Remember the last time you visited your favorite shop? Let’s remember those moments together and see how it relates to e-commerce pricing.
You went into your favorite store, gazing through the stalls briefly, touching a couple of the items for the feel and texture. Suddenly, you found your perfect match. You grab it and place over your body to see if it really looks great on you. You loved the item and the only thing between owning it is the price tag. You find the price tag after a quick search, flip it, and check how much it’s worth.
It costs a lot. It’s not a bargain, it’s not a deal so you give up, and probably leave the shop after similar experiences.
Now, this is a quite common offline shopping story and the example here was mainly for the fashion industry, but if you think that the experience is different in e-commerce you’re wrong! The decision process is way faster than that.
Because in e-commerce pricing, the prices are right there in front of your eyes with the product name, images, and descriptions. Therefore, the e-commerce pricing of any product is one of the most crucial qualifiers when consumers start browsing that product.
Do it properly and start with creating a pricing strategy.
What is a Pricing Strategy for Ecommerce?
A Pricing Strategy refers to the method a company uses to price their products or services. Pricing is a marketing tool and the most efficient way to improve conversion rate optimization. By applying various pricing approaches, your business will be more efficient, profitable, and sustainable in the long term.
If you don’t base your pricing on any strategy chances are that you might set it too high or too low. You’ll lose customers if you price your products too high, as they will stop buying the products, whereas if you price too low, your profit margins will decline and you might end up leaving the impression that your products are poor quality
Your eCommerce company lives and dies by your approach to pricing your products.
Even if you have the best product in the world, a poorly-planned pricing strategy can cause major problems for your company. Price it too high, and no one will be able to afford it; price it too low, and your profit margin goes “bye bye.”
For any size of e-commerce company from any country, e-commerce pricing matters. A lot.
To emphasize that even further, let’s look at some stats to better guide your business on how much you should take-commercece pricing into consideration:
– More than 60% of online shoppers worldwide considers e-commerce pricing as the very first criteriaaffecting their buying decision. In emerging e-commerce markets, consumers care about online prices even more.
– Around 90% of e-commerce shoppers are quite fluent about hunting deals and invest time for that before deciding on the web-shop where they will shop. This time for e-commerce price comparison is measured to be around 10 minutes per every item purchased.
– Price Comparison Engines are a key part of e-commerce marketing stack, as they constitute around 20% of e-commerce traffic for all sorts of product categories.
Obviously, this ratio is even higher for product categories where e-commerce pricing is even more important, and the shopper persona is naturally more price-sensitive, for example, in consumer electronics.
That’s why it’s wise to say that e-commerce companies of all sizes from all around the world should dedicate the much-required focus on their e-commerce pricing management operations and take it as a team sport, rather than leaving it under the management of a few people in a company or a department.
When taken seriously, and managed properly, companies actually see that e-commerce pricing can act as a marketing tool and can have a major influence in both comparison engines and product page conversion rates.
The Importance of Price Optimisation
As we said, although price isn’t the only factor consumers consider when making a purchasing decision, most consumers absolutely do pay attention to price whenever they’re about to open their wallets.
Case in point, 80% of consumers say competitive pricing is the most important factor for driving purchasing decisions. And, even if they believe it isn’t the most important factor, nearly half of consumers rank pricing among the top three factors influencing their purchasing decision.
It’s also worth noting that, according to data collected by Strategy&, 61% of consumers visit retail and ecommerce sites specifically to compare prices of similar items.