How do readers set product prices in their companies and stores? I think that the balance between supply and demand, competitive prices, marketability and circumstances are taken into consideration and set from various angles.
There are various ways of thinking about pricing, but one of the representative methods is "competition-oriented pricing." “Competition-oriented pricing” is a method of setting prices that are equal to or lower than those set by competitors or other companies. With the recent development of digital technology, it has become easier to check the selling price of products at each store or company. As the selling price becomes open regardless of whether it is one's own or others', the price competition for the same product becomes fierce, and the price generally tends to go down. In order to avoid this trend, there are cases where each company or store takes measures to make it difficult to understand the price of the same product. Therefore, the seemingly simple task of referencing other companies' prices has become more complicated.
In this article, we will explain what specific points should be considered for "competitive pricing" on EC sites in such an environment, and the points for operation.
Author profile
Representative of Colabofact / CDO of Bsidefunny Co., Ltd.
Mr. Yusuke Komatsu
Joined Members Co., Ltd. after graduating from Hosei University. Six and a half years of experience in website construction / operation direction and project management for major domestic financial institutions and manufacturers. Engaged as manager of the company. Joined Amazon Japan GK since 2015. After two years of experience as a site merchandiser in digital marketing, from strategy to execution and analysis, as a buyer, experienced business strategy, P/L management, demand forecasting, and product planning in the category in charge. Participated in Principle Co., Ltd. since March 2019. Launched a dedicated sales department, and since October 2020, has been in charge of launching the company's DX business department and responsible for business operations. In May 2021, he joined Bsidefunny Co., Ltd. as a partner and CDO. Independent as a sole proprietor from June 2021.
[EC Business Growth x AI] Series 4th INDEX
- Importance of pricing on EC sites
- Difficult competition-oriented pricing
- Hybrid operation of AI and humans
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▼[EC Business Growth x AI] Click here for previous articles in the series
[Part 1] What are the specific measures to grow your EC business? Explain the points to keep winning in the expanding EC market!
[Part 2] The success or failure of ASKUL Corporation, which handles more than 10 million items, uses AI behind the EC
[Part 3] How to reduce opportunity loss due to shortages in EC site management? Introducing the points of inventory management using AI demand forecast!
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1. Importance of pricing on EC sites
First, consider specifically how pricing affects customer behavior and impressions. There are two possible cases.
The first is a case where the product is purchased by another company instead of the company. As mentioned above, customers can check the price of the same product in various stores on the Internet. If other companies are cheaper than your company at the timing of purchasing products, customers will flow to other companies. In this case, the number of customers who checked the company's product detail page but did not make a purchase increased, resulting in a decrease in CVR (conversion rate) as a quantitative indicator. There are factors other than price setting that increase or decrease CVR, but if there is a sudden change in your company's CVR, it is recommended to check whether this case has occurred.
The second is a case where you realize that the price of another company was cheaper than your own after purchasing it yourself. There may not be many cases where the price is continuously investigated after the product is purchased, but the negative impression given to the customer is more serious than the first case. You may be asked to return the product after making a complaint, or in the worst case, you may never buy it from your own site again. Although it is difficult to quantitatively understand and identify such cases, we recommend investigating if the number of active users continues to decline.
2. Difficult competition-oriented pricing
As mentioned earlier, what kind of price setting operation is necessary in order not to impair the customer's purchasing experience? There are two major steps in operation.
STEP 1 is the work of matching the same products of your company and other companies. Products sold in Japan usually have a product identification code called a JAN code, and the same product can be checked based on this code. However, during actual operation, matching may not be successful due to the following two cases. One is the case where the JAN code is not posted on the other store's site. In this case, it is necessary to judge whether or not the product is the same based on information other than the JAN code. In many cases, the product model number is posted, and we will match it based on that information. The other case is an original product from another store with a different JAN code and model number. Verification in this case is more difficult than in the first case, and it is necessary to sort out the product information and specifications one by one and judge whether it is the same product or not. This requires a lot of effort and is prone to personal matching errors.
STEP2 is the work of researching other companies' prices and setting prices. After checking the same product in STEP 1, we will research the price of other companies and set the price after referring to the price. The problem with this STEP is that price research and setting are not a task that ends in one go. Other companies may change the price once set due to the balance of supply and demand and various strategies. Even if you research and set the price once, there is a possibility that the price of other companies will change after that, so it is necessary to continue the work of STEP 2 at a certain timing, such as daily. If we conduct a daily survey of 3-4 other companies' sites for each product, we will check 3-400 sites for 100 products every day. Considering resource capability and prevention of personal mistakes, it is realistic to introduce and operate some kind of system for this STEP2 work.
3. Hybrid operation of AI and humans
As mentioned earlier, in order to achieve competition-oriented pricing, it is necessary to have "A. A large-scale operation system" and "B. Establish rules and criteria for pricing". In order to realize this operation, there is a method of introducing AI and human hybrid operation. Acquisition of data from other companies' sites that can be executed based on a certain rule, product matching based on that data, and recommendation of setting prices are executed by AI, and the final price setting based on the recommended price and product information It is an operational style in which judgments and settings are made by people. Depending on the situation, there may be cases where pricing with reference to competitive prices is not necessarily optimal. This is an operation method that can also be used in such cases. In addition, if certain rules can be established for price setting and the judgment criteria are clear, it is effective to operate "Auto Pricing", which automates everything from competitor price research to price setting. Especially when the number of products is large, we will consider introducing automatic pricing based on the priority and characteristics of the products, and expand the products we handle and improve the customer's purchasing experience while ensuring resource scalability. would be desirable.
Macnica proposes a solution using AI for pricing, which has a major impact on improving CVR on e-commerce sites.
We are able to provide services tailored to each customer's business, data, and challenges, so please feel free to contact us.
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In the 5th installment, we plan to explain how to proceed with clarifying issues that should be addressed with priority, expected improvement effects, and operational bottlenecks for continuous growth of EC sites and gaining trust from customers. .
looking forward to!
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