automating your marketplace! 3 critical areas to start

This post is a part of our three part series on pricing success, be sure to read the first post here and second post here!

Market conditions are continually changing; customer opinion is fickle; and trends and fads can switch up in the blink of an eye. Pricing optimization is extremely important, but you and your team doesn’t have enough hours in the day to keep a personal eye on every issue. In order to scale quicker, you need to automate as many processes as you can. 

Fortunately, pricing optimization is ripe for automation, and new tech provides the tools to do so simply and swiftly. We’re here to show you the best ways to automate your pricing optimization, for maximum revenue at minimum effort. 

1. Automated price matching

Automated price matching has been around for some time now and something we highly recommend (if you’ve read our other posts). These systems check whether certain products are offered for sale elsewhere at lower prices, and then either notifies you or adjusts prices automatically.

Why should you care? Don’t take it from us, we’ll let the numbers do the talking!

why you should be using automated price matching systems

Marketplace owners can set automatic price matching software to send an automated email or popup notification to sellers who need to adjust their pricing. You can set pricing rules such as:

  • Decrease of $0.10 below the lowest price on a different marketplace
  • Decrease by $0.10 but ONLY when the item is priced $1 or more below yours.
  • Decrease by a percentage of the price of other marketplace

These are just some of the simpler pricing rules that you can implement.

What if I only want to price match with certain competitors?

Automated price match software can operate on a remarkably granular level. You can use filters to match prices only from specific marketplaces, or marketplaces in a particular geography or vertical. You can also set filters to respond only to certain categories, or certain products within categories, such as only items with free shipping, or only items with high stock levels. In this way, automated price matching software keeps your marketplace highly competitive on price, without requiring too much of your time. 

price match filtering

2. Automated promotional decisions

Now that you have an established marketplace, you can base your decisions about promotions and bundling on real data, instead of informed guesswork.

The data you’ve gathered about customer behavior and buying preferences reveals which products are often bought together, and the price that customers are willing to pay for them. It also shows which promotions are the most effective, and in which seasons, so that you can roll out the right discount offer at the right time.

Utilizing your data to optimize promotions

One way to go about doing this is to look into historical data about shopping cart purchases and items that get purchased together. Research shows that using historical shopping cart data to create automated bundles resulted in a 3% increase in profit!

When you combine your data with advanced software, you can access automated predictions about optimal bundling offers and other promotions. These automated bundles could then be shared with your sellers, presenting the most appealing product combinations and discounts that bring true value to buyers, thereby increasing seller revenues and boosting those of the marketplace. 

3. Experiment with marketing subsidies

Once you feel confident around price elasticities and know the optimal prices to attract customers, it’s time to take things to the more advanced stage and experiment with marketing subsidies.

What are marketing subsidies?

When marketplaces want to promote a certain product, they might want to offer a deep discount to attract more customers. To do this, they offer special deals with sellers to sell their product for a much lower price, and then the marketplace reimburses the difference.

For example, eBay might ask all its sellers to reduce the price on a certain smartphone by $50, agreeing to pay the $50 difference on every sale.

Marketing subsidies need to be calculated carefully. You want to hit that sweet spot; a price that is low enough to attract customers and lift sales volume, without being so low that you lose money on the transactions. Ideally, the extra revenue from increased sales more than makes up for the subsidies you pay out, but it’s a delicate balance.  Automated software judges price elasticity and the predicted uplift of any proposed price subsidy, taking away the guesswork in a task that requires precision. 

4. Track success metrics

As you automate your pricing optimization, it’s vital to continue to gather your growth metrics. Data is the fuel that powers successful automation, so you need to stay on top of price elasticity and keep driving down your price index through continual price monitoring. 

Automated price tracking and market monitoring enable you to make the right pricing decisions through automated price matching, promotions, bundles, and marketing subsidies, in order to increase AOV and drive revenues up further. 

Automated pricing optimization maintains your competitive edge

When it comes to pricing optimization, even an established marketplace can’t afford to relax. With so many sellers, products, and competitors, it’s also no longer possible to manage everything single-handedly. By automating price matching, promotional decisions, and product bundling, experimenting with marketing subsidies, and continuing to automate data gathering about prices and markets, you can free up your own time for other tasks, while maintaining your competitive edge and maximizing revenues.