Most retailers change product prices infrequently. But larger companies, such as Amazon, Jet, and Sears, continually adjust prices in real time. Now smaller merchants can also benefit from real-time pricing and promotions. I’ll explain in this article.
What Is Real-time Pricing?
Real-time pricing changes product prices on the fly based on a variety of factors, such as limited stock of an in-demand product, a customer’s browsing history, weather patterns, and competitor pricing. A good example is offering a discount on umbrellas when a customer is browsing the site from a location where it is raining.
Much data needs to be analyzed instantly to offer the promotional price, such as customer information, location, weather, relevant products, appropriate profit margins, and the duration of the promotion.
In the past, this data analysis prevented smaller retailers from adopting real-time pricing. But that has changed, thanks to faster (and less expensive) computers and multiple vendors that offer this capability.
Benefits of Real-time Pricing
- Increased revenue. Real-time pricing can result in greater demand for a retailer’s products, especially if the updated price matches (or is lower than) other retailers’. Shoppers know they will get a competitive price without shopping on other sites.
Moreover, when prices are changed in real-time based on the customer context, such as browsing history or physical location, the probability of closing the sale increases. In short, real-time pricing can lead to a better conversion rate and more revenue.
- Improved loyalty. Customers will become more loyal to a retailer with the right price and contextual promotions. Customers’ positive reviews and referrals will result in driving more traffic to the retailer’s sites and apps.
- More profit. Real-time pricing is not solely about lowering prices. Depending on the context, it could mean increasing prices. For example, a limited product that is selling quickly may provide the opportunity to mark up the price, thus generating more profit. Also, a retailer could increase profit by pricing a product differently for various customer segments. This segmentation can be done in real-time based on the shopper’s behavior.
How to Implement Real-time Pricing
There are multiple vendors that offer real-time pricing capability. I’ve listed a few of them, below, to highlight the different ways of enabling real-time pricing and related promotions.
- Granify monitors 400 attributes per second to understand shopper behavior in real time and take actions to overcome obstacles to closing the sale. This would include showing specific, relevant messages to the shopper. An example of one such message is shown below.
- Personali creates personalized incentives — to increase the probability of closing a sale — based on a customer’s behavior. Personali is a hosted solution that easily integrates with ecommerce platforms. For retailers with complicated integration needs, Personali offers assistance.
- ZenClerk is a Japanese company that uses artificial intelligence to understand shoppers, to offer relevant coupons and discounts via a widget. It runs on a phone, tablet, or a computer.
- Suzu is a U.K.-based startup that uses artificial intelligence to create dynamic customer profiles and then show specific messages to influence shopper behavior, to help complete a sale. Suzu is easy to integrate with ecommerce platforms.
Does your company use real-time pricing? Please share your experiences, below.