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A Guide to Omnichannel Pricing Strategies for Online Retailers

By Priceva
on January 25, 2022
Omnichannel brands are the future of e-commerce. These brands use pricing strategies built specifically for omnichannel sales that allow them to provide conversion points wherever there is a buyer. We will take a closer look at this phenomenon in this article, analyze omnichannel pricing strategies, and tell you when it’s a good time to use such a strategy.

What is Omnichannel Pricing?

Omnichannel pricing is a way of pricing a single brand on different platforms: social networks, an online store, a website, and so on. The point is that prices should be approximately the same everywhere.

Customers do not like it when the price for the same product from the same brand varies depending on the platform. There is a feeling that they are trying to "deceive" the buyer: somewhere the deal is better, but elsewhere it’s not.

However, it is difficult to keep track of all prices on all channels. Omnichannel pricing aims to equalize a brand’s prices as much as possible, and it also monitors and parses your store's prices so you don't have to do it manually. Thus, omnichannel pricing will save you time and increase customer loyalty.

Which Retailers Should Use Omnichannel Pricing?

Omnichannel pricing suits all stores that want to make a positive impression on their customers and build a good reputation in the market. It does not depend on the specifics of the brand or its products; omnichannel pricing will inspire more confidence among buyers. They don't have to spend time comparing prices across different channels, and it's also a powerful way to retain customers.

Omnichannel Pricing Strategies

There are several strategies in which the approach, pricing, and potential profitability vary.

Channel-Specific Pricing

This is a strategy where prices vary across channels. It has both its advantages and disadvantages.

Advantages: You will be able to get more profit and manipulate platforms, because most likely, the platform on which you offer the goods cheaper will become more popular among your buyers. This is an effective strategy when the client does not compare prices on different channels; that is, his path to purchase is more "linear".

Disadvantages: This is a risky approach and can damage your reputation with customers. As already mentioned above, consumers do not like big differences in prices. If you use this strategy, don’t count on high customer retention across platforms. Though you may increase sales and profits on some channels, experienced customers can get angry and form a bad opinion about your brand.

Therefore, think carefully before implementing such a strategy.

Omnichannel Pricing

Omnichannel pricing implies the same prices on all platforms.

This attracts customers, because even when they compare different brands to yours, they may find your brand more attractive. This strategy simplifies the interaction between the consumer and the online store.

Since clients don’t need to look for a better offer, they understand that the deal is the same everywhere, which inspires confidence. This approach will help you increase your market share and create competitive prices.

For example, the UK-based catalog retailer Argos allows customers to buy online and pick up their purchases in-store. Because of this, they need to ensure the pricing online reflects the prices you’d pay if you had gone to the store. The option of buying online and picking up in-store or choosing home delivery puts the choice in the hands of the customer: they are able to choose the method that best suits their lifestyle.

Combination Pricing

As the name suggests, with this pricing, also known as hybrid pricing, you have both an omnichannel approach and channel-specific pricing.

This is the most common strategy, and for many brands it is the most suitable one. In this case, you keep approximately the same prices for your products, but at the same time, you make small exceptions on certain sites.

Starbucks, for example, offers an online reward program which users can take advantage of from their phone. There, they are able to order their drinks in advance, so they’re ready to pick up right away at the location.

These deals and offers are only available to users of the app, so there might be situations where two customers pay completely different prices for their drinks, as one makes use of the in-app deals and the other doesn’t.

Deciding Your Omnichannel Pricing Strategy

We have already considered various pricing options, but before you decide on your own strategy, you should consider the following factors:

How much does it cost you to maintain sales channels? This is a matter of logistics, delivery of goods, and the territorial coverage of your store. You have to calculate the cost, the delivery time of the goods, and then draw conclusions. Of course, you can’t work at a loss, which means that if delivery to different places requires different resources, then prices are likely to be different.

What are the regional differences? Obviously, if you have a clothing brand, and you deliver goods to areas with different climates, then, for example, discounts on down jackets for some regions will be completely useless for other warmer regions. Regional differences affect people's demand, which means supply will also be affected.

What is your client base? You need to understand your customer's basic needs and motivations. If you have some customers who are always looking for a better deal, then you need to take this into account.

How tough is your competition on different platforms? You can have many sales channels and many ways to promote your business, but if somewhere the competition is off the charts, for example on social networks, then it makes sense to lower the price for this particular platform in order to cope with the competition.

How to Choose a Strategy

There are four points that can help you choose the best option:

  • How many similarities your channels share, including in the supply chain or with operations.
  • Customer behavior, specifically whether they shop linearly or bounce between channels.
  • Global market conditions and channel-specific pricing trends.
  • Regional or market needs, especially if you sell internationally.
When building a multi-channel pricing strategy, it is important to study the pros and cons of each channel, the advantages and disadvantages of your brand delivery regions, and customers from different regions.

Only a thorough analysis of your entire customer base will help you build a win-win pricing strategy.

Takeaways

Omnichannel pricing is a successful strategy for many merchants; moreover, it is a way to build customer confidence in the face of huge e-commerce competition. Of course, there are other pricing strategies, but there’s nothing stopping you from mixing them, or integrating special exceptional offers into omnichannel pricing.

An omnichannel strategy will allow you to increase sales through customer satisfaction. Your buyers will be able to choose the site they like, but not because of the need to buy a product cheaper.

Omnichannel pricing will help you collect more data: data about your customers and competitors, and which platforms are more effective. And as you know, knowledge is power, so the more data you have, the more competitive your business will be. To collect as much information as possible, you can use the Competitor Price Monitoring and simplify your task. You may also use Repricing software by Priceva, which will be an excellent tool for setting prices during periods of market change.

FAQ

How do you make an omnichannel?

You need to present your product on different platforms: social networks, your website, large online stores, and so on. Advertise your brand on all these platforms whenever possible. It is important that your product has one fixed price everywhere.

What's the difference between multichannel and omnichannel?

Omnichannel and multichannel are similar, but are not the same concept. Omnichannel involves selling on all channels, while multichannel involves selling on many channels.

The main difference between omnichannel and multichannel is that omnichannel involves all channels and revolves around your customer, while multichannel involves many channels and revolves around your product.

How is Amazon an omnichannel?

First, Amazon focuses on the customer experience. They use data to create personalized, responsive interactions, no matter which channels their customers find them on.

Second, they focus on integrating their channels in the backend. This goes beyond inventory and central fulfillment. It includes connecting customer data and fulfilling customer's needs in whichever channel they prefer.

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