Competitor price monitoring – what does it consist of?
Price monitoring is nothing more than the continuous collection of data on your competitors’ offerings. With the right tools, your company can keep its finger on the pulse and react in real time when prices at other online stores change. However, monitoring competitor prices is not about waging a constant price war (although we know of such cases, such as the battle between Lidl and Biedronka, which has been going on for months), but rather about shaping a sensible pricing policy.
This will help you find out what prices your competitors are charging, which products go on sale frequently, and how long promotions last. This is all information that will help your store better respond to customer needs, adapt to the market, and even make pre-emptive moves!
Price tracking also helps to verify and optimize business goals. It is worth implementing monitoring as soon as possible. Every day without knowing what your competitors are doing is potentially a lost benefit.
What is worth following?
Aside from the obvious answer, which is: Your direct competition, there are a few more platforms to keep in mind when monitoring prices. In the era of e-commerce, it’s not always easy to identify a direct rival for yourself – Ladybug and Lidl, for example. Online stores need to look broadly, because the competition is… all stores offering a similar assortment and shipping within the country.
To effectively track market changes, watch carefully:
- Other online stores with similar offerings,
- Price comparison sites (Ceneo, Skąpiec),
- Sales platforms (Allegro, Amazon, eBay),
- Manufacturer’s stores (brands you sell).
With a broad cross-section of tracked companies, you will get more reliable and detailed information. As a result, it will be easier to prepare a meaningful response in the form of – for example – price changes in your store.
Stages of online price monitoring
Observing changes in price lists consists of several elements. It’s worth learning about them to know what’s really inside the process.
Data collection
Whether you verify prices yourself (manually) or with the help of automation tools, you should start by determining the scope of information your company needs, and then start collecting it.
At this stage, it is useful to divide the information into categories:
- Key data: e.g., product price, change from previous price, and unit product cost (if applicable),
- Optional data: e.g. shipping costs, duration of the promotion.
You will need a more detailed breakdown if you choose to manually acquire data. In this option, you will need to select the most relevant information very carefully, as you will most likely run out of time to collect the less important ones.
Updating data
With an environment as dynamic as the e-commerce market, the information gathered this morning may be outdated by the afternoon. Prices are constantly changing, competitors are launching promotional offers and reacting on their own to what others are doing. It is also important to take into account the fact that companies use tools to automatically change prices. This, in turn, means that the price of one product can change many times in one day.
How do you make sure your data remains relevant under such conditions? The answer is to automate price monitoring. With such software at our disposal, we can benefit from automatic data updates – every few weeks, every few days or even on demand. The frequency of available updates depends on the subscription plan chosen.
Analyzing the data
With access to current and historical data, you can start analyzing it. The choice of approach is important – you can focus on analyzing specific competition (for example, a company with which you compete directly in a particular field) or trends in the market.
A thorough analysis of the competition will allow you to extract more information about a particular company:
- On what dates and for how long they launch promotional actions,
- What products are missing from their stock,
- Which products often go into special offers,
- How low they are able to drop the price of specific products.
You can then use all this information when planning your company’s next moves.
Looking more broadly, you can spot trends in the market. Here, access to historical data is key, so you can compare current prices with those of a month, several months or even a year ago. A chart showing changes over time will make it easier for your company to make decisions about possible price reductions. Sometimes even a symbolic reduction of a few tens of pennies can result in concrete benefits – for example, when thanks to the reduction the product will be displayed in a price aggregator as historically the cheapest, or hit the homepage of a portal collecting promotions.
What are the benefits of e-commerce price monitoring?
While it’s not so easy to accurately estimate the impact of price monitoring on a company’s profits, there are several tangible benefits that come from tracking competitors’ offerings.
First: knowledge
This is especially important if you are just starting out in e-commerce, trying to capture a new market, or expanding into new product or service categories. Gaining knowledge of practices typical of the market, segment or industry you’re in will allow your business to perform better. Monitoring – not only your prices, but more broadly: your competitors’ activities – will allow you to make more informed decisions.
By having knowledge about the doings of other companies, you gain a valuable reference point with which to plan further moves in the market. Think about how to use the information you gain to offer your customers something even better than your competitors.
Second: competitiveness
Is your direct competitor offering a lower price for a product that is currently on a roll? By keeping a close eye on market developments, you can respond appropriately to his proposal. There are at least a few possibilities:
- Lower the price of the product in your store – sometimes a small reduction is enough,
- offer a lower price when buying multiple products or several products from one category – this solution will not work in every case, but is often effective,
- offer free shipping,
- assign additional points in the loyalty program for the purchase of this product,
- Launch a promotional campaign (e.g., on social media) promoting your product at a discounted price.
Remember, too, that it’s a good idea to verify prices in the other direction as well. If your competitors have raised their prices – for example, due to market reshuffling or difficult availability – this could be a signal to your company. In such a situation, raising the price can make your offer more credible. With a large price difference, customers may become dubious about whether the cheapest offer is fair.
Third: profits
When you set your product prices, you consider margin and profitability. However, if you have knowledge of the prices of other companies operating in the same area, it will be easier for you to adjust yours so that it is still profitable to sell these products.
Fourth: customers
It’s not just about the lowest possible price. An attractive offer also consists of good timing. You need to launch a promotion at the right moment – when customers need it. You can’t miss the moment when a product is very popular – your competitors don’t sleep and will certainly do their best to take advantage of the right moment. With price monitoring, your competitors’ movements will quickly draw your attention and allow you to adjust your offer to customers’ expectations.
How to monitor product prices manually?
There are two ways to keep abreast of changing prices in the market you are interested in: manual and automatic. Independent price tracking has more disadvantages than advantages, but this does not mean that it is an absolutely useless solution. So when can it be useful?
- if you sell one or more products whose prices are relatively easy to track on your own,
- if you are operating in a small niche and the competition is not numerous,
- if you are just starting out and don’t have the resources to spend on automating price monitoring.
As you can see, the use for manual price tracking is severely limited. It is also worth remembering that the savings associated with self-monitoring may prove to be apparent – as it is an involved, time-consuming process and prone to making mistakes.
By choosing to track prices manually, you also do not have access to real-time price list changes. New pricing data will only become available when you acquire it. This, in turn, means that they quickly become outdated.
There’s another problem: for this method you need constant commitment. You won’t get a notification of a price change in the app or in your mailbox – you need to check regularly to see if anything has changed, or delegate an employee to do so.
Price monitoring tools manually
If you want to try this method, get yourself a spreadsheet application – it could be Microsoft Excel or Google Sheets. Then create a sheet with a price tracking table as its centerpiece. Ensure that there is room in it for:
- The name of the product/good whose prices you want to track,
- brief description,
- quantity,
- unit product cost,
- total cost.
The last three fields will say to be able to put together several sources (stores) that sell this commodity.
Put four boxes at the end of the table:
- highest product price,
- lowest product price,
- average product price,
- The current price of the product in your store.
Thus prepared, the table will be clear and will allow you to quickly complete the most important data and compare.
Automatic price monitoring – what does automation provide?
The second method of price tracking in the crushing majority of cases will be the default one. Despite the higher up-front costs and the need to commit to the automation startup process, these tools simply provide more benefits that win out in the bigger picture over manually watching price list changes in every field. What do you gain from automation?
First: time
With specialized software, price monitoring is much faster and more accurate. This means that not only will you instantly receive information about any changes, but also the results will be more reliable (there is less risk of error).
Second: opportunities
By monitoring your competitors’ offerings manually, you can only check them as much as your (or your employees’) time allows. By automating this activity, it becomes possible to track dozens or even hundreds of products offered by all your competitors.
The only limitation here may be cost – price monitoring tools often offer several differentiated plans. Cheaper or free variants usually have limits – for example, they allow price tracking of 50 or 100 products, and limit the number of companies whose offers they can analyze. This is an advantage for smaller companies that perhaps don’t have a need to track many products or are competing with a limited number of companies. Such companies can choose a cheaper plan, so they don’t pay for services they can’t use.
Third: advantage
Price checking tools can keep you informed of any changes in real time. Email or SMS notifications mean you’ll know right away when a competitor introduces a new product price or when your offer is no longer the cheapest.
But that’s not the end of the features that can help build leads. Some of the applications also allow you to check:
Price-matching features – these are solutions that allow you to configure criteria based on which prices of pre-selected products will change in response to changes made by competing companies.
Stock levels – so you’ll be able to take advantage of your competitors’ running out of stock.
Delivery costs – for low-value orders, the shipping cost is often very important. Thanks to this function, you will know when it is worth offering cheaper or free shipping, and when there is a good time to raise the delivery fee.
Price matching, or matching prices with competition
One of the most advanced features using the data obtained through monitoring is the dynamic adjustment of your store’s prices to the market situation – that is, to the prices of your competitors. With the help of filters and conditions (their availability depends on the tool you use), you can make your prices change automatically so that they always match your competitors’ proposals. You can also configure the tool to send notifications when the competitor’s price (for a given product) becomes lower than yours.
Important!
It’s not always about offering the lowest possible price. Automatically lowering prices can reduce margins to a degree that makes it very difficult to make money on product sales. Initiating a price war, on the other hand, is a very risky solution that the vast majority of companies are unlikely to be able to afford.
Summary
Monitoring your competitors’ prices is a necessary part of your online store development strategy. Putting it in place requires considerable effort and time – yours and your staff’s – but it brings tangible benefits. In the long run, automatic price tracking is a more advantageous solution, making it easier to tailor features to your company’s needs and working much more efficiently.
In the pursuit of presenting the best possible offer, however, moderation is necessary. Constantly lowering prices is a road to nowhere, and the pricing strategy should be well thought out and implemented according to plan – not just as a reaction to the actions of competitors.
