Holiday season will be different this year. E-commerce penetration and the digital transition efforts around the globe are at unprecedented levels.
Not only the sheer number of first time online shoppers and new competitors, but also changing spending habits makes it difficult to stand out from the crowd using old tactics.
In this new shopping environment, you need to
- Understand what shoppers expect from you
- Anticipate how COVID-19 will affect shopping behavior
- Build/try out new strategies to adapt to changes
Based on our research on what's waiting for us this November, we've gathered some pricing strategies and tactics you can use for a successful holiday season.
Let's start!
Take every chance to improve profitability
It's going to be a longer than usual season.
Think of it as a marathon. People are going to start holiday shopping earlier this year and will be looking for good deals for weeks.
Make sure your products don't run out of stock. Those who visit your store and see what they want is out of stock might not come back.
More importantly, monitor competitors' stock information. When they're out of stock, you can improve profit margins.
Even if it's a slight increase that won't alienate your customers, it'll still make a good difference in revenue considering the high demand.
Track competitors, set dynamic prices
One thing is for sure. You need to offer competitive prices.
See, price is the top priority for the financially strained consumer. One survey found that 36% of online shoppers are shopping with more brands this year. Which is a great opportunity for small businesses.
But the same survey also found that shopper loyalty decreases as people spend more time online, seeing more stores that offer discounts and deals. 45% of shoppers reported they are now less loyal to brands they love.
Apart from that, holiday shoppers come with a certain expectation that the deals are going to be better, compared to the rest of the year.
Perhaps more important than all, your competitors are likely to offer deep discounts to get rid of dead stock.
That means you need to be monitoring your competitors and set flexible prices that you can adjust on time.
Use loss leaders
One of the greatest pricing tactics for the holiday season is loss leader pricing.
Loss leaders are products sold at a loss to drive traffic to a store. If you pick the right products, you can drive enormous traffic to yours.
Here's how.
Comparison shopping engines are an incredible traffic source for you.
For instance, skroutz is a comparison shopping engine in Greece.
Or, kakaku is a CSE serving Japanese shoppers.
As you can see, they're one of the most visited websites in their countries.
If you offer the cheapest deal on a popular product, you'll bring in all the shoppers who visit these websites or ones that use Google Shopping-a.k.a., all of us.
I know that matching a giant retailers' offer is always difficult, especially when they have a huge assortment they use to compensate for the loss from unprofitable transactions.
But you must do your best to get the best deal from your supplier, specifically on popular products. Remind them it's a big opportunity and you'll both win, if you combine your efforts.
Offer personalized discounts
We all know that standing out from the crowd in the holiday season is more difficult than preparing for it.
Shoppers receive countless generic discount emails and they only use a few. Personalized discount and price drop emails work much better than generic ones.
If you're not tracking customer data, start today.
Observe your customers purchasing behavior, track their browsing behavior, find the products they've left in their carts and added to their wish lists.
Instead of sending out generic discounts, send your customers discount codes they can use on products they've shown interest in.
Consider previously used discounts to find out what type of discounts will entice them.
Offer custom bundles
Bundles are great to entice customers to make impulsive purchases. Even if they got plans to buy merely a laptop and a headphone, you can add a hard drive to that bundle with an enticing offer.
But the thing is, shoppers plan to cut spending this year, and they wouldn't trifle their money away unless they're truly interested in the product.
One brilliant strategy to avoid both steep discounts that diminish profit margins and generic bundles that won't sell is offering custom bundles.
If you offer a 20% discount on a bundle that shoppers can create themselves, it can work much better than a 30% discount on a bundle you create.
Wish you the best holiday season!
The consumer is changing. Track customer data, try to get to know your customers better. Learn what they're expecting from this holiday season and your store.
Offer competitive discounts, let customers know about them from early on.
Try these pricing tactics for the holiday season and let us know how did it go!