Price data gatherers say Amazon is the king of intra-day price
fluctuations, but other large and smaller merchants are doing it,
too. Sears led the
charge between November 1 and December 10, 2012, shifting nearly
24% of its online prices on select products daily, up from 10% in
2011, according to Dynamite Data research featured in a Bain and
Company report. Amazon changed 20% of prices on those products in
2012 and 12% the previous year. Kmart adjusted almost 15% of the
select product prices in 2012 -- up from 3% in 2011.
Toys "R" Us, Best Buy, Home Depot, Staples, Office Depot and
Lowe's all changed 5% or more of their prices on the products
studied during the 2012 holiday season, according to the
report.
Hot sector
The price-data sector is heating up. The Home Depot acquired
pricing-data firm Black Locus in December to enrich its competitive
pricing efforts. In addition, IBM is now partnering with pricing
intelligence company 360pi to supplement data used for its retail
analytics services.
"In Q4 of last year we on-boarded more customers than we did
from Q1 to Q3 combined," said Pierce Ujjainwalla, marketing team
lead at 360pi. The firm started as a price comparison shopping
engine but shifted to focus on its b-to-b price monitoring service
about a year ago. Like Dynamite Data, 360pi extracts data from
e-commerce sites throughout the day, sometimes on an hourly
basis.
The pricing data services trend started with electronics, where
specific model numbers and SKUs are standard features on product
pages. "That's where the data is clean," said Dynamite Data CEO
Diana Schulz.
However, there are applications for other markets such as
appliances, office tools and auto. CPG sellers are also showing an
interest in pricing data. After all, said Mr. Kubicki, CPG products
are "why the barcode was invented." Merchants selling consumer
packaged goods are starting to add barcodes to online product
pages, though the practice is "still in its infancy," he said.
Still, he suggested, the CPG industry is research-rich. "Most of
these companies are already big data companies."
While the internet is enabling the data collection, it's having
a big impact on in-store prices and shopping behavior. Retailers
are investing in pricing data services to optimize pricing online
and in their physical locations, and to fight showrooming -- when
shoppers peruse bricks and mortar store goods but then purchase
online.
On the sales floor
Abt Electronics, a Chicago-area seller of electronics, furniture
and luggage and kitchen accessories, works with Dynamite Data to
feed competitive pricing information straight to its salespeople on
the floor who use it to negotiate sales, said Mr. Kubicki. Another
bricks-and-mortar furniture store plugs Dynamite's data into its
own algorithms to update prices shown in LED displays each day, he
added.
360pi also offers a tool that helps in the physical realm. Its
mobile software is used by secret shoppers who capture pricing data
for retail clients when they visit rival stores, said Mr.
Ujjainwalla.
While the physical and digital shopping worlds are aligning, the
logistical challenges involved in updating prices at bricks and
mortar locations prevent some merchants from doing so as frequently
as they might like. Even Walmart changes
prices just once each day, according to Dynamite's research.
"Bricks and mortar still kind of supersedes everything," said Mr.
Kubicki.
Beyond pricing
It's not just about price optimization, though. Pricing data firms
are also helping search marketers become more sophisticated about
when to bid on search terms and when it's best to to sit back and
wait. For instance, digital marketing firm Rise Interactive uses
360pi data to help e-commerce clients, said Mr. Ujjainwalla. When
the data shows their products are priced higher than the
competition, they can set up rules that prevent their ads for that
product from running. Because companies have to pay if someone
clicks on a search ad, they may choose not to run the ad at all if
a consumer is likely to buy the product for less elsewhere.
Retailers have also used Dynamite Data to inform search
campaigns. When the data suggest a competitor is out of stock on an
item, merchants may act on that information by reducing their
search keyword bids, said Mr. Kubicki.