Price Points by Omnia Retail
14.02.2024
Omnichannel Ddynamic Pricing: Competition, Comparison and Consumer Behaviour
Think back to the last expensive product you purchased. Maybe it was a wearable like the newest Apple Watch, a pair of running shoes, or a new TV. How did you go about making your purchase? Did you just buy the item in...
Think back to the last expensive product you purchased. Maybe it was a wearable like the newest Apple Watch, a pair of running shoes, or a new TV. How did you go about making your purchase? Did you just buy the item in one click? Did you see it in-store and immediately hand over your debit card? Or did you first research online via social media and comparison sites, then experience the physical product in-store, then research prices online to decide where to buy? As consumer behaviour evolves and the younger, more tech-savvy generation gains more experience in maximising their value for money, brands and retailers must evolve to meet these shoppers where they are and win the sale. These changes, amidst a wider shift toward omnichannel selling, call for a more thoughtful approach to the interaction and synchronisation of online and offline pricing. Businesses are spending more time and resources on building omnichannel pricing strategies that can succeed – and be implemented – across all points of sale. In this article, Omnia explores the evolution in consumer behaviour and price comparison and how omnichannel brands and retailers can use dynamic pricing to bridge the gap. How Does a Consumer Make their Decision to Buy? Today’s consumer is investing more time and effort in the research stage before making a decision about if they should buy, and if so, when they should buy and from whom. 44% of consumers say they are spending more time planning their shopping trips to brick-and-mortar stores, while about half say they’re spending less time just browsing in physical stores. The retail analyst, Natalie Berg explains: "There's just so many different ways to shop today. And as shoppers, we don't think in channels. We just want to shop and we want a seamless experience across the many touchpoints that exist today. But we're channel agnostic and we're device agnostic. Retailers have had to work really hard behind the scenes to make this a seamless experience." Google Trends has found some compelling insights on these omnichannel consumer behaviours since 2023: About one-third of consumers are spending more time on their decision-making, considering more brands, stores and retailers in the process 65% of consumers are more likely to research a product online, even if they plan to buy in the store And vice versa: 59% are more likely to go to stores to physically see or touch a product, even if they intend to buy online The trend is even stronger around the holidays: Consumers used online search before 96% of in-store holiday shopping trip It’s clear that online and offline are colliding, and as the data above shows, the buying journey can take many paths. Some consumers might research online first – watching unboxing videos from their favourite influencers, searching the product on social media or comparison sites – then go in-store to experience the physical product. Even after all that, they might conduct more price research online to decide whether to buy online or in-store, or whether to buy from a different seller altogether. Others might browse in-store first to get a feel for what they like, then research reviews, prices and other factors online before deciding if or where to buy. There are countless paths to purchase, and shopping behaviour is influenced by a number of factors: Price: The higher the investment, the more likely it is that the consumer will invest more effort and take the time to research Complexity: If a product is more complex, it is more challenging to get a full picture. A technical description does not always reflect the experience; for example, do you know offhand how loud 48 dB will sound in a pair of headphones? Experience: The five senses contribute to emotions, which can lead to consumers making a purchase. Experiencing a product and all its sensory information first hand can be a significant factor in the shopping journey. Returns: How easy is it to return a product? For example, consumers might be more likely to research items that are fragile or those cannot be returned due to hygiene reasons, versus something like a sweater that can easily be sent back. Brand: If the experience and association with the brand is exceptional – for example, the in-store service – a number of shopping behaviours could be impacted. The consumer might be more likely to want to shop in person and to go through with the purchase, and they are likely to be willing to pay a bit more. Competing in the price comparison stage Once a decision is made to purchase the product, the modern consumer is savvy enough to compare prices online. This means sellers across channels are competing on price, and if you’re an omnichannel brand or retailer, you’re essentially competing with everyone. In these highly competitive environments, dynamic pricing is an effective strategy to capture more sales and take control of your assortment. Omnichannel brands and retailers benefit from dynamic pricing in a number of ways, including: Competitive pricing advantage: Dynamic pricing adjusts prices in real time based on market conditions, competitor pricing and predetermined pricing rules. This ensures that prices remain attractive to consumers compared to other options in the market, which is particularly important when a shopper starts researching prices online. Maximising revenue: By dynamically adjusting prices at a higher frequency, retailers can set prices that reflect current demand, customer behaviour and other market variables, boosting revenue over time. Inventory management: By adjusting prices based on inventory levels, retailers can promote products that need to be cleared quickly or maximise profits on high-demand items. This is especially helpful when managing stock for both brick-and-mortar stores and online sales. Seasonal and promotional pricing: As mentioned previously, merging online research with brick-and-mortar shopping is even more relevant during holiday events, with consumers using online search before 96% of in-store holiday shopping trips. Dynamic pricing gives omnichannel retailers and brands the flexibility to respond to seasonal trends, demand fluctuations and promotional events. Real-time market changes: External factors, such as changes in the economy, weather conditions or geopolitical events, can impact consumer behaviour and market dynamics; changes that retailers can more quickly adapt to using dynamic pricing. Agility and flexibility: As online and offline become more intertwined, omnichannel sellers need to adapt and respond quickly to new information and competitor pricing updates. Bridging the Pricing Gap in Omnichannel Omnichannel brands without a cohesive dynamic pricing strategy can face unnecessary losses and fractured pricing between channels. The challenge is this: How do you match your offline store to your online store while still competing with your key competitors? Consistency across online and offline channels is crucial. Omnichannel sellers have to find ways to synchronise both pricing strategies in order to provide a seamless experience for consumers and avoid losing sales or loyalty if a consumer or price comparison site spots a discrepancy. This is a common challenge. Many retailers struggle to align pricing: Their online prices change frequently, while their offline products are far more static. It’s easy to change an online price any time, but the retailer doesn’t want to change in-store prices every time if they are simply printed on signs, tags or stickers. There are a few ways to mitigate this challenge with the help of Omnia Retail dynamic pricing software. Electronic shelf labels (ESLs) This is the easiest way to match online and offline pricing. It requires more financial investment and IT infrastructure, but saves on costs by decreasing the labour and time needed to update prices. Image source If the cost of purchasing ESLs is too high, retailers can rent them (which tends to be far cheaper than buying), either for the whole assortment or just high sellers. One thing to consider with ESLs is timing. You don’t want a price to change on an ESL if a customer is standing right next to it. Imagine you’re shopping in a store, and the price on a product suddenly jumps from €100 to €110. The product hasn’t changed in the last five seconds, so it’s unlikely you’ll think it’s fair that the price has suddenly increased by 10%. To mitigate this, retailers might choose specific hours to change prices, either when the store is closed or during slower hours for foot traffic. Other retailers offer a discount if a customer comes to them after having found a cheaper price online compared to in-store. Fixed price adjustment days Another option is to decide on fixed days when you will align online and offline pricing, and adjust your repricing frequency to match. Compared to the ESL option, this is suboptimal, but it will allow you to synchronise prices at a level that does not exceed your shop floor staff capacity. This option will also decrease the chance of consumers walking out after checking online and discovering that either 1) your prices don’t match your own website or 2) your competition sells it for far cheaper. While providing great in-store service and experience adds value that consumers may be willing to pay more for, they are still likely to leave if the price difference is too large. Gaining clarity first on the following questions will help retailers to set this process up: Which key assortments are your revenue/margin drivers? How can you segment the online competition toward this assortment? Is there a pattern of which days the segmented competition is repricing their products? Answering these questions will tell you which assortments to prioritise, as well as which days your segmented competition is adjusting prices so you can do the same. Dynamic Pricing Made Simpler with Omnia As consumers become more research savvy and the lines between online and offline shopping continue to blur, retailers and brands – especially those operating in an omnichannel environment – will need to adjust pricing strategies to win over the competition. If shoppers are researching on multiple channels, then those retailers and brands must be consistent and competitive across all points of sale. Omnia’s dynamic pricing software enables retailers and brands to bridge the pricing gap in omnichannel. Our customers who utilise ESLs use Omnia’s dynamic pricing software in a number of ways to make this strategy more effective: Understanding which products are more competitive in the market and which are not. For brick-and-mortar sales, only the competitive product prices need to be changed more frequently. Setting up the frequency at which Omnia sends data for their brick-and-mortar products, according to their ESL pricing strategies. This can be done in three different formats: CSV, XML and JSON. Omnia's output can be placed automatically to an (s)ftp location from where your ESL system can pick up the latest pricing data. Using Omnia’s filtering capabilities to decide which parts of the assortments you want to include in the reports used to change the products' prices on the ESL. This means that you can make a differentiation between the fixed-price products and the products that you want to change dynamically. Aligning online and offline pricing (where relevant). Omnia data enables customers to remove discrepancies. For example, one Omnia customer used to do their offline repricing manually – a tedious and time-consuming process. Now, they use ESL software connected to the Omnia output, making it faster, easier and more accurate.
Omnichannel Ddynamic Pricing: Competition, Comparison and Consumer Behaviour
22.06.2023
How do brands become and stay relevant?
Are there any brands you used to love as a kid that are no longer around? What about brands that have lasted from before your childhood until the present day? Looking at the differences between these long-established...
Are there any brands you used to love as a kid that are no longer around? What about brands that have lasted from before your childhood until the present day? Looking at the differences between these long-established brands and the ones that didn’t last can offer valuable insight for today’s brands: How do you become and stay relevant long into the future? What is the difference between Nokia or Blackberry, who were extremely popular in the early 2000s in the mobile telecommunications category but couldn’t evolve to keep up with the market, and Apple or Samsung, who are the current market leaders to this day? In this article, Omnia identifies some key lessons to be learned from established brands that have stayed relevant over time, as well as highlighting some real-world success stories. Lessons from established brands that have managed to stay relevant 1) Be intentional about your pricing and discount strategy Different brands will approach pricing in different ways, as they should – each one is different. Think of a luxury brand selling high-end clothing: Customers go to this brand with high expectations of quality and status. They also know in advance that they will pay a high price for those goods, and likely don’t expect many discounts. With a low-cost brand that targets more price-sensitive consumers, however, price is the main decision factor, and discounts may be expected more often. Both of these strategies are valid; what the most long-lasting brands have in common is that they are intentional about their pricing and discount strategy. Brands have to consider questions such as: If you offer discounts, how will discounting impact our brand image? Will our customers see us as a discount brand? How will this impact our margins? Is it a viable long-term strategy? What else can we do to ensure our perceived value isn’t tarnished, for example, better service or impressive packaging? If you don’t offer discounts, how can we promote our products without discounting? Should we offer loyalty programmes or find another way to capture data? Should we offer special services to differentiate from other brands? There’s no right answer, although it’s worth mentioning that many brands who choose not to discount can stay relevant and offer value to customers through other promotions like BOGO, free shipping, money-back guarantees, bundling and more. Let’s look at two examples of long-lasting, established brands that have managed to hold onto their reputations in the market – even with different discount strategies. Dyson A household appliances company founded in the UK in 1991, Dyson started by making vacuum cleaners and has grown its product assortment to include hair dryers, air purifiers, bladeless fans and more. The company and its founder, Sir James Dyson, are known for their technological innovation of everyday household products. Dyson heavily leverages brand loyalty and the company’s reputation for high-quality products, which enables them to charge higher prices. While the company does offer D2C discounts on its website, the customer base is willing to pay the premium price point upfront because they know the product will last. Dyson vacuum cleaners, for example, can cost over $700, making it the most expensive vacuum on the market. Talk to one of our consultants about dynamic pricing. Contact us Ortlieb On the other side, German bike wear brand Ortlieb is well-known in the market for never giving discounts. Because this is an intentional strategy, the company has used it to maintain a strong brand image, along with other benefits like a five-year guarantee, waterproof products and German manufacturing. 2) Remember the product life cycle Successful brands have a deep understanding of their own product assortment and where each offering is in its product life cycle, or PLC. When brands strategically align pricing with each stage of the PLC, they avoid endangering revenue from retail partners and instead price alongside the market. A brand’s pricing strategy over the course of the PLC may look like this: Different groups of products can then be priced according to their stage in the cycle. For example, the maximum discounts set by the brand will likely rise over time and be highest during the decline stage, as the brand sells off product to make room for new assortments. The PLC can also guide distribution strategy. Many brands may want to sell older products through retailers and keep the newest collections on their own D2C channels, enabling the brand to focus on those new product lines. 3) Be careful about competition with your retailer network Many successful brands use a combination of D2C sales and retail partnerships, whether they started with traditional retail strategies and added D2C or vice versa. This is an effective strategy to diversify sales and reach new customers, but it’s important to mitigate the risk of competing with your retail network. There are a number of factors to consider here. One way to avoid competition is by differentiating product assortments between D2C channels and retail. Research from McKinsey shows that brands who get their product assortment right achieve higher sales, better margins, more loyal customers and leaner operations. One example of this is speaker company Sonos, which launched a retail partnership with IKEA in 2019. Sonos developed a line of connected speakers just for IKEA that blended into the home environment: One as a lamp and one as a small bookshelf. The product line is only offered at IKEA, and while it maintains some core benefits of Sonos – high-quality sound and the ability to control through an app – it is differentiated from core D2C offerings, lessening the risk of competition. Sonos VP of brand and marketing Pete Pedersen said this about the partnership: “The best partnerships are always those rooted in respect, admiration and complementary skill sets. IKEA has been a terrific partner and we couldn’t be happier with the collaboration. Together we’ve pushed boundaries on form factors, materials, packaging and go to market strategies. IKEA’s massive global presence has also helped bring Sonos into many new territories where we might not have otherwise been.” It’s also crucial to be cautious and avoid competing on price. Successful brands don’t undercut their own distributors and resellers. For example, if a brand drops a price on any of its products in D2C channels, its retailers will probably follow. Instead, brands that stay relevant aim to keep a good balance; staying up to date and matching prices in the market, but also avoiding sending prices “to the moon”. Dynamic pricing software is key to automatically adjust pricing across channels based on predefined pricing strategies and rules. 4) Build a brand image that reaches different generations To stay relevant as a brand, companies have to build a brand image that resonates and lasts. This means not only building up a culture and community around the brand through marketing, but also ensuring that the younger generations, who will become top spenders soon, continue to find the brand interesting. If a brand relies on the first generation of buyers it has, even if it was highly successful with those buyers, then eventually its customer base will age out and there will be no one left to replace those sales. What kinds of marketing tactics can build up a relevant brand identity that reaches younger generations? Let’s look at Gen Z specifically as an example. This set of buyers expects brands first and foremost to act and market based on their values. Nearly half of Gen Zers say that a brand “appearing trustworthy and transparent” motivates whether they engage or not. Language, acronyms and jokes that are relatable in the present moment are also important, although pushing too hard on this can feel inauthentic or even cringe-worthy. Other marketing tactics that work for Gen Z: Influencer marketing, funny or entertaining campaigns and TikTok videos. Fenty Beauty, Rihanna’s beauty brand, is a great example of building a consistent brand image that grows with its customers and reaches younger generations. Fenty ran a campaign to find a model for a 2023 campaign and asked customers to submit their own content using the hashtag #TheNextFentyFace. This turned every customer who posted into a micro-influencer, while also building up Fenty’s own image as a brand for everybody. 5) Use the right technology Of course, to remain relevant, brands must keep up with current technology and evolve the customer experience over time. Some older brands have a hard time adapting to changing times and technologies, but those are typically the ones that don’t last. Established, relevant brands use technology to build best-in-class online and omnichannel experiences: Personalisation: Utilise technology to gather customer data and preferences, enabling personalised shopping experiences. Implement recommendation engines that suggest relevant products based on customer behaviour, purchase history and demographic information. Mobile optimisation: With the increasing use of mobile devices for online shopping, it's crucial for e-commerce brands to have a mobile-friendly website and dedicated mobile apps. Optimise the user experience for mobile devices to ensure seamless navigation, quick loading times, and easy checkout. Artificial Intelligence (AI): This is especially top of mind in 2023 with the rise of ChatGTP and other large language models. Brands can leverage AI to automate and enhance various aspects of the e-commerce business. Use chatbots or virtual assistants to provide instant customer support, automate customer service inquiries and offer personalised recommendations. AI can also be used for inventory management, demand forecasting and dynamic pricing. Social Commerce: Leverage social media platforms to drive sales and engage with customers. Use technology to enable social shopping features, such as "buy" buttons or in-app checkout options, allowing customers to make purchases directly from social media platforms. Data Analytics: Brands that stay relevant capitalise on all customer data available to them, gaining insights into shopping patterns, preferences and trends. Use advanced analytics tools to optimise marketing campaigns, personalise offers and identify new opportunities for growth. It’s crucial to stay updated on the latest technological advancements, industry trends and available tools. Any brand not paying attention to these may find itself quickly irrelevant. Maintaining customer trust = maintaining relevance as a brand At its core, brand relevance is about winning and maintaining the trust and loyalty of customers over time. To do this, a company must build up its brand reputation and network of retail partners, intentionally choose its pricing and assortment strategies, utilise the right technology and continue to offer clear value to the customer. Do all of this while staying true to your mission, values and who you are as a brand, and you might just be the established brand we’re all using as a success story 10 years from now.
How do brands become and stay relevant?
14.06.2023
Amazon European Expansion Accelerator: What does it mean for sellers?
Amazon Europe is experiencing a shake-up designed to increase the e-commerce giant’s profits and market share, opening its European sellers to nine new markets across the region. On April 18th, Amazon announced a new...
Amazon Europe is experiencing a shake-up designed to increase the e-commerce giant’s profits and market share, opening its European sellers to nine new markets across the region. On April 18th, Amazon announced a new offering called the European Expansion Accelerator (EEA) which is meant to enable sellers to expand to a list of additional EU and UK stores in just “two clicks and in less than three business days”, the announcement said. Amazon European Expansion Accelerator will affect a range of stakeholders Impact on Amazon sellers According to Amazon, businesses must be registered as a professional Selling Partner with at least one active Amazon Europe account in order to use the EEA. They can then choose which market(s) they want to expand into. According to the company, benefits of the program are: Time and resource savings Expanding business reach Automated scalability Diversified revenue streams It’s clear from the announcement that this new solution is aimed especially at small-to-medium businesses (SMBs), as it discusses being able to expand business with little money or effort. However, some key points were left unmentioned and there are definite concerns sellers should be aware of before using the EEA. First, if sellers are going to be able to cover additional costs like storage, shipping, or potential customs charges, they will have to sell sufficient product volume via the marketplace. Although Amazon makes it sound like internationalisation will be simple and sellers will make quick money, it’s important not to underestimate the advertising budget that may be required. Running ads on Amazon can get expensive, especially in the more crowded verticals, with an average cost-per-click (CPC) of €0,75 ($0.81) while the average for advertising elsewhere falls between $0.05 and $10 (€0,04 and €9,24). Additionally, Amazon only mentioned legal provisions like sales tax very briefly in the announcement, while other major areas like customs were not mentioned at all. For sellers who are considering UK expansion, however, customs will be a significant factor. With the changes brought on by Brexit, the “red-tape curtain" has become very expensive, costing businesses an average of 8 - 9% for both exports and imports of goods and services. Other factors like language translation should be considered as well, as the EEA doesn’t include search engine optimisation for translated texts. There are both benefits and challenges presented by the EEA offering, and sellers should consider both sides before making a decision about whether to participate. Impact on consumers There are currently hundreds of millions of monthly visitors across Amazon Europe stores, and the EEA has the potential to show them more shops, vendors and products than ever before. According to Amazon, there were more than 86,000 third-party sellers with Amazon EU marketplace sales of at least $100K in 2020. This number has likely risen and will continue to significantly grow going forward. How this will affect shopping choices and pricing remains to be seen as the program ramps up. We can assume the range of products available will increase, and pricing may become more competitive for sellers, and attractive for shoppers, as vendors from different regions enter EU stores. Impact on other marketplaces Amazon is likely to see an increase in EU sales with the EEA as new sellers gain access to these markets and consumers have access to more product and vendor choices. However, other existing marketplaces with a European presence, such as Zalando or Bol.com, may see a small decline in investment as sellers expand to the Amazon platform. Leon Curling-Hope, Omnia Retail’s Head of Marketing and Insights, says this of the EEA’s impact on other marketplaces: “I believe that this will be short-lived due to the long-term nature of the Amazon business. We need to take a step back and see Amazon as a marketing platform like Google Shopping, where it forms part of the ‘marketing mix’, but not a silver bullet.” As for how those other sites may react to the changes at Amazon, Curling-Hope observed the challenge for local marketplaces to compete with the retail giant. “Local marketplaces face the challenge of competing with Amazon's vast product selection, efficient logistics, and aggressive pricing strategies. We could see them become or attempt to become more efficient here in one or more of these verticals.” Talk to one of our consultants about dynamic pricing. Contact us What does this mean for pricing on Amazon? From the seller’s point of view, the EEA has some intriguing potential for better pricing strategies across EU markets. Sellers who use dynamic pricing software will be able to remain competitive in local markets and automatically adjust pricing based on local competition and market signals. We can expect to see more offers on the local market due to the opening of the EEA and the opportunity for more sellers to sell across borders. On Amazon’s side, the EEA is likely to increase the company’s power in the EU and the UK. By analysing their vast amount of data on local demand and competitor pricing, Amazon can adjust its prices to offer the best possible value to customers while maximising profits on their own product offerings. With dynamic pricing software, sellers will remain competitive and quickly spot when new entrants join the market, automatically adjusting pricing strategies accordingly. For example, if a new market entrant from another country has a better product offer in terms of price, this doesn't mean that you need to compete with him on price; you will first want to check on a variety of factors: whether this is a relevant competitor or not, vendor reviews, shipping costs, delivery time, stock levels and more. The pricing rules set by the seller in their dynamic pricing software ensures that every relevant factor will be executed automatically. See how Dynamic Pricing from Omnia can help you automate your pricing strategy across Amazon, across countries and all other e-commerce channels.
Amazon European Expansion Accelerator: What does it mean for sellers?
14.07.2022
Antoine Brouwer: E-commerce, its challenges and dynamic pricing | Part 2
A few days ago, we shared the first part of our insightful conversation with one of Europe’s top e-commerce and digital marketing minds, Antoine Brouwer. We’re excited to share the second and final part with you today....
A few days ago, we shared the first part of our insightful conversation with one of Europe’s top e-commerce and digital marketing minds, Antoine Brouwer. We’re excited to share the second and final part with you today. Omnia Retail: We’ve previously touched upon Dynamic Pricing earlier but let’s discuss more. Could you tell me more about your view on pricing for the retail industry? AB: Pricing has really evolved over the years. In the beginning, it was just checking the price of your competitor, then the second phase was to know your price and needing to automate the strategy. Nowadays, there are more and more competitors and you can't compete with everybody. If you take consumer electronics as an example, you might have 200 competitors on the same SKU. You can’t say you want to be the cheapest in the market, because you can’t afford it, even Amazon can’t always do that. Also, you really need to get smarter. You now see strategies differ on a category-level but often even down to SKU level, in order to really maximise effect. The next phase is price elasticity, because following what the effect is, whether you follow the price of your competitors up or down, is important to see what it does to your volume. Therefore, measuring price elasticity shows you what happens, if you increase your price but your volume stays the same it means you can make more margin. Or the other way around if you decrease your price but your volume goes up and your cash margin goes up in total, it becomes more interesting. You see how important the strategy is. The first time I used Omnia we only made a few rules and when I now look at the last implementation I was involved in, we made pricing rule, after pricing rule, after pricing rule to really manage it. I think you also see that we take far more things into account, like the logistical cost and the marketing cost to measure what you make per SKU. It’s the same idea behind integrating data from Google to really see, okay, I have this page with a lot of visitors, but a low conversion. This either means that you don’t have stock or that your price is not correct, because apparently your customers are not interested. Feeding this information into a pricing tool is extremely interesting. This way it’s becoming more of an ecosystem with more and more data getting involved and actually looking at more things than just competition alone. That is also what Omnia does with “Market Conditions”, as users can set all these rules to actually determine what should happen with their pricing if they have one competitor, and what happens if they don't have any competition. Omnia Retail: Pricing has indeed become a lot more complex than it was some years ago. AB: Yes, sometimes it’s also necessary to be able to explain your pricing strategy to customers. If you look at products in the same family, is it acceptable to price them differently? Online it often is, but explaining to a customer in store why the same coffee machine is standing next to each other but in different colours differs in price can be difficult. How can it be that a 60-inch TV is cheaper than a 40-inch TV? It's really difficult for customers to understand, but market conditions can determine exactly these differences in prices. That’s why it makes sense to gradually change things. It will for sure be better than pricing manually, because then your prices are always wrong. Omnia Retail: Do you think that the need for pricing strategies to become more complex is mostly due to the increasing competition or did the behaviour of consumers also change? Are they doing way more research than they used to before, with much more information being available? AB: It's a combination, there's more competitors, and there's more customers comparing. In the early years, everything was focused on growth and now the focus is also on being profitable. These are completely different things. With every sale you make, that you actually make money on, you have to be far smarter, and also look at all these things to actually drive profitable growth. I think that has changed, in the beginning, it was growth and now it's profitable growth and that is far more complex. For this, you need far more rules, than just following the competition. Omnia Retail: Based on your experience, what is your opinion on investing in Dynamic Pricing from a retail perspective, and why (if so) do you think it's essential? AB: If you think about it, whenever you have more than 1,000 SKUs, you can never do it manually. One thousand you can't even handle per day, let alone your competition changes their prices up to 4 or 6 times each day. In that respect, it is never possible and that means your price is always wrong, period. It doesn’t even have to be that you have complex rules. You could also just say I want to be number three in the market, or I never want to be more expensive than 5% difference to my competitor, or you want to have the average price in the market. That is also fine, at least you set a rule and can implement it. But manually, that's not doable. Or if you for example only get the competitor data rather than look for yourself on every single website ten times a day. That already really improves the accuracy and saves time spent by valuable category managers, who can make more money by buying correct products. I think that's the key. What I normally see when we do price changes is that it’s almost equal to 50/50 price increases and price decreases. Decreasing a price doesn't have to mean you make less money. A lot of retailers look at it old fashion and buyers are targeted on gross margin. And yeah, your gross margin will drop, but your value of your company is not based on gross margin but the money that you make. There is a saying: “Maybe you prefer to earn 11 times a dime than four times a quarter.” That’s the idea. Omnia Retail: Looking at the market today, most companies are making use of Dynamic Pricing tools, as they can’t compete without it. What do you think still holds some companies back? AB: I agree, you will hardly find any large retailers that don’t have a pricing tool and do their pricing manually. To be honest, I don’t know of any. The ones that might be hesitant are probably retailers with huge stores, with a large store assortment or low-value priced items in stores. This makes it a bit more complex, but there are always ways around it. Omnia Retail: Do you think a lot of companies take the approach to have different prices in stores than they do online? AB: No, generally not. I think a common mistake is when comparing prices in store with online prices people compare them excluding shipping costs, whereas the in-store prices should be compared to online prices including shipping costs. Then it often becomes a different story if a company is asking €2 shipping costs on items below €20 then a pencil for €2 online suddenly becomes €4. I think you should add that if you have a store and then you have a lot more room to increase your prices in stores as well. Omnia Retail: Interesting, you think they should add that to in-store prices? AB: Yes, I do think so, especially in these price ranges. In my experience starting at above €30 to €40, people start comparing prices by going to comparison websites, Google shopping or visiting several different sites to see what it costs. But this also depends on the homogeneity of the product and if you actually want to see the product physically. I saw this a lot in the toy market, when you see a Playmobil box in a store, you see a carton box with an image on it. You can’t open it, you can’t see more than what you see online on an image as well. This is different from shopping for a TV, where you can actually see the screen in real life if you go to the store. I was shocked how quickly the online shoe market changed. Buying shoes online was not at all big in the Netherlands and then Zalando came and it got a huge boost. Suddenly everyone was buying shoes online and just sending them back if they didn’t fit. Omnia Retail: Now, I have to admit, when ordering shoes online I make sure they have a good return policy. AB: Exactly, and you see that the companies are really getting smarter. If you return an item and indicate the wrong size they use this data to determine fit for others. That’s when you’ll see fit recommendations based on other shoppers. Where Zalando will for example recommend to go a size up for a certain item. Omnia Retail: You often also see size guides, where based on a few answered questions they will give you size advice. For example, if you know that a Puma shoe fits you in a 40 then they might indicate that a Nike shoe should be ordered in size 41. AB: And that really helps the companies, because free online returns most of them can’t afford. At fonQ if customers returned items complaining that a certain piece of furniture was a different colour in real life than it was online, we made sure to note these types of feedback and change the pictures accordingly. This will make the experience better for the customers, who are happy with what they bought and the companies save money on not receiving returns. Omnia Retail: How do you foresee the future of dynamic pricing and why is automation important in this process? AB: I think in the future more and more variables will be added. I think more and more focus will be on sales data, trends, promotions, calculating what the effect of a promotion will be and capturing the history of a product. There is definitely a future for artificial intelligence, and I mean not so much for the products that you can recognise on an EAN because it’s comparable. But more for products that are new and where there is no competition and then you can use AI to see if that product is comparable to anything we’ve seen before. Does it belong to a product group or a category in order to set a price? You also see a trend for more and more white label products at retailers because they want to be less comparable, but then how do you set the price and compare your product? Because it’s a different brand and a different product but it’s often really comparable to another branded one. So you need to compare based on attributes and features opposed to EAN and product name. This is something that is becoming a lot more relevant lately. This is a far more complex way of matching products. The technology will need to evolve in order to cover these kinds of aspects. Omnia Retail: Interesting, staying on the topic of change, which vertical within the retail industry would you say has changed most over the past years? AB: I think a big trend we saw was brands starting their own webshops because they were hit by the covid-related lockdowns and backlogs. If you look at the furniture business for instance, furniture is still a business where the majority, around 80%, of purchases are still made offline. Whereas in most other industries this is the other way around, for instance compared to consumer electronics. The furniture business was really hit hard because people were sitting at home and wanted to invest in a new interior, but if you can’t go look at a new couch, most people won’t just purchase it online. For a lot of brands it was really noticeable that if the retailers don’t sell their products anymore they don’t sell anything. In response to that a lot of manufacturers and brands started their own D2C channels in order to be in control. Another trend that we’re seeing is that more and more luxury brands are moving away from the marketplaces. For example, if there is an A brand and they are selling on any platform like Amazon or Bol.com and the customer searches for “chair”, they will see your designer chair of €3,000 next to a cheap chair of €20. Whereas offline, they would always be selling at an exclusive store. You would not find a designer chair in a LeenBakker store. However, online on marketplaces you can suddenly find these two items next to each other. Hence, a lot of the luxury brands are moving away from the marketplaces. Omnia Retail: But apparently some luxury brands have tested it out and were represented on the market places. AB: Yeah, but that was definitely related to volume, it seems like a great idea at first, it’s an easy channel and you can ship a lot of products easily anywhere. But what does it do to your brand image? Omnia Retail: Since we're already talking about the marketplaces, what is your vision on marketplaces in the future? AB: In general, I think there will be more and more marketplaces. If you look at the Netherlands, five years ago there was only Bol.com. Then I started with Blokker and Intertoys with the second marketplace in the Netherlands. And look at how many marketplaces there are already now. It’s really a trend that more and more retailers see a marketplace has a place in their category vision. Because if you believe in having the best assortment in your vertical you can’t afford to have everything and can’t manage it. So, a marketplace just makes most sense. Omnia Retail: Sounds like even more of a reason to have a Dynamic Pricing tool if you need a different pricing strategy for the marketplaces than for other channels. AB: Definitely. That’s why we see customers with several portals, so they can follow up on their marketplace offering and on their own channel. Omnia Retail: This was very insightful, thank you so much. Rounding off, I would like to know what you like to do for fun, what excites you outside of work? AB: BBQing is a passion of mine. And I really love to go out for dinner with friends and family. I love sports a lot, so I'm playing hockey three times a week and right now I'm training five days a week every morning. Plus I really enjoy a round of golf. Omnia Retail: Thank you so much for this interview, Antoine. It was really interesting speaking with you and getting your expert opinion. That concludes our interview with Antoine, who has given us and our followers plenty to chew on regarding pricing and strategy. Omnia Retail will be chatting to other experts in the field in the future, so keep posted to our LinkedIn page.
Antoine Brouwer: E-commerce, its challenges and dynamic pricing | Part 2
07.07.2022
Antoine Brouwer: E-commerce, its challenges and dynamic pricing | Part 1
We sat down and spent some time with one of Europe's greatest minds in e-commerce and digital marketing. Antoine Brouwer, he shared his thoughts with Omnia Retail on e-commerce in 2022, his forecast, thoughts on trends...
We sat down and spent some time with one of Europe's greatest minds in e-commerce and digital marketing. Antoine Brouwer, he shared his thoughts with Omnia Retail on e-commerce in 2022, his forecast, thoughts on trends and challenges in retail and the importance of pricing. Omnia Retail: Thank you for joining us for this prelude into the world of e-commerce and retail. We would like to kick off with an introduction of yourself. AB: I’m Antoine Brouwer, 49-years old and I live in Amersfoort. I studied International Business in Den Hague and Advertising and Marketing in Pforzheim, Germany. I started my career at Ben in the Netherlands. I was one of the first 40 people that joined the company and started there with wholesale marketing. The company was bought by Deutsche Telekom and became T-Mobile. In 2003-2004, we needed to integrate a webshop and that became my first experience with e-commerce, in telecommunications. I built this up for T-Mobile in the Netherlands and then I was asked to move to Germany to the headquarters in Bonn. I lived in Germany for two years and set up the entire digital marketing strategy for T-Mobile, T-Home and T-Online Germany. After two years, I moved back to the Netherlands and then I became director of e-commerce for UPC; currently Ziggo. I started there on my own and built an e-commerce department for about 3-4 years. After ten years, I wanted to do something else, I moved to retail and I went to work for MediaMarkt and became responsible there for marketing and e-commerce. Omnia Retail: What triggered your move to the retail industry? AB: I had already done everything in telecommunications and in my field of marketing and e-commerce. I thought, okay, what are the other interesting segments that are big in e-commerce? Retail and specifically MediaMarkt were a great opportunity for e-commerce. I developed the whole marketing department and e-commerce side there and this was my first touch-point with Dynamic Pricing in 2011. I then went on to work for Blokker holdings (a large non-food retail chain in NL), back then they had 11 retail chains and around 125 people managing e-commerce for the whole group. We grew revenue in four years’ from €30 million to €300 million, which was a huge success. There were so many brands and there was a real need for dynamic pricing. I had built everything myself for MediaMarkt and thought to myself, ‘I don't want to do that again’. So I reached out to Connective Power (today Omnia Retail) and that’s how we became one of the first big multi-portal customers, with brands like Bart Smit, Intertoys, Blokker, LeenBakker, and Xenos. After I left Blokker, I was then asked to become CEO of fonQ. We had fonQ NL, BE and DE and I was there for two years, which was an even wider role. Then, I decided it was again time for something else. So in May 2020 I left the company in the midst of covid-19, and moved to Greece for a year. I became the executive director of two main plays in Greece, Public and MediaMarkt and again, set up the marketplace, e-commerce strategy, and team organisation, the proverbial life of a consultant. Omnia Retail: It’s clear that you know the need for Dynamic Pricing well. Related to all your experience in the retail industry, what is your view on this field is for the future? AB: I see a number of shifts. On the one hand, you really see the platform economy growing, so you really see the Amazons of Europe, on a global level, becoming bigger and bigger. In the Netherlands you see it with Bol.com and on the other side, there are a lot of verticals that are coming back. An example here is Coolblue, in the past they had like 100 different URLs I think, and then they merged it all into Coolblue. But they started with all kinds of specialist verticals which was mainly because of SEO. Now you see a lot of specialists coming in, which have a broad and in-depth assortment of a specific category, and they have the best content, the best pictures, the best advice in order to really specialise in one thing. The other thing that you see is that e-commerce is becoming more cross-border. In the last year, 14.9% of all e-commerce in the Netherlands was already coming from other European countries; an interesting prospect because you have omni-channel players competing with each other in different markets where they're not in the same offline market, but they are competing online over country borders. Hence I believe it's becoming more and more important, especially also due to covid that e-commerce grows in terms of data quality. Meaning, getting the best prices right but also creating the best content in terms of pictures,specifications, and attributes. It has become more and more important that all these things are correct because the more competition you have, the more you can't compete on price alone anymore. Omnia Retail: Do you think this is heavily impacted by the situation we were in over the past two years with the COVID 19 pandemic? AB: I saw a report over the whole of Europe that you actually see a lot more growth. Especially if you look at the Netherlands, there was hardly any growth in e-commerce revenue in 2020 with only 4%. However, if you take out online purchases within travel, e-commerce revenue was up 30%. I think it made a big step forward, but the bigger question is now, how will this remain? Do you really attract new customers who have never bought online before? In an evolved country like the Netherlands, U.K. or Germany, especially not that many people have never been online before and there might have been a small bit of an uplift, the key here is what are all these e-commerce companies going to do with the data they were able to collect across the ‘new’ customer base that they attracted. Can they continue to target them? I don't believe there will be a big shift from offline to online, with people suddenly not going to stores anymore.There will definitely be an increase in the future split between online adn traditional stores, but nothing as big as we’ve seen over the past two years. The growth will not be linear. Omnia Retail: You described some changes in e-commerce that we saw over the last two years. Do you foresee any challenges with these changes? AB: That depends whether you are an omni-channel, pure player or offline entity. If you're mostly offline, and there are many companies that hardly have any online presence at all. Then the bigger the shift to e-commerce the more difficult it gets. But overall, competition online has gotten tougher over the last year and that will have its effect that people compete more on price. Omnia Retail: So the largest overall challenge for retailers that you see, is the large competition in the market? AB: Yeah, it's the competition. In 2021, you really saw the difficulty in that there was a limit in the supply chain. Couriers couldn't handle the volumes anymore, suddenly having to scale up for almost a year without any planning or warning. It really has shown that there's a limit to the volume that can be handled in terms of infrastructure, transportation options and the volume of deliveries that can be delivered to people’s homes, so scaling up overnight is not an easy or viable solution. One that also has an effect on sustainability, something I see myself that I have way more boxes at home than I used to before, because everything is delivered in a carton box. Omnia Retail: That is something I noticed as well. Would you yourself say that your behaviour has changed a lot when it comes to online shopping, compared to pre-pandemic? AB: Not for me, as I’ve always been in e-commerce, hence I like to buy online, also due to my curiosity, to see what other check-out processes look like, for example. Omnia Retail: Of course, there is also a difference for people living in cities, compared to rural areas. AB: Yes, indeed. When I was living in Athens, for instance in 2021, the couriers there couldn't handle our packages anymore. So we decided to hire taxi drivers. We had around 500 taxis driving around delivering our packages to customers. We built software and we gave it to the drivers, which they could use on their phones, and then we agreed on rates for the delivery service. Omnia Retail: That sounds like a smart solution, win-win for everyone. AB: The drivers were happy to earn money, we were happy our packages were delivered and the customers were happy to receive them on time. In part two (here) we continue our conversation with one of Europe’s top e-commerce and digital marketing minds, Antoine Brouwer.
Antoine Brouwer: E-commerce, its challenges and dynamic pricing | Part 1
12.04.2019
Everything You Need to Know About the ROPO Effect
It’s no secret that the internet has changed the way we shop. And for the most part, retail has done a great job of adapting to the online space. But despite adopting online stores and advertising, many retailers...
It’s no secret that the internet has changed the way we shop. And for the most part, retail has done a great job of adapting to the online space. But despite adopting online stores and advertising, many retailers overlook one key component: the modern customer journey. In this post, we’ll discuss way the ROPO effect, which is reflective of a larger seismic shift in how consumers get their information about products, then carry that information into their buying decisions. Curious? Read on to learn more about how your online presence impacts your offline sales. What is the “ROPO” effect? “ROPO” stands for “Research Online, Purchase Offline.” It’s a consumer phenomenon where shoppers will find all of the information they need about a product online, but will make the final purchase in-store. Traditionally, there hasn’t been any “online” part of the consumer journey. If you wanted to buy something, you needed to get in touch with a salesperson to discuss the features and benefits of the products, as well as the market-ready options. You’d likely have to go to a store to find this information, or book an appointment for a sales person to come to your house. You’d also probably search out some reviews, of course, but they might be harder to find. But that’s not the case anymore. Now all a consumer has to do before buying a product is search “[product name] review” on Google or YouTube and tap “enter.” They’ll instantly go to a new page filled with reviews and comparisons of different products. The majority of these reviews — the ones trusted by viewers — will be from independent channels, not from a company itself. In other words, consumers now do all the research online for themselves. So much so that Bazaarvoice reported 56% of online shoppers read at least one review before making a purchase. Many consumers will then take that research and purchase a product online. But, depending on the product, consumers might still need to go in-store for one reason or another. And this is where the “Purchase Offline” half of the ROPO equation comes into play. Talk to one of our consultants about dynamic pricing. Contact us Why retailers should care about the ROPO effect If you don’t consider the ROPO effect in your sales, marketing, advertising, and pricing strategies, you aren’t really considering your entire assortment. Say your online marketing team wants to boost online sales. If they don’t consider the ROPO effect, they’ll probably discontinue advertising on all products that don’t result in a high volume of sales online. When you consider the ROPO effect though, you might notice that certain products — like running shoe — might perform poorly online, but drive a high number of in-store visits. Let’s imagine a more concrete example. Take a look at the graphic below, showing the number of online and in-store sales for a television and a pair of running shoes. You can see that the television is making multiple sales online, but is under-performing in-store. But you can also see that the shoes perform poorly online but sell like crazy in-store. If you were a marketer and you only looked at a product’s online performance, you’d probably redirect your Adspend toward the television. But if you look at your online and in-store sales holistically, you’d see that the shoes drive more overall sales. In this situation, consumers might know exactly which shoes they want to buy, search for the pair on a comparison shopping engine, then go to the nearest store that says they carry these shoes. So while the online sales are low, the advertisement drives people to the store to make their purchase. And there’s an additional benefit to this scenario: once someone enters your store, the chance for cross- and up-sells increases significantly. If this were the case, you’d probably want to continue advertising on this product, even if the online sales were low. The returns on ROPO Adjusting your strategy for the ROPO effect opens up a new world of possibilities because it allows you to see your entire assortment as one interconnected channel. Your online store becomes an extension of your offline store and vice versa. And optimizing for ROPO can have an enormous impact on your overall sales. What's the secret behind the ROPO effect? And how can you use technology to get more traffic and better, more profitable sales? Download your free copy of Why Pricing and Marketing Go Hand-in-Hand to learn more. Which categories are influenced by the ROPO effect? When it comes to ROPO, not all categories (or products) are equally influenced. In general, high-ROPO categories will contain products with a certain “feel” quality. Here’s a collection of high-ROPO categories, though this list is by no means exhaustive. Fashion Fashion is a category that’s extremely susceptible to the ROPO effect. That’s because unless you know your exact size and fit, most people want to try on clothes before they buy. Even though online fashion retail is booming, physical stores will still always be high-traffic areas for a few reasons. One is because consumers want to see (and feel) their clothes before they buy them. Consumers also want to avoid the hassle of returning clothes through the mail system. Beauty Beauty is another interesting retail space that has a high ROPO effect. Similar to fashion, there are wide swaths of consumers who simply enjoy going into a store and buying their beauty products. This is category also relies heavily on sales consultants and industry experts. Many makeup stores, for example, will have promotions in-store where you can get your makeup done for free by a professional makeup artist. The artist then uses that opportunity to educate consumers on the different products and demonstrate how the product works. Sports retail As we previously mentioned, sports equipment (and clothing) is heavily influenced by ROPO. Whether it’s running shoes or a new bike, consumers will research before they buy. And if it’s their first time purchasing, chances are they will go to a store to test out the product before purchasing. Household items Household items large and small are responsive to ROPO as well, especially small items like kitchen utensils, light bulbs, batteries, and the like. These are the kind of products that most consumers won't necessarily need (or even use) every day. But when the need arises, it's likely a pressure that needs to be filled immediately. If you decide to make a soup, for example, but realize you don’t have a ladle, you might look online at the nearest home goods store to see if there are ladles in stock. For most of us it doesn’t matter if the price is €8 online compared to €10 in-store — if you need it that day, you’ll pay for the convenience of an in-store pickup. Furniture and lighting The last high-ROPO category we'll cover is furniture and lighting. Whether it’s a couch or a standing lamp for the corner of your bedroom, it’s difficult to evaluate the look and feel of these pieces based on an online photo alone. This is especially true for high-ticket, pre-assembled items that are large and bulky. The cost and hassle of getting these pieces delivered is great enough to drive consumers to a store before they purchase. How to optimize for ROPO To optimize for ROPO, you need to do a few things: 1. Determine which products are most influenced by the ROPO effect Think about your customers. What is their journey through your store? Why are they purchasing your products? Your marketing teams will have some great insights into your consumers and be able to help you figure out what categories are susceptible to ROPO. But beyond marketing insights, which will only help you make an educated guess, you can also use hard data to better understand your customers and their buying habits. Here are 5 ways you can extract that data from your daily operations. 5 ways to measure the ROPO effect Here are 5 simple ways to measure the ROPO effect on your products and your store. 1. GPS tracking GPS tracking is the ideal way to measure the ROPO effect. That‘s because it‘s the most accurate way to see how your online advertisements influence physical store foot traffic. With a few Google tools, you can clearly see how many people view an advertisement online, then use GPS data to follow how many people enter your physical store after viewing the ad. 2. Soft Conversions “Soft conversions” let you estimate the influence of ROPO on your assortment. Place a button on the product page that allows the visitor to check your brick-and-mortar location and stock levels. If the visitor clicks on it, you can treat this as a “soft conversion,” which helps you know that the visitor is interested in your store. 3. Statistical analysis Perform an easy statistical analysis to experiment with the ROPO effect on your in-store sales. Simply take the amount of traffic on a product on your website then match it to the number of sales in-store. If you alter your marketing strategy to double the amount of traffic on a product listing and the number of in-store sales also increases, the ROPO effect might be the reason. 4. Link offline data Customer information like email addresses is extremely valuable to analyze the ROPO effect. Use this data and online customer profiles to generate insights about earlier steps in the customer journey. You can also link that data to your AdWords and Facebook profiles to connect your sales and advertising clicks. 5. Surveys Surveys are an effective (but expensive) way to measure the ROPO effect in real time. Ask customers at a cash register what prompted them to come to the store and buy the product. You need the data from 200-500 customers to generate a proper analysis. Here's an inforgraphic that shows you all the different ways you can measure the ROPO effect: 2. Find the optimum online price for those products After you’ve discovered which products are heavily influenced by the ROPO effect, you need to determine the optimal price for them. Your new price needs to be lower, or in-line with, your biggest competition on the market. The goal is to have these products proudly displayed on comparison shopping engines so customers can see that you carry the product. Even though you offer a discounted price, however, that price should still align with your overall commercial objective. 3. Adjust your online marketing efforts The final step to ROPO optimization is to adjust your Google Shopping bids and Adwords spend to ensure your competitive edge over your competition. The goal is for your product to appear at the top of search results to let interested shoppers know that you carry the product they are looking for. This step requires cooperation and coordination between your pricing and marketing teams. These two teams will need to work in tandem to find the right balance between a low price and high marketing spend. They will also need to monitor these products to make sure they are always competitive. If a competitor decides to drop their price, for example, you will need to adjust yours to match the market. Use software to optimize for ROPO If you want to optimize for ROPO — and other omnichannel strategies — the easiest way is with a software. So, instead of asking one person from the marketing team and one person of the pricing team to constantly watch your products and update bids and prices, you can just let the software take over this tedious part of the manual labor. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Odd Even Pricing?: An explanation of the psychology behind different numbers in a price. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
Everything You Need to Know About the ROPO Effect
10.01.2019
How to Win at Omnichannel Retail
The rise of omnichannel is one of the most significant revolutions in the retail industry. But what exactly does “omnichannel” mean, and how should retailers adapt to this sphere of influence? Keep reading to learn...
The rise of omnichannel is one of the most significant revolutions in the retail industry. But what exactly does “omnichannel” mean, and how should retailers adapt to this sphere of influence? Keep reading to learn everything you need to know about omnichannel and get tips on how to build the right strategy for your business. What is omnichannel retail? Omnichannel retail is an approach which gives consumers a unified, seamless shopping experience across all physical and digital sales channels. This means your store is connected on all fronts — from the app your customers have on their phone all the way to the checkout counter at your physical location. It’s important to distinguish a truly omnichannel experience from “multichannel” retail. Multichannel retail is selling through multiple channels, such as desktop and a physical store. But what separates multichannel from omnichannel is the unified experiences across your platforms. Having an app for your customers is an example of multichannel. Connecting that app to their in-store experience or the open shopping cart on their desktop makes the experience seamless across the board and makes it a unique omnichannel interaction. Omnichannel is increasingly important in retail, and the modern, tech-savvy consumer is the driver of the trend. Because of our increasingly interconnected world, consumers expect interactions from their phones to run flawlessly. And consumers will ditch the app at the first sign of friction in the process. We live in a “golden age of user experience” according to Jason Spero, VP of Global Performance Solutions at Google, and that demand for ease of use bleeds into our offline lives. Why does omnichannel matter? Omnichannel retail matters for one major reason: consumers demand the experience. In essence, omnichannel retail provides consumers with what they crave – convenience. Namely, omnichannel gives consumers reassurance they will receive the same seamless experience no matter where, when, or how they shop. However, just because consumers seek omnichannel experiences isn’t the only reason retailers should care. Looking at omnichannel data opens up a whole new world of opportunities for cross and upselling and illuminates a range of missed sales opportunities. In other words, by adjusting your thinking to an omnichannel mindset, you might uncover hidden opportunities for profit and margin growth. Some examples of omnichannel retail The phrase “omnichannel strategy” is an umbrella term, and, in truth, there is no single “right” way to optimize your business for omnichannel. Instead, there are numerous ways omnichannel expresses itself. The ROPO effect The “Research Online, Purchase Offline" (ROPO) effect is one of the shining examples of omnichannel retail. In the information age, consumers have access to everything they need to know about most products you sell from sources you do not control. As a result, by the time they get to your webshop, they likely know exactly which model they want. For many types of products though, many consumers won’t purchase online. Instead, they’ll visit your webshop (or see your Google Shopping advertisement), then go to your physical store to make the final purchase. The reasons why vary. Sometimes consumers want the product immediately, and they simply check your online store to see if you have it in stock at the nearest location. Another common reason is consumers want to see and feel the product before buying. This is particularly pertinent for fashion products where consumers want to check the fit before paying. Regardless of why a consumer does it, the effect of your online presence on your in-store sales might be extraordinary. That’s why you need to consider in-store sales data in your online marketing decisions on products where the ROPO effect is high. Even if you don’t sell a lot online, it might be worth investing heavily in the marketing to show consumers you carry a product in-store. Retailers can also embrace the “order online, pick up in-store” model that is gaining popularity. Crafting user experience through augmented and virtual reality Many retailers and companies are creating interactive omnichannel experiences for their customers with augmented and virtual reality. These experiences not only cultivate customer loyalty and interactivity, but they are also effective commercial sales points. A shining example of this is the IKEA Place app, which uses augmented reality to help consumers understand which IKEA products will look great in their home. This “try before you buy” concept reduces major consumer frustrations that are an inherent part of the furniture-shopping experience. Just check out their video below to see how it works. Pure online players opening physical stores A third example of omnichannel is the high number of traditional, online-only retailers who are opening physical locations around the planet. From Amazon to Warby Parker, “pure players” around the world are adapting their businesses to capitalize on the growth of omnichannel. This last example is interesting because it illuminates how mainstream omnichannel is: internet companies want to create physical experiences for their clients while brick-and-mortars strive to reach customers beyond their physical walls. Companies from both ends of the spectrum are adopting strategies to end up somewhere in the middle. Tips for developing your omnichannel strategy Omnichannel is the future of retail, but how do you build a strategy that meets your company’s goals? Let’s look at our top tips for winning at omnichannel: Tip 1: Think about your commercial objective Implementing an omnichannel strategy for the sake of joining the omnichannel sphere is a risky venture. Omnichannel can quickly become expensive if you don’t think about it strategically. Ask yourself why you want to implement an omnichannel strategy. Do you want to: Increase customer loyalty? Capture more sales? Solve a customer pain point? Drive more foot traffic to your store? Answering these questions should give you an idea of what kind of strategy you should implement. And as with all new strategies, use your commercial objective as a compass to guide your decision making. Tip 2: Ensure the same prices across all platforms One of the easiest ways to disrupt the consumer experience is to display one price on your app, a different one on your webshop for the same product, and a third price in-store. Since consumers are interconnected and research heavily before purchasing, they’ll notice these differences instantly. This rips them out of the experience you’ve crafted and leaves them with more questions than answers. Keep your prices are the same across all platforms so your customers stay captivated with the experience. An easy way to do this is with electronic shelf labels. Tip 3: Centralize and integrate your pricing and marketing data Omnichannel is an entirely new area in retail. So the historic ways of thinking about the industry won’t lead to a successful strategy in this new realm. The traditional silo mentality of pricing and marketing as two different departments doesn’t translate well into this new, 21st century model of retail. Instead these arms of your organization need to connect and collaborate. Click here to download your free copy of Why Pricing and Marketing Go Hand-in-Hand Software can centralize all of your pricing and marketing information in one place. You can then use this software to change your pricing or marketing strategy according to your omnichannel strategy. Software can also help you centralize all your data points, both in-store and online, so you can have all the information you need to make more strategic decisions. With Omnia you can include internal information like your stock levels or purchasing prices with external data to build a more informed omnichannel strategy. Final thoughts To execute a successful omnichannel strategy, you need the right tools. Without the ability to collect, store, and analyze data points on all of your products, you won’t be able to build the best strategy possible. Omnia’s tools give you the building blocks for your omnichannel strategy. By helping you organize and evaluate your pricing and marketing information, Omnia illuminates different opportunities that are useful metrics as you enter this new sector. Interested in learning more? Reach out today to request a demo of our software and speak with one of our consultants about your omnichannel goals.
How to Win at Omnichannel Retail
26.11.2018
5 Benefits of Electronic Shelf Labels
Retail is one of the most innovative industries out there. In recent years, one of the most interesting changes to hit the industry has been Electronic Shelf Labels (ESLs). These “electronic” versions of price tags use...
Retail is one of the most innovative industries out there. In recent years, one of the most interesting changes to hit the industry has been Electronic Shelf Labels (ESLs). These “electronic” versions of price tags use e-ink to display a price and are connected to a computer database. This labelling technology makes changing in-store prices as easy as typing a new price into the software and clicking “send”. These digital price tags have numerous benefits for retailers. But ultimately, the greatest advantages of electronic price tags for retail are the ability to engage in real-time dynamic pricing in-store and build an omnichannel experience to enhance customer loyalty. Interested in learning more about the benefits of these price tags? Here are 5 reasons brick-and-mortar retailers should consider the investment in retail label shelf holders. 1. Accurate pricing across channels The internet has completely transformed how people shop, and it’s not uncommon for consumers to price check an item while they’re standing in a store. Shoppers lose trust in a company if the in-store prices don’t align with the online data display, and unfortunately this is often the reality they encounter. An electric labelling system, however, completely change that interaction. With one standardised pricing system, your customers won’t be disappointed by price differences anymore. Instead, your company can immediately reflect any online price change in-store. Digital shelves also allow you to align your promotion prices, audit trails for your headquarter to check changes, and fix any pricing errors. Each of these keeps your prices accurate across the board and ensures your customers see your optimal price. Image courtesy of DisplayData 2. Shelf edge influence The shelf edge is one of the most important sales influencers. Most purchases are made at this point — so you want to make sure your pricing information is accurate. A price label is prone to human error. It’s also a slow process, and by the time you finish re-labeling, prices might have changed again online. This is especially true in regards to pricing electronics in an attempt to compete with online and offline competitors. With ESLs though, these changes are easy, so you can capture more sales at the shelf edge. You can react competitively to price changes, enable instant promotions, track what promotions work, and protect margins on time-sensitive stock. You can even create offers based on where a specific customer is standing in the store with just a few clicks. 3. Enhance your omnichannel experience It’s no secret that omnichannel is the future of retail. According to Planet Retail, 56% of consumers feel that technology improves their shopping experiences. Image courtesy of DisplayData How do ESLs help you build a successful omnichannel experience? ESLs enable you to interact with your customers in ways that were previously impossible: Display stock levels so customers know whether the supply is limited Display online prices of competition so consumers can trust you when you say you have the best price Enable simple ordering with QR codes Display reviews of products, so shoppers can understand what others like or dislike about a product And these are just a few examples of the opportunities in using retail pricing tags! 4. It’s not as expensive as you think Here’s the thing: ESLs do require an initial investment. And if you’re unsure about whether you will use them, it’s understandable why you might be skeptical of moving forward with the technology. But with the shelf edge being the last — and most powerful — point of influence on a sale, the ability to control what a consumer sees at the push of a button is priceless. And the process of installing and configuring the electronic shelf labels isn’t as hard as you think: Minimal construction and installation: Electronic shelf labels are easy to install and can be set up with a simple screwdriver. They’re also easy to configure using the provided software High security with low maintenance: ESLs operate on an unused WiFi network for maximum security from interference at low maintenance for retailers Easy to use: Most ESL softwares are easy to use and learn. Just drag and drop the information you’d like to display and you’re done! After installation, your employees no longer need to monitor the price tags each day. The centralized system makes it easy for one person to control all pricing changes on the shop floor. 5. Payback is quick According to DisplayData, the payback for ESLs is high. The company reports in-store sales typically increase by 6%, with a typical margin increase of 2%-3%. The payoff in transitioning shelf labels is also fast. One of DisplayData’s customers, a major European retailer with over 800 stores, secured a payback on their investment in just 16 months and predicts over 170% ROI in the next two years. If you zoom out to 5 years, the retailer expects their ROI to increase by 400% Conclusion Creating an innovative omnichannel experience is all about connecting stores and online. And the shelf edge is no exception. Retailers should carefully consider this key moment in the omnichannel buyer’s journey and recognize that electronic shelf labeling is one of the easiest ways to connect the two domains. Read more: The Ultimate Guide to Dynamic Pricing Omnia can easily connect to ESL systems like DisplayData, which allows you to create a cohesive omnichannel experience based on the most up-to-date pricing and marketing information. Want to learn more? Get in touch with Omnia today. Click the button below to sign up for a demo and one of our consultants will be in touch.
5 Benefits of Electronic Shelf Labels
15.06.2017
Dynamic Pricing is Also Possible in Physical Stores: Here’s How
More and more e-commerce players use dynamic pricing to automate pricing to grow sales and contribution margin. This leads to frequent price changes on their entire stock with some products even getting repriced...
More and more e-commerce players use dynamic pricing to automate pricing to grow sales and contribution margin. This leads to frequent price changes on their entire stock with some products even getting repriced multiple times a day. For physical stores, the process of printing and changing a single price tag in a physical store takes several minutes and physical stores carry many thousands of products. How then can omnichannel retailers keep up with pure e-commerce players, for whom changing prices is a completely digital event taking at most milliseconds, and therefore are changing their prices multiple times per day? This is a question we often get from omnichannel clients and omnichannel retailers considering implementing dynamic pricing. In our many years of experience in implementing dynamic pricing at omnichannel retailers, we have learned that dynamic pricing for omnichannel retailers is certainly possible. We present an action plan for implementing dynamic pricing, ranging from tips to create political momentum in often quite traditional retail organizations to technical considerations, such as electronic shelf labels Step 1: Building the business case for dynamic pricing Before e-commerce, retailers had to operate under the “shelf space is limited” constraint. E-commerce has introduced virtually unlimited shelf space: they are only limited by the size of their warehouse. Drop-shipment even removes that constraint. Many omnichannel retailers have also grasped this opportunity provided by e-commerce. They have a core product assortment which is carried both online and in physical stores, but they also have a considerable web-only products. For omnichannel retailers we, therefore, recommend a pilot period during which dynamic pricing is used solely for the web-only products. This provides them with a solid business case to prove to management that dynamic pricing also has a huge impact on sales and contribution margin at their retail format, not just for Amazon. If an omnichannel retailer does not have web-only assortment, it could decide to run a pilot on a subset of the omnichannel assortment that is so limited that it doesn’t have a significant impact on store operations. In that case, it is still crucial to make sure that the stores are aware of the importance of the pilot and to make sure store execution is optimal. This prevents the risk of drawing the conclusion that dynamic pricing does not have an impact while it was caused by poor store execution. If both alternatives for the pilots are not possible, omnichannel retailers could use the 10-20% average contribution margin increase that Omnia Dynamic Pricing users see as input for their calculations. It should be noted that there is huge difference in the performance of a well implemented value-based dynamic pricing system and a poorly implemented rule-based dynamic pricing system. The latter can even be margin eroding. Step 2: Store rollout by electronic shelf labels or reduced frequency of changes Once the business case has been established, the omnichannel retailer needs to plan a roll-out for their entire range of products. The retailer needs to make an important decision at this point on whether to implement electronic shelf labels (ESLs). Over the last couple of years there have been great improvements in performance of electronic shelf labels, mainly driven by e-ink technology, and costs are continuously decreasing. Several providers of digital shelf strips are sesimagotag, Pricer, and Displaydata. Considering an average store carries thousands of products, electronic shelf labels will still be a significant investment. Typical payback periods of ESLs are 18-24 months. It is, however, important to stress that the impact of dynamic pricing is not just driven by “smarter price points” but also by increased frequency of price changes. Electronic shelf labels help to increase frequency of price changes and thereby returns on dynamic pricing. Some omnichannel retailers decide on a middle ground, implementing electronic shelf labels only for fast moving products with a high frequency of price changes. The route of implementing electronic shelf labels primarily has technical challenges, however. The ESLs need to be placed in the stores, there needs to be a communication network and the system needs to connect with the retailers' ERP system. From the perspective of this article, it is, however, the most straightforward implementation as – after implementation – the retailer has complete flexibility in frequency of price changes. If the business case for implementing ESLs does not (yet) seem feasible, the retailer needs to take a different approach. The retailer first needs to decide whether to couple the frequency of online and offline price changes. The advantage of coupling the frequency of price changes is that there can never be price differences between online and offline purchases, which is of course an important consideration for omnichannel retailers. However, in this approach the retailer does not exploit the ability to have as high a frequency of price changes in its webshops as its e-commerce rivals. This would make the retailer competitive on all online touch points where shoppers carry out their research, such as Google Shopping and comparison shopping engines. An alternative approach for the retailer therefore could be to have a (much) higher frequency of price changes online than in the physical stores. We would recommend retailers taking this approach to have the policy that – when shoppers note a price difference between online and offline – they always get the lowest advertised price. In any case, the retailer will have to operate with a relatively low frequency of price changes in the physical stores. Most of our clients start with once a week. Once store operations get used to the new process, this could be increased; for example to twice a week. Final thoughts We believe the approach without electronic shelf labels to be an intermediary option, which of course is still a great improvement versus not doing dynamic pricing as omnichannel retailer. Ultimately, we expect all omnichannel retailers to fully adopt ESLs. The shift to online orientation for products, increases in frequency of price changes and developments in ESL technology will accelerate this trend. What are your thoughts on (implementing) dynamic pricing in physical stores? Please let us know!
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