A Guide to Omnichannel Pricing

kathleen 2Omnichannel retailers have the advantage over their single channel competitors. But omnichannel pricing can be a challenge. By Kathleen Egan

Sixty-two percent of shoppers now expect omnichannel capabilities from retailers – and they have more information than ever at their fingertips. Shoppers today can compare products and prices in the aisle or on their couch, and even the smallest discrepancy could lead them to choose a competitor over you. It’s a tall task, but large-scale retailers can improve their pricing while providing a more cohesive customer experience. Here’s your definitive guide.

How to determine your omnichannel pricing strategy

There are three basic ways to approach omnichannel pricing:

1. Uniform pricing is exactly what it sounds like: providing one price, no matter the channel. This strategy is best for providing a unified customer experience, where brand equity and product quality are more important than the specific channel.

2. Channel-specific pricing starts with taking an inventory of where you sell, the respective customers, and their shopping habits (elasticity). Amazon, for example, requires that list prices be on-par or below prices posted elsewhere. Of course, there’s a fine line between helping and hurting your brand image with channel-specific pricing. Only sell into channels that protect and preserve your brand and customer experience. Brands and retailers that sell on many channels may consider using homepage ads, email newsletters or social media to drive shoppers to their most profitable channel.

3. Hybrid pricing is a combination of the two, varied along a wide spectrum. When determining your strategy, consider value-adds like free gifts, shipping options and rewards programs. Ultimately, the right omnichannel pricing strategy for you is the one that upholds your brand value and increases your bottom line.

How to get omnichannel pricing right

Once you set your omnichannel pricing strategy, you must keep it in check. One way is with a pricing solution that allows for intelligent price and promotion optimization and testing. Should market conditions change, retailers can analyze data from these sources to tweak pricing strategies in real-time.

Speaking of data, analyze past years’ pricing and promotional trends for you and your competitors. Whenever possible, get these insights in real time, or risk your competitive edge. Scrambling to update pricing across your many selling channels while falling behind competitors is one of the many omnichannel pricing pitfalls.

Finally, account for regional differences. International retailers know this well. Winter in Canada is summer in Australia, so heavily discounting swimsuits globally will destroy margins. For a robust omnichannel pricing strategy, consider season, demand, buying habits, competitive offerings, inventory levels, and more for any given region. Manage this scientific process internally with a dedicated team or outsource to a third party re-pricer.

How to police your omnichannel pricing

The line between brand and retailer is blurring. Digitally Native Vertical Brands (DNVBs) like Warby Parker and Bonobos now have a brick-and-mortar presence and sell direct-to-consumer.

Today, these brands must not only set their omnichannel pricing strategy, but also protect it wherever their products are sold. Minimum Advertised Price (MAP) violations are rampant, and it’s nearly impossible to keep up with reseller pricing manually. Even more complex, resellers may hold site-wide buy one, get one or other promotions that impact the final sale price of products.

Historically, retailers have had very little incentive to police pricing infractions on brands. Instead, brands should invest in automated MAP monitoring. MAP abuse impacts brand image, retail value and margins for resellers. While marketplaces and unauthorized sellers are the most common perpetrators, even authorized resellers are subject to frequent MAP abuse.

Final thoughts

According to Accenture: “Many retailers have reached a false state of omnichannel comfort. With many retailers having invested in some level of omni-channel capabilities, it may seem they are far along in their omnichannel initiatives. Yet customer expectations are constantly increasing." Pricing optimization is an ongoing process – especially for omnichannel. Set your strategy, and monitor and police your prices on demand, or your competitors will.

Kathleen Egan is vice president of customer success at Wiser. Wiser collects and analyzes online and offline data with unmatched speed, scale and accuracy for brands, retailers and more.

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