only the most popular products per Category in the Category Terms campaign and the most popular products per Brand & Category combination in the Brand & Category Terms campaign. The product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date. You are now in control of which products are shown for broad keywords! Step 7) Optimizing CPC bids Being in control of the broad keywords gives you the opportunity to manage the CPC bids of these products. Because you are only showing popular products, chances are higher that you are showing a relevant product to the customer. This will increase your CTR and consequently the ROAS of the campaign. Higher ROAS means that you can increase the CPC bids and gain larger impression shares on these high volume broad keywords. Also, the broad keywords are now separated from the Brand Terms and Other Terms campaigns, solving the problems of the 3-level structure. This will allow you to increase the bids on terms like “40-inch Samsung television” or “40-inch grey LED television”. Gaining maximum impression share on these products. Benefits of the 5-level structure Let's recap the main benefits of the 5-level structure: Bid higher on more specific, more valuable, keywords. Optimizing traffic on those terms. Full control over which products are shown for broad keywords to push the products that serve your business targets. Popular products are shown for broad keywords. Increasing the CTR and ROAS and allowing you to increase CPC bids to gain impression share and consequently increase your revenue. Broad keywords are now separated from the Brand terms and Other terms campaigns, allowing you to increase bids on these campaigns and maximize this impression share. In addition, this can all be automated with Omnia: Automatic ad-group creation based upon values in the feed: e.g. brand and category combination CPC bids updated hourly on product level for each campaign corresponding to the performance of each of the 5-level campaigns. Smart filters by using the Top-X functionalities: product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date and saves a lot of manual work. Initial negative keyword lists can be created by using the content of the feeds. Tips Try using negative lists, instead of negative keywords within a campaign. These lists can and must be used by multiple campaigns, so choosing proper lists will save lots of time and will let you keep the overview. Use “Phrase” negatives for product and brand terms, so that you don’t have to add every search term that contains “Samsung” as a negative. Use [exact] match for broad keywords. Broad Modified Match is not available as a negative keyword. Choose your Top-list groups so that the top products cover the whole spectrum of broad keywords. When you select only the top performers of the whole assortment, chances are great that products only match a portion of the search volume: e.g. when you only select televisions in the Top-list, products will not show for a broad keyword like “wall-mount”. So you will at least want your best performing wall-mount to be in the Top-list. Use the shared budget option for the AdWords campaigns. For this structure it is necessary to make sure the keywords are always shown in the right campaign. When the budgets are separate, you risk the “Other Terms” campaign will run out of budget. This will cause the other terms to be served on the brand or product terms campaigns, where CPC bids are much higher. For more information about the 5-level Google Shopping structure or guidance on how to implement this structure, please contact us via info@omniaretail.com or call +31 (0) 35 699 02 22. Or log directly into the console to get started: login.omniaretail.com.

3 Dynamic Pricing Methods and How to Implement Them in Omnia

The rise of e-commerce has led to a greater assortment of shops. In addition, the internet has greatly increased price transparency in the market, which in turn has increased the frequency of price changes. The...

The rise of e-commerce has led to a greater assortment of shops. In addition, the internet has greatly increased price transparency in the market, which in turn has increased the frequency of price changes. The combination of these two factors made dynamic pricing a necessity in today’s retail market. And as part of the Five Steps to Successfully Implement Dynamic Pricing, shops need to choose a pricing method that makes sense for their organization. Dynamic pricing is often equated with a purely competitor-based pricing method. For example, “Always adjust the price to the lowest of the three competitors X, Y and Z”. Competitor-based pricing, however, isn’t the only dynamic pricing method, nor is it the most recommended pricing method. Three dynamic pricing methods are outlined in this blog post. Pricing method 1: Cost-plus The most straight-forward pricing method is cost-plus pricing. The starting point is the cost per product, where the desired margin (percentage or € amount) is added to calculate a selling price. If the cost per product changes daily or even hourly (due to changing suppliers or dropped shipping for example), it is necessary to implement this method dynamically. Main advantage: Easy to understand & implement Main disadvantage: Takes only internal factors into account How can I apply the cost-plus pricing method in Omnia? This method is easily implemented in Omnia. Create a new variable with the formula editor. Start with the purchase price and add all other product costs from your feed plus a desired margin, possibly at the product-level. Include this variable in your strategy settings as a lower & upper limit and you are set. Read more: The Ultimate Guide to Dynamic Pricing Pricing method 2: Competitor-based With competitor-based pricing, products are priced relative to (direct) competition. For instance, a company might want to undercut a certain competitor. Or, a company might want to maintain a certain price position in the market. It is a common strategy for shops to match prices with their most important competitors for certain products. Stores specialized in electronic products have the highest frequency of price changes and other product categories are likely to follow with an increasing frequency. Therefore, it is essential to implement this method dynamically to not lose any market share. Main advantage: Takes external factors (competitors) into account Main disadvantage: Assumes your competitors have the right price How can I apply competitor-based pricing method in Omnia? Two steps are involved to implement this method in Omnia: 1. Create an action, which is the concrete formalization of your strategy. Some examples: Never price higher than competitor X Never price lower than position 2 in the market Set price equal to most occurring price Etc. 2. Apply this action in the Strategy settings within Omnia to a part of your assortment based on a variable, such as: brand, category, color or even stock. An example: raise price above the average of the market when stock is below 10. Pricing method 3: Value-based By far, the most recommended pricing method by experts is value-based. Value-based pricing is a dynamic pricing method based on the economic principles of demand and shows the best results in additional sales and total margin. As the true value of products is difficult to uncover, consumers’ willingness-to-pay functions as a proxy for the perceived value. Omnia calculates the price elasticity of products to uncover consumers’ willingness-to-pay for the combination of product and seller. A product with high price elasticity is very sensitive to price changes as consumers value the product less than a product with low elasticity (keeping all other things equal). Over time, Omnia learns how much consumers are willing to pay for the product at each price point relative to the competition. You can use this data to further optimize your pricing strategy and create rules for maximum profit with the given price elasticity. Main advantage: Combines external and internal data Main disadvantage: Most complicated pricing method How can I apply this method in Omnia? After a few months of gathering sales data and comparing prices against those of the competitors, Omnia has sufficient data to determine the price elasticity of products and categories. You can then use those insights to build pricing rules that capitalize on the price elasticities of different products or categories. Ending remarks While value-based pricing in theory is the best pricing method, Omnia recognizes the importance of having complete flexibility in automating pricing strategies. Omnia gives the power to (online) retailers to use all three popular pricing methods at the product level and even combine them according to your strategy. For example, the strategy in Omnia for a specific product could be: Begin with value-based pricing through price elasticity Never price higher than competitor X Never price lower than 10% margin To conclude, there are five main benefits when you use Omnia’s integrated pricing methods: Omnia brings internal product & sales data together with external market & consumer data Omnia’s proprietary algorithm automatically determines the price elasticity of products and categories Easily combine all three pricing methods at the product level Automation of the pricing process, multiple times per day No "black box": Omnia is completely transparent about the decisions of the price setting process. For more information about our dynamic pricing & marketing software or guidance on how to implement these pricing methods, please contact us via info@omniaretail.com or call +31 (0) 35 699 02 22. 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.

Get the Most Out of Facebook Dynamic Ads with Omnia Dynamic Marketing

The world’s largest social network keeps expanding. With over a billion monthly active users, Facebook provides great marketing potential for any business. Because the platform is well aware of this fact, it is...

The world’s largest social network keeps expanding. With over a billion monthly active users, Facebook provides great marketing potential for any business. Because the platform is well aware of this fact, it is constantly adding new opportunities for businesses trying to expand their reach. It now seamlessly blends advertisements with generic content, adds social proof and stimulates sharing and liking. Facebook also allows retailers to use their immense data sets to create audiences based on interests, marital status, income, and many other factors. Most of all, it has the best performing mobile ad format. In Q4 of 2016, the company reported that 80% of its total ad revenue came from mobile advertising. Consistently, the platform has been able to offer marketers high CTR (Click Through Rate) and returns. This is because, "traditional" mobile advertising – in the form of banners – is generally seen as obtrusive, and most clicks are actually by accident rather than intentional. In contrast, the ads on Facebook are seemingly integrated in the user experience. Often it does not even occur to us that we are looking at advertisement, it's just another post in our newsfeed that we are seeing. If it is interesting, we engage, if not, we just scroll down. That is the power of Facebook mobile advertising. For retailers, the dynamic product advertisement is especially relevant. They become even more powerful when combined with a remarketing audience, which will be the focus of this article. Besides the possibility to export your products to Facebook with Omnia, you also get the most out of the campaigns, by using the unique features Omnia has to offer. Automated remarketing using Facebook Dynamic Advertising Remarketing means trying to engage those people who have visited your webshop, looked at products -maybe even added some products to the cart- but did not finalize the purchase. Out of all potential audiences to show your ads to, this group will have the highest probability to convert into buyers. This translates into a high ROAS (Return On Advertisement Spend), making it one of the first places to spend your marketing budget. By using Facebook remarketing, you can specifically show the products that the person has shown interest in. Consequently, the CTR of the advertisement will increase significantly. The end result is a dynamically tailored product ad -such as the one shown below-, whose content and target audience is chosen with maximum ROAS in mind. It is also possible to intelligently expand the audience using the "look-a-like" feature in Facebook. With this feature, Facebook looks at all characteristics of the people in the remarketing audience, and finds other similar people on Facebook. Use this feature to expand the reach of your ads, while maintaining the benefits of a high ROAS target group. For more information on Dynamic Advertising on Facebook, see the video below. Five steps to implementation 1. Make a company Facebook page and sign-up for Facebook Business Manager In order to start advertising on Facebook, you need to have (1) a personal Facebook account, (2) a company Facebook page and (3) access to Facebook Business Manager. The last step is done by signing up at business.facebook.com. In the Business Manager, you can manage the company page, create ads, and set up the Facebook pixel. This brings us to the next step. 2. Give Facebook customer data To set up a remarketing campaign, you have to supply Facebook with data about your webshop’s visitors, so target audiences can be created automatically. Therefore, it is necessary to implement the Facebook pixel. The best way to do this is by using a data layer that can be used to make Facebook tags in Google Tag Manager, which in combination makes up the Facebook pixel. The pixel needs to contain your unique Pixel ID, which can be found in the Facebook Business Manager. 3. Create a Facebook channel in Omnia Next, you must provide Facebook with a product feed. This is done by creating a Facebook channel in Omnia. Under Marketing > Channels, simply create a new channel with the Facebook template. All mapping will be done automatically for you – just add the tags and you are done! Of course, if you wish to the edit the mapping, you have the ability to do so. 4. Connect Omnia in Facebook Business Manager Now that a live feed has been created in Omnia, it can be connected toFacebook. This is done in Facebook Business Manager, in the Product Catalogs section. 5. Create the advertisement The last step is actually creating the advertisement in Facebook Business Manager. Since the products are inserted dynamically, you only have to create one advertisement! To do this, choose the product catalog sales ad under conversion. The rest should be fairly straight forward. Congratulations! You have now created your first Facebook Dynamic Ad remarketing campaign. Tips from the Omnia marketing and pricing consultancy team At Omnia Retail, we are constantly working on improving the capabilities of our software. As a result, our extensive features allow for the creation of advanced strategies in order to get the most out of the Facebook advertisements. Our team of experts here at Omnia have come up with three options for omnichannel profit maximization, listed below. Tip 1: Only advertise competitively priced products In the Facebook channel in Omnia, you can add filters which exclude certain products based on the supplied rules. The rules can be made using data from your feed, but also from pricing data. This is very useful, since the conversion rate on products with a competitive price in market will be higher than the conversion rate of products that are out-priced. Indeed, the webshop visitor may have actually decided not to buy the product he/she looked at, because it did not have a good price in the first place. Money spend on showing advertisements highlighting the same product is money wasted. To prevent this from happening, create a filter based on a pricing variable such as ‘price ratio’, ie. Your price divided by the market average. An example of such a rule could be: If Price ratio > 1.1, then exclude product. This means: if the product has a price higher than 10% above the market average, I do not want to show it in my Facebook campaign. Tip 2: Strategically include only top products based on bottom line margin Let’s say you have decided to create a product catalog campaign not based on remarketing, but on a wider audience. Which products would you show in this case? Certainly there are better options than randomly showing products. Well, there is. With Omnia’s Top-X functionality you can automatically only show the top products according to a certain parameter. We recommended a Top-X such as the following: Top 3 products per category based on bottom line margin (or volume * product margin). Tip 3: Optimize advertisements for omnichannel profit If you have a webshop in addition to physical stores, you can strategically show products to increase both online and offline sales. First, create a Facebook channel in Omnia for each physical store, using a filter to only include products that are in stock in that specific store. Second, connect the feeds in Facebook Business Manager. Third, create an advertisement for each store, using the remarketing audience (generated by the pixel) but only targeting people near that store. You also have the option to add a custom first slide, which shows either the store’s location on a map or a photo of the storefront. The end result is a highly tailored local remarketing advertisement, showing the products that people near that store location have seen on the webshop, and are actually in stock in there! This is a very effective type of adverstising for products that people predominantly search online but buy offline (such as a home cinema set of 1000+ euro). Are you excited to get started with Facebook advertising through Omnia? Do you want more insights? Be sure to contact us at info@omniaretail.com or call +31 (0)35 699 02 22.

Important Update: Google Tightens their Requirements for EAN / GTIN Codes

We would like to inform you of an important update by Google concerning the Global Trade Item Number (GTIN) requirements, and show you how you can utilize Omnia to give your products the appropriate GTIN format. In 2015...

We would like to inform you of an important update by Google concerning the Global Trade Item Number (GTIN) requirements, and show you how you can utilize Omnia to give your products the appropriate GTIN format. In 2015 Google made GTINs obligatory for the products of 50 specified brands. From now until May 16th 2016, it is mandatory for advertisers to supply the correct GTINs and the corresponding brand for all new products for which a GTIN code has been assigned by the manufacturer. What is a GTIN? A GTIN makes a product identifiable anywhere in the world. Plainly speaking, the GTIN is the barcode of a commercial product. In Europe it is popularly known as the European Article Number (EAN) or the International Standard Book Number (ISBN) for books. If there is a GTIN available it will be shown below to the barcode on the package. The length of the GTIN depends on the product type and where the product is sold. For Europe, the EAN (in Europe/GTIN-13) is a 13-digit number underneath the barcode. Why this change? Providing GTINs is essential for Google to recognize your product and supply their users with the most accurate and complete information. If Google knows exactly what you are selling, then they can help you improve the performance of your advertisements by adding valuable information and showing the ads in a relevant way. In addition, it allows Google to match different retailers' offers for the same product. This result is better visibility, improved targeting and more ads being setups. Therefore, you should add GTINs for all of your products in the feed. If there is no GTIN for a product in the feed, it is denied and will not show up in Google Shopping results. There is no point in creating a fake GTIN because has connections with all GTIN-databases and will immediately recognize if there are fake GTINs in your feed. Google reports that retailers that added correct GTINs to their feed had an increased conversion rate of up to 20 percent. What does this mean for you? When you target Australia, Brazil, France, Germany, Italy, Japan, The Netherlands, Spain, the Czech Republic, the United Kingdom, the United States, or Switzerland, starting May 16th 2016 you have to provide correct GTINs and the corresponding brands for all new products that are in stock and where a GTIN is supplied by the manufacturer. If you sell products that are made-to-order, hand-made or vintage products, these changes have no influence on you. In this case, you could improve your results by providing unique product IDs. Don't have GTINs? Your suppliers should be able to help you with all required GTINs. If not, then you can contact the manufacturer, or check the barcode on the packaging. For the latter, you can use a barcode-scanner app. Alternatively, some GTINs can be found in a GTIN database such as icecat.nl (this particular site is mainly for electronics). Correct GTINs are important for the optimal use of the Omnia Modules Providing correct GTINs for your products is very valuable and will pay off in both the areas of pricing and marketing. The GTINs form the basis of the Pricewatch and Dynamic Pricing modules in Omnia. Without GTINs we are not able to compare your products with competitors and it is not possible for the Dynamic Pricing engine to incorporate market prices in its calculation of optimal price points. Additionally, GTINs are the basis for the optimal performance of all marketing channels at a product level. Products with GTINs will have improved exposure on marketing channels, resulting in a substantial traffic increase for these products. Moreover, they allow the marketing channels to categorize products and expand the content of advertisements. Because of this, the consumer will be exposed to more information, and those who end up on your website will therefore convert to buyers more frequently. How do I adapt my feed in Omnia? The GTINs are entered by the Omnia user in their input feed. For each product there is a field for the correct GTIN code. In the ‘mapping’ section, Omnia has a function called ‘MakeEAN’, which will add zeros at the beginning of the GTIN code to reach the necessary 13 or 14 digits (if applicable). For example, the function will change “87263517” to “000087263517”. Moreover, the function checks to see if the GTIN is indeed an official GTIN. You are able to easily perform the same check with this tool. If the GTINs (EANs) are correctly entered in Omnia - Connect, then Omnia will automatically make sure that the right format will be supplied to marketing channels. When are these changes occuring? Google started warning advertisers February 8th 2015. Since this date you have seen a warning at the product level in the tab ‘Diagnostics information’ for products that do not meet the requirements. Update these products in accordance with the warnings. Starting May 16th 2016 Google will be enforcing this change. From this date you will see denials at the product level in the tab ‘Diagnostics information’ for all products that do not meet the requirements. After this date you have to adhere to the GTIN-requirements to be able to keep showing advertisements for your products. Want to know more? Do you want to know more about how to correctly provide GTINs to your marketing channels? Reach out to one of our Omnia consultants via email: info@omniaretail.com or call +31 (0)35-699 02 22. Good luck!

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