How often online prices change
Online prices always change in a short period of time.
If you have a look at the most famous marketplace we all know, Amazon, you will notice a frequent change of prices. The price you see today might not be the one you'll see tomorrow. The pricing strategies of Amazon are very competitive, changing prices up to 8 times a day. Amazon uses very complex algorithms that take in consideration different parameters such as the number of visits, peak hour and competition.
(price variation of the Playstation 4)
Why do prices change so quickly and how often?
Here in Competitoor we collect millions of prices every day. These information are extremely important for us because thanks to these real time data we are able to let clients take right and strategic decisions in order to increase their sales and presence on the market.
Online prices change because the price itself is among those factors that influence the potential customer. Before purchasing online it's likely that a person controls on average 4 websites to see where is the best deal. In this search, other factors are taken in consideration such as: shipping costs, guarantees, pyments and returns policies.
What are those most vulnerable products?
Many are the factors that influence the price fluctuation. Here after are listed the most common, each one with a case study as example. The best way to know hot the market is changing over time is to keep it tracked, choosing one of the Competitoor's plan.
1) How much the website is famous?
Sites with a lot of visitors, have more opportunities than others to try to find the perfect price through the ability to monitor the behavior of multiple visitors and get instant benefits from the optimization of the price. Popular sites are also a benchmark, not just for the buyers, but also for those who sell and want to be perceived as competitive.
In the following example, Competitoor compared the behaviour of 3 german e-commerce that were selling the Playstation.
Observing the graphic below, it's pretty clear that there are specific moments where the price are similar and other moments where they have a difference of 15%. Quite predictable is also the fact that those website in the videogame field, changed price very often.
(Competitoor.com Playstation 4 500G, sold in Germany at the end of 2016)
2) Commodity field
The most common products that are easily sold online since 1996 are electronics items and holidays-hotels. The dimension of the online market keeps getting bigger year by year with an increasingly facility to buy anything, from toothbrushes to cars.
Price variations collected from 4 main italian electronic websites.
(SAMSUNG 850 EVO 250 GB external memory)
In the same period of time, a niche product like a power wash shows price variations only on Amazon. The website indeed "follows" the best offer, except for sporatic moments where it tries to marginalize with some abrupt variations.
(Lavor Mek 1108 power washa)
3) Product value and income
A high value often brings a greater marginality and offers the store manager freedom of action on price variations and discounts. But even if marginality remains the same in terms of percentage, indicators such as the power of customers, the salary and how much the item is wanted from the costumer, should always be considered.
In the electronic field, the merchants has more or less the 7% of margins on the main product of different brands. With a 600€ TV Led, the merchant income is 49€.
In the large-scale distribution some specific products can be sold witha 10 time higher price (apple for example shift from 0,10€\Kg to 1,2€\Kg ).
In the luxiry field, where the product is not sold for a primary need but it's only a way to upgrade the social status, the price came to reflect the perception of value of the brand itself.
4) Number of competitors
The amount of competitors puts pressure on the merchants and the ease with which potential customers can find best deals online imposes well-defined pricing strategies. In the following example of the Italian market, a printer is compared to audio cassettes. Loudspeaker with an average price 10 times higher than the printer have no online price variations over time and are sold by 5 websites. The printer on the other hand counts only on Amazon over 60 merchants, adding then the major electronics eCommerce.
60 merchants on Amazon (following the lowest price)
(Epson Workforce WF-2510WF)
5) Brand and no-Brand
In the following example there are two non branded pic nic table with an important price gap. This gap is higher compared to branded helmets which are sold by two competing eCommerce.
(Frech market prices)
6) Time of the year
To conclude this short list of the main factors affecting price variations of online products, there is still one missing out: seasonality.
Black Friday, Cyber Monday, Sale, Christmas, Carnival, Easter, Summer, Winter, Weekend, are in different period of the year and they are focused on promoting different items. During these periods the competition increases.
In the following example we see an important boiler discount from the 1st of April till 15 of May.