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What is pricing research in eCommerce?

Even a good product could get hammered in the online market space if not competitively priced. Competitive pricing reflects two things – prevailing prices charged by competitors and that customers are willing to pay these prices. Ecommerce pricing research is carried out to understand what constitutes this ‘competitive pricing’ in the online market space for one or multiple products (product mix) offered by competitors in the selected markets. Take for example a swimming merchandise brand. If the company wants to enter a new market, pricing assessment will be one of the important areas of decision-making. The brand cannot blindly start its services in the new market without consideration of the required changes in its pricing strategies. It could be possible that the same quality products are sold at higher prices by the competitors in the new market. Or a certain product type, say swimming ear plug, is available only in the premium band. In different cases, the pricing strategies shall vary depending on marketing and business goals. But having this information and insights on competitive pricing is critical.

In this blog, we shall delve further into the specifics of eCommerce pricing research and understand how it can help eCommerce brands in competitive pricing against their direct competitors. Indirectly, we are also trying to answer how to arrive at a good pricing strategy for eCommerce business.

Insights from eCommerce pricing research:

Focus price range of competitors vis-à-vis the product mix

Pic1:

The visual above highlights the focus price range of a direct competitor. Close to 50% of the competitor’s product mix is in the price band of USD 10 to USD 15. This is the range within which the competitor has most of its products priced. The next two big price ranges are (USD 16 to USD 20) and (USD 21 to USD 25) contributing to 84% of the price mix. The competitor has a limited number of offerings in the higher ranges or the starting one. This data alone is not sufficient to deduce which product types or models fall in which price range. But it is good enough to draw that customers, in general, are most comfortable in the price range between USD 10 to USD 25 for any product type sold by the competitor. So, the host eCommerce brand needs to align its merchandising and pricing strategies focusing to extract the most from this price range. Focusing on this price range could help it quickly gain market share.

Focus price range of competitors vis-à-vis online marketplace platforms

If you are intending to take the online marketplace route, then your pricing strategies are dependent on the prices charged by your direct competitors on the selected platforms. The visual below shows the price mix of a group of direct competitors selling on Amazon.

Pic2:

Almost 40% of the combined product mix is in the price range of USD 6 to USD 10. The other two largest ranges are (Below USD 6 contributing 20% approximately) and (USD 10 – USD 15 contributing 18% approximately). It could be construed that the epicentre of the market is in the price range of USD 6 to USD 10. A huge chunk of product types is priced in this band. If your product mix is close to these price ranges, you may not have to tinker too much with the price tags barring other business goals and market entry difficulties. The factor of dynamic pricing in eCommerce also plays a The product-price distribution map presents a detailed view of competitors’ pricing points across the product mix. The visual below is a representation of the pricing ranges of different product types offered by a group of direct competitors dealing in skincare products.

Product-Price Distribution

The product-price distribution map presents a detailed view of competitors’ pricing points across the product mix. The visual below is a representation of the pricing ranges of different product types offered by a group of direct competitors dealing in skincare products.

Pic 3a:


In the chart above, it does not matter who the competitor is. What is important here is to comprehend the collective pricing tendencies of the competitors. It throws light on how different product types are currently priced and offered in the market. For example, in the chart above, it can be seen that a majority of cleanser product types are in the price range of USD 5 to USD 30. If a new brand believes that it can charge higher than this, it needs to take into consideration the quality of the product to be offered, brand perception, competitors’ UVP in the higher price ranges, advertising and promotional efforts required, etc. If a brand enters

A snapshot of a similar nature from a research carried out by YRC is shown below. The visual in Pic: 3b shows the product-price distribution of Adidas in the women’s clothing category in a particular country.

Pic 3b:

Pricing Analysis Vis-à-vis Different Regions

Analysis of competitors’ price ranges across the product mix in different regions helps in determining the popular price bands in these regions. Determining the popularity and focus areas of competitors in terms of price bands provides direct hints for better merchandising and pricing strategies. It speeds up the decision-making process. These popular price bands should interest new eCommerce players because a majority of product types are offered by competitors within these bands. To better understand this, take a look at the visual below.

Pic 4:

The graph shows the price analysis of a group of direct competitors in the beauty products sector in four countries. The offerings are very limited in the entry-level price range among all the players. Entry-level products may not find a big market in these countries. The price band of (USD 15 to USD 30) is a high-focus area in all four countries. Barring Kuwait, all the players have the majority of SKUs in this price band. It need not necessarily bring the most of the revenue but this band attracts the majority of customers. If you are a premium brand, you would like to consider Saudi Arabia and Kuwait first because the other players have a relatively greater product presence in the premium price band in these two countries.

Price Band Performance

The performance of pricing strategies is eventually reflected in whether the business goals have been achieved or not. Sales volume is one of the most important parameters to judge the effectiveness of pricing strategies. Given below is a visual of the performance of various price bands in the product category of men’s athletic socks on an online marketplace platform for a selected period in a few selected markets.

Pic 5:

The graph clearly shows that the medium price band is a winner. But there is also a big market for the high-price segment of socks. The bestsellers in the entry-level and premium band are relatively fewer in number. What can be concluded from this? Let us provide one insight. If you are a premium brand, by lowering your prices to the high price band, you could be selling more in the given market. Of course, there are costing factors involved. But if your products are entry-level, you may not have the entire sea to you. You could push your products into the mid-price segment but that would entail some product development and extra efforts in digital marketing. Whatever the conclusion or the pricing strategy, having this data in the first place is important.

It becomes easier to understand how sensitive pricing can be when we think of it as customers. If a product of the same or similar value is available at a lesser price, there is no reason to not go for it. But this perspective does not work when we think on the macro scale involving the entire product mix offered by a host of direct competitors in one or more market regions. There, we need research-driven data and information using the right eCommerce market research tools and methodologies. Then there are bigger business goals and objectives involved. Relevant and expert statistical and strategic insights are necessary to formulate the right pricing strategy in eCommerce that is aligned with these goals and objectives.

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PROCESS AUTOMATION

The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

VIDEOGRAPHY & PHOTOGRAPHY

No matter how good your product is, the customer would know only if it looks good.

Photography includes the following steps:

  • Cataloguing your products
  • Cataloguing your images
  • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
  • Choose the right camera & lens (You may also outsource the photography to a third party agency)

DIGITAL MARKETING

Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

IT INTEGRATION

Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

WAREHOUSE & LOGISTICS PLANNING

  • How many cities or countries you wish to sell in?
  • Where should your Warehouse be located?
  • Should you have one warehouse in each country or city?
  • Should you be having your own delivery team in your base city?
  • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
  • How should I manage the logistics if my goods are coming from different countries?
  • How should the goods be stored and barcoded?
  • How much space do I require for warehouse?
  • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

 

At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

UI & UX DESIGNING

This Step involves 03 distinct parts:

Part 1: Choosing the right Platform:

From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

Part 2: UX Designing:

“UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

“As per statistics, 68% of the customers abandon the carts before payment”

An interesting UX ensures the customer sticks on to the website for a longer time.

Part 3: UI Designing:

UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

If User experience is the bare bone, user interface wraps it up with an attractive cape.

At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

SAMPLING & PRODUCTION

This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

Production Sample is made before the production which is the replica of what is going to be finally produced.

Once you are through with all this, you are good to go ahead & get your goods manufactured.

PRODUCT DESIGNING / SOURCING

Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

Product Designing / Sourcing can be done in several ways, as follows:

  • In-house Design Team
  • Freelance Designers
  • Outsourced Design Team
  • Ready Product Sourcing (From Manufacturer or Wholesaler)

At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

BRANDING

Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

It is an integral part to attract the target audience.

ORGANOGRAMS & SOP’s

Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

CRITICAL PATHWAY

Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

BUSINESS STRATEGY & BUSINESS PLAN

Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

MARKET RESEARCH

Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.