The holidays are quickly approaching and that means that online retailers need to double down on their selling strategies. With that said, how can retailers pinpoint the best ones that will help them get the most out of this most wonderful time of the year? There are many selling tips and trends that retailers have been implementing recently that have helped sales skyrocket and built a stronger brand image. Here are the top four.
Free Shipping or Bust
Online shopping is so convenient, but there is one drawback that often lures shoppers offline. Simply put, no shopper wants to pay for shipping, but retailers still charge for it. In the first quarter of 2014 alone, 58% of all ecommerce sales included free shipping. Retailers who want to be competitive in such a fast-paced market must give shoppers a reason to purchase on their site, instead of just going to a store nearby. It doesn’t have to be a detriment for retailers, luckily. In fact, offering free shipping on the condition that shoppers spend a certain amount is a great way to boost average order value.
Brick and Mortar Experiments
Recently, many retailers that started off online have taken to Main Street to try their luck with physical stores. From Bonobos to BaubleBar, online retailers have learned that brick and mortar certainly has its merits. In-store shoppers welcomed menswear ecommerce site, Bonobos, and saw so much success that it plans to quadruple its store count over the next two years. In addition, fashion jewelry e-tailer, BaubleBar, cites that on average, in-store customers buy about three times more merchandise, compared to their online counterparts. These two companies’ wins show the perks of product exposure.
Did you know that for manufacturers there is a 77% correlation between profitability and inventory turn? Managing inventory is a primary concern for all in the retailer industry. There are many inventory challenges that arise, such as having the right quantity in stock. On Amazon, for example, having items consistently in stock is key to winning the infamous BuyBox that accounts for an astounding 70% of all Amazon purchases. This also extends to retailers selling on all other channels. However, 70% of retailers rate their inventory management skills as average or below. How can this be improved?
Two words: big data. They say you don’t know until you mine and that couldn’t be more true. About 45-90% of business expenses in retail have to do with inventory, but it’s possible to cut that down with the help of data. By knowing exactly what consumers are buying, and then monitoring sales in real-time, retailers can make informed inventory decisions. But honestly, demand can never be predicted 100% accurately. Therefore, effective pricing in terms of sales and discounts must be a constant supplement to inventory management.
How your products are priced has a huge impact on your bottom line. Low prices can hurt brand value and profitability (unless you position yourself as a loss leader) and high prices can result in getting undercut by competitors. So how do you figure out when the price is right (Drew’s cool, but Bob is a hard act to follow)? There are many great pricing strategies that have been effective for online retailers, from anchor pricing to penetration pricing. However, there is one that has proven to be a successful base-line strategy by the name of dynamic pricing.
Dynamic pricing has done wonders for Amazon and Best Buy because, at its core, it is a highly flexible strategy. There are a number of factors that impact pricing decisions, such as: supply, demand, seasonality, time of day, and many more. Dynamic pricing is the only pricing strategy that takes all these factors into account. Automation is key to the functionality of dynamic pricing because changing prices manually every time a competitor reprices or when you’re low on stock would take more time than the day allows. Forrester Research estimates that price optimization software boosts retailers’ gross margins by 10% on average.
The holidays will be here before we know it and preparing to wow shoppers now is the way to go. From data driven inventory to strategic free shipping to effective pricing, it’s possible to plan for the most profitable holiday season your business has ever seen.
What other selling strategies do you think will heat up this holiday season? Leave a comment with your ideas.
About the Author
Angelica Valentine is the Content Marketing Manager at Wiser, the leading pricing intelligence suite. Wiser’s flagship product, WisePricer is a full-featured pricing and merchandising engine that monitors, analyzes and re-prices retail products in real-time. WisePricer enables retailers to grow profit margins, price with confidence and improve merchandising through powering the development of a sound pricing strategy.