Pricing wars: weekend warriors

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weekend-warriors

With ever-growing market competitiveness (mostly due to young, emerging online stores who try to make their way with cheap pricing, with extremely low margins) we have noticed a new phenomenon – prices going down on Friday evening, and up again on Monday early AM.

During our visit to Pro Light + Sound trade show in Frankfurt – we have confirmed this phenomenon with several musical brands – who observed it in last couple of months.

It typically works like this:

  • A young and aggressive online retailer, wants to attract more sales
  • The best way to do so is by lowering the price margin
  • On the other hand the price shouldn’t go too low – usually the manufacturer wants the retailer to observe minimal agreed price (MAP, MSRP)
  • The retailer knows that big brands use automated services to detect price changes on retail sites
  • However, the retailer also knows that on weekends there is no-one in brand’s marketing office
  • Thus on, Friday evening, the retailer lowers the price: sometimes just for a couple of products, sometimes across the whole brand range
  • In certain industries (especially music industry) customers are more active on weekends – and such price cuts usually result with significant sales peaks.
  • On Monday morning – the retailer moves the price back up
  • When brand’s pricing department contacts them on Monday (because they have detected weekend price cuts) their story is either
    • sorry, we had a misunderstanding, the prices are back to normal now, or
    • sorry, we had a glitch in our software, but there was no one in the office to fix it, or
    • sorry – I had to do it, since everyone else does it as well
  • There are even (rather comical) situations where retailer actually does perform automated price cut on Friday PM – but his software is not smart enough to get prices back up on Monday AM. In this case the retailer gets caught red-handed 🙂

What kind of advice can we offer?

  • You need a reliable tool in order to to document ‘dirty pricing tricks’ performed by such retailers
  • The tool also needs analytical features – so you can analyze retailer’s behavior over past weekends, and draw some conclusions from it
  • Do let your retailers know that you’re familiar with such tricks, and that you have methods to fight them
  • Arm yourself with a lot of patience 🙂
  • Try not to work weekends (unlike myself 🙂 )

Good luck fighting weekend warriors!

 

 

 

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This blog is a place for eCommerce professionals to discuss ideas, methodologies and strategies to compete more effectively in the ever more tightening world of online retail. We explore things like competitive price monitoring, competitor business intelligence, competitive pricing, and counter-intelligence in general.

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