The goal of any retailer is to make money and to do that, you need customers. Offering a good product at a low price point is a great way to bring in new shoppers as well as repeat business. Maximizing revenue while keeping prices low is a challenge that many retailers can relate to. A recent analysis of winter shoe price changes shows that 63% of price changes involve lowering the price while 37% of price changes did not have any adjustments on pricing overall. The data shows that many retailer’s pricing strategies are to price seasonal merchandise lower than the competition in order to clear out inventory before winter ends.
Winter shoe price changes show that 63% of price changes involve lowering the price while 37% of price changes did not have any adjustments on pricing overall.
Though seemingly reasonable, sellers should look to maximize their revenue along with slashing price strategy. Looking at the data, 58% of total price changes re-priced SKUs lower than the previous lowest prices, while 27% of total price changes actually result in an increase in price while still remaining the lowest price in the market. It seems sellers are monitoring competitor prices and constantly adjusting pricing to undercut the competition while still making as much money as possible off each sale.
According to our data, New Balance was identified as the top seller of winter shoes with the most aggressive lowest price plan. About 75% of their total SKUs are priced the lowest in the market. When separating the data according to the price range of the SKUs being analyzed, the data also shows that approximately 60% of SKUs in every price range was the lowest market price.
New Balance isn’t the only retailer using the lowest price strategy. Below are the top 10 online retailers who are repricing frequently using the lowest price strategy:
So, how can you compete with these big sellers?
The top 10 retailers using the lowest price strategy includes big brands like Kohl’s and Amazon. The data shows that these brands are very competitive when it comes to pricing, with large percentages of their SKUs having the lowest prices in the market. A good strategy for retailers hoping to win a market share would be to beat these big retailers with the same strategy by offering the lowest price on select SKUs.
The emerging seller, WorkBoots.com, seems to be following the lowest pricing strategy to compete with bigger brands like Kohl’s, Amazon, Zappos, etc. If you have not implemented a smart, dynamic pricing strategy on seasonal and highly competitive online shopping categories like winter shoes, then we suggest you plan to soon.
Below are a few recommendations you should consider for your dynamic pricing strategies:
1. How to Re-Price?
- Include shipping costs in your pricing strategies: This will ensure that you are competing against big brands with the total purchase price.
- Competitor Selection: Select and compete with the right brands only. Look for competitor brands that offer a similar product to yours.
- Set your Minimum Offer Price for each SKU: This will ensure you won’t go below the minimum margin required for the product. For example Minimum Price = Floor Price or MAP Price for MAP SKUs.
- Implement psychological pricing along with the lowest price strategy. Apply pricing patterns like $56.99 or $9.49 to make items appear less expensive. Use these pricing patterns to mark products at prices just below the lowest competitor price in the market.
Refer to our How to Price your Product guide for more details on product pricing
2. Which Products to Re-Price?
Consider grouping your products in many dynamic small sets. Base your decisions on brand, price ranges, top sellers, competitors’ price change volatility, number and size of competitors in the market and current online demand of that product. Running price intelligence at separate times throughout the day and in a variety of frequencies (daily, weekly, monthly) is also a good idea. This will ensure your pricing intelligence will automatically pick SKUs to re-price when needed. By varying your pricing intelligence, you will also get the best return on any costs associated with price intelligence by ensuring that your price is competitive on all of your SKUs as the market fluctuates.
Looking at the winter shoe data, your dynamic pricing strategy should identify a brand and a price range. You can then track the most competitive sellers of that brand, like Kohl’s, Workboots, Amazon and Zappos, to execute the lowest price strategy with the most success.
3. When to Re-Price?
Analyze pricing data daily, weekly and monthly when searches for your keywords are higher. Free tools like Google Search Trend and Google Keyword Planner can help you determine when searches for your keywords are at their highest. Pricing intelligence should be scheduled to run when your keyword search queries are very high. As per our analysis, pricing intelligence for winter shoes should be scheduled to run on Sundays, Saturdays, and Tuesdays when demand is the highest. Daily pricing intelligence for your most competitive products is highly recommended.