Dynamic pricing: adjust your feed according to the competition

Dynamic pricing consists in adjusting product prices depending on variations in demand and/or competition. This pricing strategy can progress very quickly in the field of online sales, where price adjustment plays a key role in a product’s search result positioning. On Amazon for instance, a low price (in comparison with the competition) helps aim for the famous Buy Box – the “Add to basket” button that leads to over 80% of online sales.

Monitor the competition’s prices to maintain good performance levels

A competitive price is one best-adapted to the market. If 80% of vendors are offering a product at a certain price, and you display it at a higher price, users will very probably turn to your rivals. This is the law of supply and demand, which is particularly potent in the world of e-commerce. As such, Dynamic Pricing helps make strategic decisions with a view to offering users the best price, based on what your competition is offering.

However, to be truly efficient, Dynamic Pricing requires you to reflect on your profit margins and sales strategy. It is out of the question for you to sell at a loss!

Top tips for implementing a Dynamic Pricing process

• Carefully select the products to be included in your pricing strategy. Target those which have generated the most interest among consumers.
• Encourage buyers to diversify their basket by dynamically suggesting similar products or accessories at increased prices, to counterbalance the lower price granted.
• Assess how interesting it would be to launch time-limited offers or cumulative discounts rather than lowering your prices in the long-term.
• Use Amazon’s “Automatic Price” tool. It will help you adjust prices automatically for selected products, according to the data provided by the platform (within previously-defined limits).