IBM recently announced Dynamic Pricing, a new cloud-based offering for online retailers.
Highlighted this week at the National Retail Federation’s Retail’s BIG Show, IBM Dynamic Pricing automatically recommends an online retailer’s best response to changes in performance data and market conditions as well as the latest competitor pricing information.
The solution enables retailers to intelligently adjust prices while driving customer loyalty and product demand.
“More sophisticated retailers are not just reacting but instead proactively testing various pricing strategies to see what effect they have on their customers; they are sensing and responding,” said an IBM white paper on dynamic pricing.
In an age of price transparency, retailers must do more than monitor competitor prices and other market conditions—they must be able to respond accordingly or risk losing customers. IBM Dynamic Pricing combines performance data, such as cart abandonment rates and browsing history, with sales, inventory and the latest competitive pricing information, and in real time applies these insights to recommend the most appropriate pricing action.
“At any given moment, a retailer is no more than one click away from losing a customer online,” Stephen Mello, vice president of IBM eCommerce and Merchandising, said in a statement. “IBM Dynamic Pricing executes real-time pricing recommendations at the scale and speed needed to ensure competitiveness in a volatile shopping environment. This intuitive and dynamic pricing system improves visibility into what’s happening in the market, allowing retailers to make decisions that are best for their businesses and customers alike.”
While pricing is always critical to driving sales, reacting to competitor price changes is not always the best course of action, IBM said. With IBM Dynamic Pricing, retailers can intelligently determine which changes they should respond to—and how—and which should be ignored, all based on potential impact on the business. When taking action is appropriate, the solution automatically makes real-time pricing recommendations.
For example, a retailer might find that a competitor rolled out a promotion on a key product, reducing the price by 15 percent. IBM Dynamic Pricing evaluates and decides based on product availability, price sensitivity and customer demand that an 8 percent pricing change will still enable the retailer to compete and to achieve sales and margin objectives. This price would then be automatically updated online.
Moreover, IBM Dynamic Pricing also helps the growing number of omni-channel retailers navigate price wars. These retailers can use data and insights from their physical stores to influence and price confidently online. As a result, they can successfully ensure that their customers get the best prices while protecting their margins, IBM said.
IBM said customers have been self-trained not to pay full price. And why should they when they can easily shop around for the best deal? Indeed, socially connected, savvy consumers now shop on their terms. Thus, retailers are being forced to evolve if they are to retain the custom of loyal shoppers and entice those that currently purchase elsewhere, IBM said.
That is why Big Blue developed its intuitive dynamic pricing system, designed for and with online merchandisers. It provides easy set up, automated processes and data visualizations to enable users to focus on critical pricing activities, manage by exception and save time.