Everyone wants to cut their costs. Especially today when retailers are forced to pour significant dollars into technology to stay relevant to the market and attract demanding customers. Technology spending is growing: Gartner expects retailers to spend as much as $225.4 by 2022, with $100 billion being allocated to IT services. The good news is: the market is already offering some solutions which help smaller and mid-size retail businesses do without IT services across many business areas, including pricing, and, as a result, reduce expenses. A verified dataset is one of them.
It’s no secret that retailers require high-quality data to fuel thousands of decisions. Pricing is no exception. However, just the fact of collecting data is not enough. To be useful, data has to be complete, accurate and timely. Otherwise, retailers will not be able to make the right pricing decisions, which will result in significant financial losses. Therefore, retail companies are desperately seeking a way to receive high-quality data which will allow for real-time pricing decisions. Such solutions need to be flexible enough to collect exactly the data retailers require: not only the information about competitors’ prices, but literally every bit of information a product page contains.
Usually, businesses have two options to choose from: to build an in-house data quality control system or partner with an external data provider. Developing and keeping such a system running requires constant investment and the involvement of the retailer’s IT department, which adds even more pressure on the retailer’s wallet. Moreover, IT professionals are unlikely to know every single thing about retail — they may create a solution which is not efficient enough. At the same time, external data providers can offer a turn-key solution, a 98% accuracy and up to 12 data updates per day. Retailers can also verify data manually in just one click.
If you can check the quality of data on the side of a data provider, it saves you time and money. “We have saved 70% of the IT budget, or the capacity of three full-time IT professionals, for data scraping and validation. The price scraping software we are using helps us get reliable, timely and accurate competitive data,” says a representative of the Eastern European online retailer Ulmart that has cooperated with one of such providers to get the data.
When it comes to receiving competitive data, retailers also need to think about what types of products they want to monitor. There are so-called exact matches (when you and your competitor offer exactly the same products) and similar or alike products. Similar products can be private label items or completely new entries. Or, they can differ by color or size. Although such items can account for as much as 30% of the assortment, monitoring them remains a challenge even for mature retailers.
Some retail companies have found a way out. The assortment of Eastern European omnichannel DIY retailer Sdvor, for the most part, consists of private label products. “In addition to the fact that each category has its KVI-products, which need to be repriced several times a day, the customer's assortment includes many similar products, as well as products manufactured under its own brand,” Natalia Guseinova, pricing manager of the retailer. The company is nailing the pricing of private label items. Partially since Sdvor has been cooperating with an external data provider, namely Competera.
The retailer, unlike many other companies, produces its private label items using high-quality materials and sells such items at higher prices. That’s why, when searching for matches for such products, the company needs more than simply finding a similar product at the lowest price — it requires a match for every characteristic of the product to position its own items properly. While cooperating with Competera, Sdvor has been using a separate module to match products by minor attributes. A category of lookalike items has been created to monitor prices, promos, stock and other essential parameters by each competitor. As a result, the retailer has managed to cut operating costs by 10 times and reprice KVIs manually, while keeping prices accurate and timely.
Everyone who’s willing to thrive is looking for the best technology to boost performance and please buyers. Technological innovation is projected to penetrate more business areas in retail. Why not make the most of it and use technology to keep your expenses low?
The article cites studies by Gartner. Guest post courtesy of Eugene Sazonov