One advantage to doing business online is price transparency. Because of the openness of the internet, online store owners can know exactly what their competitors are charging and have complete control over their own price positioning. Although using available web data to determine pricing is not new, there are new ways to utilize competitor data to make it more meaningful and make you more competitive.
EXAMPLE: Using an online digital camera retailer as an example business, we will look at how it’s possible to use your competitors pricing data to make sure your own products are competitive. For this example we will assume that your products are already registered on multiple shopping engines and indexed with Google.
First, to determine the price you should list your product at, you should search for your own product on a price comparison site like Shopzilla, Pricegrabber, Shopping.com, NextTag, Bizrate, Google Products, etc. These sites will show you a range of prices that other vendors are charging for the same product. Using this range, you can determine the “Buy Zone” for the product. The Buy Zone is the price range that most people will shop in until they settle on a vendor and make a purchase. Potential customers will usually only try 3-4 stores that are within the Buy Zone before making their final selection.
The screen shot below shows a range of prices for a specific Sony Digital Camera. The Buy Zone is calculated by taking the lowest advertised price and adding 10% to it to get your Buy Zone range. Secondly you look at the user feedback and free shipping offers which may affect the actual Buy Zone or deter you from trying a particular store because of poor user feedback.
It’s easy to see how a consumer can quickly determine their own Buy Zone and then systematically purchase based on the next best value. In this case the lowest price offering also had very high customer review rating and no tax or shipping fees. The next two had only a marginally higher price but better customer reviews. The last one had a higher price and less favorable reviews and therefore is a last choice of those selected.
Anyone can do this type of comparison for a single product, but what happens when you have hundreds or thousands of products that you need to do this for?
Fortunately, there are software solutions available on the market that can assist you in extracting large volumes of web data from a variety of websites. One such software is from Mozenda (www.mozenda.com). Mozenda’s Web Agent Builder software solution enables anyone to quickly set up an “Agent” to capture information from the web. Through a series of clicks and highlights, you can build an agent to capture such fields as competitor name, product, price, shipping, tax, consumer reviews, etc., and then save that information to your own database or spreadsheet for comparison purposes. Mozenda’s software also allows you to schedule your agents to run on any interval and send you the data automatically through its web service or via auto FTP. If your looking to automate the information gathering and process, this is probably the best method for doing so.
Once the data is in your database you can then effectively determine the Buy Zone pricing for all your products and make regular adjustments to those products to ensure that you stay competitive. You can even automate the process of price setting to stay within 5% of the lowest competing price by programming a simple comparison application that looks up data from your competitor pricing tables and then sets your web pricing appropriately.
This is just one way that online retailers can be more competitive and not loose out on traffic because they are priced out of the Buy Zone range. By automating this process the retailer will enjoy a competitive advantage over many of their competitors that are much less sophisticated.
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