Multichannel Pricing Strategies for Black Friday Online Retailers
When holiday shopping, 70% of online shoppers will actively seek coupons and promotions. 45% consider discounts as one of the most important factors when deciding where to spend money.
How do you meet these consumer expectations and drive sales this holiday season? By developing intelligent multichannel pricing strategies and offering the right promo mix to get ahead of the competition.
Now more than ever, consumers consult a comprehensive range of platforms and channels to find and buy their desired items. Over 80% of them will use more than one online channel to compare available products, and the number of multichannel shoppers grows day by day.
Keep reading as we discuss why multichannel is critical for retailers, especially during the holidays, and what to consider when curating a multichannel pricing strategy for your ecommerce business.
Today, every successful retailer engages with consumers in multiple channels, whether in-store, on social media, through an ecommerce marketplace, via email, Google checkout, and more. Generally, each customer has numerous opportunities along their purchasing journey to interact with your brand.
The COVID-19 pandemic has significantly impacted consumers’ purchasing behaviors—from where they shop, what they shop, and how they shop. Now, people prioritize safety, convenience, and seamless shipping experiences. If needed, they’ll switch retailers to fulfill these desires and needs.
Of course, you want to provide your customers with a stellar customer experience through a unified omnichannel strategy. Still, to do this, you must modernize your infrastructure and invest in new technologies. This takes commitment, so the logical first step is to spend time building out effective multichannel strategies. Consistent multichannel strategies will provide you with a stronger foundation when expanding into full omnichannel down the road.
Why Do You Need Multiple Pricing Strategies?
Every ecommerce channel is different, so they each require a different cost structure. The money spent on each channel varies as third-party software, ecommerce platforms, and channels propose different pricing plans. Also, the money spent on packing, shipping, and other sales will affect the amount of money needed to make a profit—let alone break even.
It’s vital to balance customers’ pricing expectations on different ecommerce channels with each channel’s cost structure. Typically, it would help if you utilized flexible multichannel pricing to remain competitive and raise profitability across channels. It’s impossible to stay competitive by basing an ecommerce pricing strategy on brick-and-mortar operating costs.
What to Consider When Developing a Multi-Channel Pricing Strategy
An effective multichannel ecommerce approach requires optimized business strategies across all facets from payments to marketing to returns and everything in between. When creating a multichannel pricing strategy for your business, consider the following to increase your chances of success.
Understand What Customers Expect From Each Channel
As a retailer, you must understand the value drivers of each ecommerce channel. Is the value derived from free shipping, quick delivery, ease of return, simple checkout, lowest prices, or something else for each online channel? When shopping in-store, a customer may view immediate access to products as the most important, rather than price matching with a competitor.
The COVID-19 situation has changed some of these value drivers for customers. Now, the seamless execution of “buy online pickup in-store” (BOPIS) holds more influence than ever before over which retailer a customer decides to purchase from. Customers are making fewer trips to stores but purchasing in more extensive assortments and quantities, meaning retailers with the most relevant inventory hold an advantage. You can derive pricing strategies that resonate with customers by understanding what your customers expect from each channel.
Multi-Channel Consumer Purchasing Behavior
Next, evaluating customer purchasing behavior across channels can provide valuable insights on which items and categories are more price sensitive. You must determine which items drive customer price perception and how customers react when these items are promoted to build multichannel pricing strategies that work for your business.
Promotions for Multiple Channels
The way customers react to marketing media depends on the channel they’re engaging with. Some promotions are much more effective in-store than online, while the reverse may be true for others. For example, special financing offers may be more effective in-store than in ecommerce.
You can drive insights on investments needed by measuring the effectiveness of promotions across your channels. From there, you can choose a single, consistent promotion across channels or determine the most effective promotion strategy for each channel.
Retailer Competitive Price Index Strategy
With value drivers and consumer purchasing behaviors varying by platform and channel, you must ask yourself: “Should we have the same CPI across each channel?”
If yes, how much will it cost to maintain that index?
If not, you must recognize the importance of price perception in any given channel, the cost of maintaining an index price to meet customer expectations, and the right products to drive price perception in each channel.
Other Organizational Requirements
While it’s essential to have a comprehensive multichannel pricing strategy that resonates with your customer base, it’s not the most crucial step towards an omnichannel journey. Other things to consider include whether your business is prepared for this change and whether teams should engage with each other or stay siloed within channels to maximize value for your customers.
To drive customer-focused decision-making, consider which changes may be required in your organization first.
Setting Multichannel Pricing Strategies Through the Holidays
While offering products at the lowest prices may sound tempting, the average pricing formula doesn’t always work. While you likely know which product pricing best fits your business, you should consider a few factors before settling on a final sales number.
1. Check Historical Sales Data
Looking at last year’s sales report during the holiday season is the best way to decide the price of your items this year. Consider critical indicators such as customer demographic details, your best-selling items, high-margin products, and day-wise sales to help you determine the sweet spot in pricing this year.
2. Consider Your Costs
As you calculate product pricing, you must consider your costs, such as salary, administrative, and marketing expenses during the holiday season. While this sounds like common knowledge, it’s vital to remember that these costs can fluctuate during Q4. Be prepared and ensure that your product pricing covers your production and fulfillment costs.
3. Look at What Your Competitors Are Offering
It would help if you looked at the prices your competitors are offering before settling on a pricing plan. Keep a close eye on their promotions so you can spot any potential competitive advantages. If possible, check up on their inventory levels as well. When their items go out of stock, it’s an opportunity for you to increase your product pricing to reap higher margins.
4. Run Special Promotions
During the holiday season, consider running special promotions for existing customers. First, identify your regular customers and send them a discount code via email. Not only are you showing appreciation for customer loyalty, but you’re motivating them to buy from you again this year.
5. Create Product Bundles
Creating product bundles is an excellent way to upsell to customers during the holidays. To increase the number of bundles you sell, identify special days to launch the bundles during the holiday selling season. Many retailers will advertise bundles as special offers or limited edition items since the specific combination of products may “never be offered again.” Using language like this makes bundles more appealing.
Tools for Building Successful Multichannel Pricing Strategies
Now that you know what to consider when determining a multichannel pricing strategy, what infrastructure must you have in place to begin? We recommend using an inventory and order management tool combined with a robust product information management system.
Use an Inventory Management Tool
Suppose you’re looking to merge owned inventory with a dropship supplier (or multiple manufacturers or suppliers). In that case, the first step is to get an inventory management platform that can integrate with numerous platforms.
To synchronize your data within multiple channels, choose a cloud-based software with significant integration options. Flxpoint offers several features that create a unique seller experience, including inventory availability, purchase order, shipping, and accounting and profitability management tools. As a result, you can:
- Reduce inventory shortages during simultaneous product promotions via multiple sales channels
- Ensure smooth organization, shipping, and fulfillment processes for the quick arrival of products
- Derive data to assist with sales preparations
Use a Product Information Management System
Next, you need a product information management tool in place. A PIM allows you to manage product variations across multiple channels. It gives you the ability to control precisely which product information is shown on which channels, which leads to:
- Fewer mistakes
- Lower labor costs
- More productive workflows
- Fewer returns
Add Order Management
While multichannel sales and marketing is a promising approach for ecommerce retailers, not all internal systems can integrate data from multiple channels all in one. In many cases, you have to keep up with channel data separately—in your physical stores, on your website, across social media channels, on ecommerce platforms, and more.
The solution to avoiding unexpected hiccups in multichannel sales is to make sure the platform you choose includes order management system capabilities.
By adding order management to the mix, you can merge marketplace and channel data in one platform. You will be able to see which channels have the highest demand and purchases. When planning your multichannel pricing strategies, you can check your customers’ lifetime value to better plan your pricing.
Master Multichannel Pricing Strategies With Flxpoint
The holidays are quickly approaching, which means it’s time to set new business processes in motion. There’s a lot to be done, so it becomes easy to get overwhelmed. But Flxpoint has you covered.
When you’re ready to give multichannel pricing strategies another look, consider Flxpoint as your all-in-one ecommerce automation platform. Flxpoint allows you to look at your ecommerce business data in one central location, which will enable you to make better-informed business decisions. Interested in learning more? Talk with an expert today.
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