Founder and CEO, Omnia Retail
Dynamic pricing is a concept that has benefits for both retailers and consumers in the online marketplace.
With the rapid growth of e-commerce over the last decade, as well as the intricate blend of omnichannel retail, the competitiveness amongst retailers and brands to remain a cut above the fray has only gotten thicker. Since 2010, global e-commerce sales have grown by 800%, showing not only the massive shift in how consumers are shopping, but also how traditional retailers and brands are evolving to stay ahead.
Understanding dynamic pricing
With the e-commerce market becoming more and more saturated, a question arises: What can retailers and brands do to prioritise their time, increase profit, become more strategic, while meeting consumer demands?
This is where Sander Roose comes in, the founder and CEO of Omnia Retail, a specialist in pricing software solutions, who first tackled this question when introducing the concept of dynamic pricing to retailers and brands a decade ago.
Through his conversations with them, a common theme was struck: Too much time is spent on updating product pricing and, even so, the data used to concoct these prices was not sound. Retailers were losing money because of slow and incorrect pricing practices.
Ten years ago, dynamic pricing was only relevant for the most mature online categories, such as consumer electronics.
“This is the problem we started solving for retailers with dynamic pricing software,” says Roose. He adds that since then, it has been eye-opening in the best way possible to see how the need for dynamic pricing has grown.
“Ten years ago, dynamic pricing was only relevant for the most mature online categories, such as consumer electronics. As categories became more mature online, dynamic pricing became crucial to those categories too. Nowadays we serve retailers in virtually all categories such as sports, beauty, DIY, furniture and more.”
Data, data and more data
According to Roose, the defining element of Omnia’s pricing software is its data. “We have the infrastructure to gather market data and prices of competitors, but also internal data such as stock levels, purchase prices and commercial strategy.”
As a product itself, dynamic pricing also offers price elasticity insights, the ability to export and analyse raw pricing data, and the capacity to create company-wide pricing policies.
Not only is dynamic pricing data-driven, but it is also intuitive and highly customisable. “Our software constantly checks all products and, if needed, makes price changes in their own platform,” says Roose. From a consumer’s perspective, it may seem like dynamic pricing is geared towards the goals of the retailer and not necessarily those of the shopper, which is typically to get the fairest and most honest price for a product or service.
However, Roose refutes this by suggesting instead that this technology is making markets more efficient and there is less margin for retailers to grossly inflate their prices without recourse. “There is no benefit for a retailer to overcharge as the implicit assumption is that prices are very transparent. To do that will hurt their sales, so it is good for the consumer and good for the retailer,” he says.
The direct-to-consumer shift
By consistently monitoring and analysing retail trends, Omnia notes that the growth in e-commerce has instigated another trend: The rise of direct-to-consumer sales. Traditionally, brands would sell their stock to retailers and rely on the reach, marketing strategies and financial power of the retailer to make sales. Roose says that, today, brands are skipping the retailer route by selling directly to consumers, and this is requiring them to use pricing strategies that are competitive.
As a SaaS (software as a service) company that was introducing a product very few knew much about a decade ago, Omnia has been able to penetrate the retail sector quite successfully, as multiple European and global brands like Samsung, HP, Philips Electronics, bol.com, Grohe and more have implemented their data, software and strategies. In fact, going forward, Roose doesn’t see the industry without it: “Retailers need these kinds of tools in the market to survive.”