Avoiding the Pitfalls of Automatic Repricing

Product Management

Retailers understand the importance of offering items at a competitive price point. While there are numerous factors that impact whether people make a purchase with a seller, price is one of the more prominent variables. Generally speaking, offering items at a lower price (or equal cost) to competitors can go a long way to ensure customers do not go elsewhere to make purchases.

This has led retailers to take proactive measures when it comes to setting price points. For example, many merchants have price-matching policies that allow employees to give customers lower prices if competitors offer the same item for less money. Retailers have also ventured into dynamic pricing, allowing them to raise or lower prices depending on demand, seasonal activity, stock issues and in numerous other situations. While these approaches allow merchants to be more flexible with pricing, they can also result in some serious missteps.

When automatic repricing goes bad

Marketplace sellers are without a doubt familiar with automatic repricing tools that help them match the prices of their competitors automatically. This technology plays a pivotal role in helping to automate a process that would otherwise be a time-consuming, tedious task.

Many Amazon sellers saw their goods reduced to a price of a single penny.

However, when using these solutions, errors can occur. Perhaps it’s a problem with the technology itself, or perhaps the merchant entered data incorrectly – maybe employees missed a decimal place or misread the field they were entering the price into. As Practical eCommerce noted, these errors can appear at the worst of times. For example, on Black Friday, many Amazon sellers saw their goods reduced to a price of a single penny. This resulted in disaster, as merchants scrambled to cancel orders.

Errors like this can lead to several long-term ramifications. Pricing mistakes make the seller look silly and unprofessional. For marketplace users, these errors can lead to marks against their reputation – canceling orders often result in penalties, as marketplace owners do not want their customers to leave dissatisfied.

Merchants using drop shippers and fulfillment services such as Fulfillment by Amazon may not be able to cancel these orders in time.

Perhaps worst of all – merchants using drop shippers and fulfillment services such as Fulfillment by Amazon may not be able to cancel these orders in time. The purchase could be processed and sent to customers immediately after the transaction is complete, resulting in retailers taking a significant hit to their margins. Practical eCommerce contributor Richard Stubbings brought up horror stories of retailers having their entire stock wiped out in an hour as a result of automatic repricing issues.

With the rising importance of prompt delivery and many merchants striving toward two-day or same-day delivery, repricing issues will only be more disastrous. If orders are being packaged and shipped even quicker, merchants have less time to cancel orders before they are sent to customers. Additionally, more merchants utilizing drop shipping and FBA will also make the repricing issue an even more pressing matter.

Making the most of dynamic pricing

Many marketplaces are looking to make changes to repricing tools and other technology to minimize the chance of price errors occurring.

There is no denying that pricing technology helps merchants maintain a competitive edge. Many marketplaces are looking to make changes to repricing tools and other technology to minimize the chance of price errors occurring.

However, it is also up to retailers to minimize any mistakes on their end. When entering product data and information such as prices, they must ensure they do not enter wrong figures. This will go a long way in eliminating any potential mistakes.

Leave a Reply

Your email address will not be published. Required fields are marked *