Competitor pricing is one of the most, if not the most important variables that retailers need to be monitoring in order to ensure that sales are not lost needlessly to a competitor with a smarter pricing strategy.
But, are there any others? Are retailers who monitor price and price alone missing out on other information that can be just as useful?
In this article we discuss what variables retailers may benefit from monitoring to gain an additional competitive edge.
What Variables to Monitor?
In the days where manual competition monitoring was the norm, monitoring competitor pricing strategy was a painstakingly slow process. It was inevitable that vital information on price comparison was missed because the manual task was simply too demanding and time consuming. Gaps in information then resulted in lost sales opportunities as a competitor with a better pricing strategy gained new customers and sales.
As software for competition monitoring develops, retailers can now take in an array of information that builds a picture of their competitors and how they are selling the same products. With the monitoring process becoming less onerous, it isn’t surprising that more factors can be examined to build a picture of how to get ahead of a competitor.
Variables that reveal opportunities to build a better sales strategy include inventory, similar products, posting and packing charges, social media, newsletters, sales and supply channels, images, videos and blog content. Monitoring these variables gives an important and useful insight into the strength of a competitor brand and this analysis can impart useful ideas on how to get ahead of a competitor.
When people shop, they compare product price, but they also compare prices of similar products.
Retailers now frequently do this, too. So, to gain advantage over competitors, it helps to keep an eye on the pricing of identical products, as well as similar products.
Every retailer manages an inventory. Some do this better than others, and therein lies an opportunity to gain an advantage over a competitor.
Consider the following scenario. Two retailers sell the same product for the same price, however one of these retailers sells the entirety of their stock out in less than 24 hours and fails to replenish it for a week, whereas the other retailer replenishes their stock continuously, never running out of stock.
These two retailers look identical on the surface, with the same, identically prices products, but a closer look reveals that one has an advantage. One retailer does not run out of stock, whereas the other does. This begs the question – could the retailer who does not ever run out of stock be charging a little bit more for their products?
Whether things are in stock or out of stock is also a factor that shoppers take account of in making their decision to make a repeat purchase from a given retailer. If an item is advertised and then it transpires that the item is out of stock, customers develop less trust in the overall brand. It makes sense that shoppers want to shop with brands that offer updated, helpful information and don’t habitually let them down by offering what cannot be delivered.
Monitoring inventory therefore delivers a competitive edge that is complex. Successful inventory monitoring not only allows retailers to make informed, strategic decisions on price – it offers them a chance to consider a holistic picture of how competitors are behaving and performing as brands in themselves.
Price for Postage and Packing
Two retailers can advertise the same product, with the same price, however all of this changes if one retailer is charging less for postage and packing. This transforms the retailer offering cheaper delivery into a retailer with a smarter pricing strategy.
As such, information on postage and packing allows you to look behind apparently identical prices and deduce that one seller actually does have a price advantage, even though it is not apparent at first.
In fact a lot of retailers will take advantage of the fact that a reduced postage and packing charge won’t always be visible to competitors who just monitor price and nothing else. So, they will vary their postage and packing charge instead of price, because they know this achieves a price advantage that is going to have a bigger impact because lots of retailers will only monitor price, and nothing else.
Such is the importance of social media in the world of online retail, many are adding social media to the list of variables that should be monitored to get a better picture of how competitors are performing.
Social media will often be the route used by online retailers to announce a discount or an offer. Likewise, it will usually be the means by which major changes in strategy and important events are conveyed to customers.
Checking what a given competitor’s social media following is
in terms of numbers of followers can give you an idea of the strength of a competitor’s brand. Additionally, this type of competitor analysis can impart valuable ideas on how to appeal to consumers in particular market segmentations like beauty and fashion, for example.
What is on social media, is sometimes only as important as what ISN’T on social media, and this should form part of the competitor analysis. So, to properly evaluate competitors you should draw inferences from what isn’t happening or being advertised. For example, are there competitors who are on social media, but have not advertised a special offer in over six months? Is a competitor active on one social media channel, but not others?
You can also consider the quality of the competitor’s investment in social media. A retailer might be on Facebook and Twitter for example, but a closer look at their activity will reveal they really only focus on Facebook, with key messages not being conveyed on multiple channels. All of these gaps represent potential opportunities for gaining competitive advantage over others.
Newsletters and Customer Engagement
When you visit a competitor website, you should check whether they have a newsletter and how frequently it is produced. You could even go as far as to sign up to the newsletter to see what kind of content it has.
You can use a visit to a customer website to investigate how they engage with their customers. Check how many reviews they have for certain products. Do the reviews themselves reveal and weaknesses in their approach with customers, or the quality of the products they are selling? Are there any patterns in the issues that crop up in the reviews? All of this information is useful in building a picture of a competitor and how successful they are.
Sales and Supply Channels
Competitor monitoring can be achieved by trying out competitor products to see how competitors are interacting with their customer base.
If you purchase a competitor product, you could evaluate how long it takes to arrive; is it packed appropriately?; is it broken when it arrives?; what information is enclosed?; How is the returns process organised?
You don’t have to go as far as to purchase a competitor product to gain an insight into how the retailer is performing. You could put an item in your shopping basket and check to see what happens? Do you receive push notifications and emails regarding the abandoned purchase? If you don’t you can deduce that there isn’t a comprehensive sales abandonment strategy in place.
Blogs & Content
A good indicator of the strength of a brand is the quality of the content they are producing. Good blogs, with relevant information are a way of reaching out to prospective customers. Blogs can be shared on social media, so they have a value in themselves, but they are also valuable in terms of their potential to reach new customers and generate leads for the retailer producing them.
Reviews sell products because they build a customer’s trust in a brand. For this reason, you should be monitoring your own product reviews, but importantly you should also keep a good eye on the reviews that your competitors are receiving.
Are competitors getting better reviews than you are? If so, you need to know and fast, so that you can take the necessary steps to be in an equal or superior position to that of your competitors.
Images and Video
If an image
tells a thousand words, you can use images on competitor sites as a measure of how effective their customer engagement strategies are. You could and should consider the quality of the images, their relevance to the brand or product and how well lit and impactful they are.
Another indicator of brand strength is the presence of videos, and their quality if they are available. Video is a key means of communicating with a customer base, and if there are no videos on a competitor site, it means they have not capitalised on a key means of communicating with their customer base.
Price is Just One Important Variable to Monitor – There are Many Others
As we have seen discussed in the article there are many ways to monitor competitors, and price monitoring is just one of these variables.
Monitoring just price opens a window into a competitor’s business and the quality of their brand and market position, but it is a limited view of your competitor which can be enhanced by a deeper analysis to include social media presence, images and the quality of content available on a website.