Tag Archives: mercent

Amazon Prices, Repricing, Toilet Paper and the Airline Industry

5 Sep

Interesting article at the Wall St Journal on how merchants on Amazon are taking a page from the airline (among other) industries to maximize revenue with fast changing pricing based on sales volume and competition.

 

It used to be only airfares that changed every minute. But now, prices of everything from clothing to toilet paper are fluctuating dramatically online. Julia Angwin explains on The News Hub.

The fast-moving Internet pricing games used by airlines and hotels are now moving deeper into the most mundane nooks of the consumer economy.

Deploying a new generation of algorithms, retailers are changing the price of products from toilet paper to bicycles on an hour-by-hour and sometimes minute-by-minute basis.

The pricing wars were fought last month over a General Electric microwave oven. Sellers on Amazon.com Inc. AMZN -0.16% changed its price nine times in one day, with the price fluctuating between $744.46 and $871.49, according to data compiled by consumer-price research firm Decide Inc. for The Wall Street Journal. Best Buy Inc. BBY +1.58% responded by lifting its online price on the oven to $899.99 from $809.99 after the Amazon prices rose, then lowering it again after Amazon prices for the oven dropped.

The most frequent price adjustments are occurring among Web stores selling products on Amazon, which encourages ruthless competition between retailers vying for the top spot among search results. Sellers such as children’s clothing store Cookie’s use software to change prices every 15 minutes in order to stay on top of Amazon rankings. The store’s owner, Al Falack, said he often sells clothing cheaper on Amazon than at his bricks and mortar store in Brooklyn, N.Y.

“We’re finding that we’ll receive something fresh and new in the season and before we give it a chance to sell, we are selling it for less than we wanted,” Mr. Falack said.

In the 1990s, airlines became known for constantly changing prices, based on how many seats they had available on a flight and prices charged by competitors. Hotels soon followed with their own “yield management” systems, that allowed them to change room rates constantly.

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Now, Internet retailers are using similar software. A goal is to maintain the lowest price—even if only by a penny—so that their products will show up at the top of the search results by shoppers doing price comparisons.

One crucial difference with the travel industry is that Internet retailers are usually competing against a lot of different competitors with identical products. By contrast, airlines and hotels have a fixed number of competitors, and certain players dominate certain markets.

Mercent Corp., the company that provides the software used by Cookie’s, says it changes the price of two million products an hour. Mercent says it makes price decision based on a variety of factors such as competitors’ prices, competitors’ shipping prices, manufacturer price restrictions and seasonal sales. Retailers pick their settings to determine how frequently prices are adjusted, which products are tracked and which competing websites are ignored.

The most frequent changes are for consumer electronics, clothing, shoes, jewelry and household staples like detergent and razor blades.

“The long-term implication is that a price is no longer a price,” said Eric Best, chief executive of Mercent, which tracks prices for more than 400 brands.

For vendors that sell on Amazon, having the lowest price on a product is the quickest way to get space in the coveted “buy box,” Mr. Best said. A product in the buy box, or the default box that adds a product to a shopping cart, is picked more than 95% of the time by shoppers, he said.

Mr. Falack of Cookie’s said that changing prices more frequently has boosted sales dramatically, but requires a lot of attention. First he set the software to beat his competitors by a certain percentage. Then he set a floor price below which he wouldn’t go. Then he restricted his competitors to those who had at least two stars out of Amazon’s five-star rating system.

For consumers, the result is more volatile pricing. Once the low-price vendor for a particular item sells out, rivals selling the same product can immediately lift their prices without fear of being undercut.

Hugh Lee, a 32-year-old from Seattle, said he extensively researches products and prices before pulling the trigger on a purchase. And even after buying something online, he monitors the price and asks for a price adjustment if it is lowered. “It’s a lot of extra work,” he said.

So far, shoppers are winning the price game about as often as they lose—with about half of price changes going down, and half going upward, according to Decide.com, which tracks prices of products over time to determine the best time to buy them.

The price changes can be dramatic. Last month, retailers on Amazon.com changed prices on a Samsung 43-inch plasma television four times over the course of a day, between $398 and $424, according to Decide.com. Around midday, Best Buy boosted the price to $500 from $400 before dropping it back down, while electronics retailer Newegg in the morning raised its price to $600 from $500. Amazon, Best Buy and Newegg declined to comment.

Before software, stores would send employees to their competitors’ stores to jot down prices by hand, said Rafi Mohammed, founder of Culture of Profit, a Cambridge, Mass., consulting firm that helps retailers with their pricing strategies. Once e-commerce took off, companies scanned their competitors’ websites to make adjustments, he said.

The new software has greatly speeded up the process. Online home goods retailer Wayfair changes hundreds of thousands of prices daily, said CEO Niraj Shah. When it finds pricing discrepancies—like if a product is priced 5% higher than a competitor—the company quickly makes adjustments.

The pricing works both ways. If Wayfair finds that it is selling a product for much less than its competition, it can then raise the price to be more in line with the market’s pricing, said Mr. Shah.

“In the age of the Internet, fixed prices are a thing of the past,” said Oren Etzioni, professor of computer science at the University of Washington and co-founder and chief technologist at Decide.com.

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Mercent a Leading Sponsor at 2012 Magento Imagine Conference for eCommerce

17 Apr

SEATTLE, WA, Apr 17 (Marketwire) —

Mercent(TM), a leading technology company that enables retailers to

profitably reach and convert more shoppers online, today announced it has

taken a leading sponsorship role in the second annual Magento Imagine

eCommerce conference taking place April 23-25, 2012 at the M Hotel in Las

Vegas.

As a Magento Gold Partner, Mercent will host a marketplace exhibit space

and showcase its award-winning Mercent Retail(TM) performance marketing

platform to retail conference attendees. Participants interested in

learning about Mercent Retail(TM) and its suite of Magento-supported

products — including the new Mercent Retail(TM) Marketplace Price

Optimizer extension now available in the Magento Extension Marketplace —

can pre-schedule 1×1 meetings. Mercent executives will also be on hand to

share thoughts and insight on prevalent eRetailing trends impacting

Magento community members and share client success stories.

Mercent CEO Eric Best commented, “We are delighted to be a leading

sponsor for the 2012 Magento Imagine conference. Through participation we

are focused on deepening our engagement with the Magento retail community

and gathering direct insight on their eCommerce initiatives and use of

Magento-supported technologies like Mercent Retail(TM) and our

Marketplace Optimizer for Amazon. Feedback in this form is invaluable to

Mercent and our drive to continuously enhance our suite of retail

products and services.”

Through its award-winning technology, Mercent helps large brand name

retailers, including retail members of the Magento community, drive

retail product and offer visibility across a comprehensive set of digital

channels that includes comparison shopping sites, paid search platforms

(Google AdWords, Microsoft AdCenter); online marketplaces like Amazon and

eBay; product ad platforms including Google Product Search (GPS), Amazon

Product Ads, and Google Product Listing Ads (PLA); social shopping and

shopping search sites; and affiliate networks. The Mercent Retail(TM)

platform complements this with deep retail analytics that highlight

products, categories, brands, promotions, ads, and channels contributing

most to online performance and ROI and tools that allow retail marketers

to take action on these insights.

To learn more about Mercent and its full product portfolio, or for an

in-person demo, contact Mercent Sales at 206.832.3900 or

sales@mercent.com. Information regarding Mercent Retail shopping feed

management technology, Mercent Performance marketing services, and a list

of online marketing channels in the Mercent Shopping Network is also

available at http://www.mercent.com.

About Mercent:

Mercent ensures the world’s leading retailers are

visible, competitive and profitable where consumers shop online. Through

its award-winning Mercent Retail(TM) SAAS technology and Mercent

Performance(TM) professional services, Mercent helps the world’s most

successful online merchants including 1-800-Flowers, Bass Pro Shops,

GUESS?, L’Occitane USA, HSN and others, maximize their online marketing

performance to drive inventory velocity, customer acquisition, revenues

and profits. Supported online shopping destinations include Amazon.com,

Google, eBay, Bing, comparison shopping engines (CSEs), affiliate

networks, social shopping sites, and paid search and display advertising

campaigns. The company was founded by Amazon.com veterans, is

venture-funded, and is based in Seattle, WA. For more information, visit

http://www.mercent.com.

Shop.Org Dinner

17 Aug

A Great Article on Prepping for the Holidays from Stores Magazine

27 Jul

Christmas (Buying) in
July

Christmas (Buying) in
July

From Jul 2011 | By Fred Minnick |

Preparing for those stocking-stuffing
consumers, e-commerce retailers are making holiday planning a top priority.

Holiday sales from November to December rose 5.7 percent (to
$462 billion) last year compared with 2009 — the largest seasonal percentage
increase since 2004, according to the NRF. These figures have retailers
wondering if they can improve results even more this year.

The holiday matters
Eric Best, co-founder and CEO of online tech firm Mercent, works
year-round with retailers to prepare for the holiday season. Mercent has built a
strong track record for improving e-commerce sales and expects to deliver its
typical results this coming holiday season.

What’s typical? Using Mercent Retail solution, which optimizes
paid search campaigns to drive sales for every SKU and merchandising offer,
Gardener’s Supply, headquartered in Burlington, Vt., increased return on
advertising spending (ROAS) 500 percent. Year-over-year sales for FootSmart, an
online retailer specializing in foot and lower body healthcare products,
increased more than 400 percent, with gross profits rising substantially. REI
used Mercent’s on-demand platform to automate and optimize the company’s data
feed marketing efforts, while SitStay.com’s sales on Amazon.com increased after using Mercent.

As these and other clients look at their holiday planning,
“They are becoming more risk-tolerant as they get more comfortable with
year-over-year growth, with a trend line that is now up and to the right,” Best
says. “That is giving the retail planners some level of comfort that they’re
going to have another successful year.”

Despite a solid January, 2011 started off slow, and some
retailers are looking for holiday sales to make up for soft early quarters
impacted by the Japanese earthquake and tsunami, a late holiday and bad
weather.

“We actually saw a steady decline in February and March,” Best
says. “Our clients were starting to feel a little jittery by the end of the
first quarter, just based on their year-over-year sales comparables.

“Part of that March softness, it turns out, was related to a
late Easter holiday,” he says. “January, February, March was decelerating
growth. April and May have been accelerating again, getting us back in May to
effectively where we expected we would be in terms of our forecast at the
beginning of the year.”

Best says the trends point to a positive holiday forecast – and
that forecasting itself is becoming more accurate. This allows companies to have
aggressive targets in terms of their space capacity as well as their staffing
expectations in the customer call center and the warehouses.

Some Mercent clients “are actually playing around with moving
some inventory over to Amazon’s warehouses in advance of the holiday, using
Amazon’s warehouses as contingent square footage,” Best says. “This allows them
to handle the peak holiday volumes without having to necessarily make permanent
infrastructure investments in warehouse space.”

Big holiday spend & buy
One of Mercent’s clients, a Midwest-based children’s product
retailer, is using 47 percent of its total 2011 ad spend in the fourth quarter
to capture holiday shoppers.

“The holiday is definitely one of our more exciting time
periods,” says a spokeswoman for the company. “We always see the greatest growth
during this time period and we get to showcase a higher amount of SKUs to
fulfill the demand.”

Her company’s 2010 holiday assortment was conservative, she
says, but “this year we have quadrupled our holiday gear and are thrilled about
that because we usually sell out rather quickly.”

In August, this retailer will create holiday search, display
and affiliate ads to hit around October. “The reason we start earlier is due to
our large product assortment push, as well as wanting to keep the same ‘voice’
prevalent throughout all our text ads,” the spokeswoman says.

On the buying side, children’s department store CookiesKids.com is planning holiday buys earlier
than ever, says founder Al Falack. Beginning in February, he says, the company
started importing goods directly from manufacturers.

“We also plan on sending a high percentage of our toys to be
fulfilled directly by Amazon.com,” Falack says. “Our primary goal is to complete
buying by June 25th, with deliveries no later than October 15th. We think that
if we could get a head start with receiving the inventory we will have more time
to focus on aggressively marketing and selling versus chasing
product.”

Amazon.com is the company’s biggest channel for the holiday
season. Therefore, “in addition to following and keeping up with trends in terms
of popular games and toys, it’s imperative we understand the mindset of Amazon
shoppers — how they discover, evaluate and ultimately purchase products,” he
says. “This impacts the way we market, promote and sell products through this
channel.”

Possible holiday trends
There’s clearly a focus on the social influence for this year’s
holiday planning, Best says, with retailers paying particular attention to
Facebook and mobile shopping trends. “There are questions and a lot of
investment occurring in mobile shopping,” he says, “which, in some ways, has
potential to impact traditional bricks-and-mortar retailers even more than the
pure-play e-commerce companies, because you can tie in-store shopping behaviors
to digital information that you can syndicate on these devices.”

And holiday planning is no longer just a
domestic proposition; even for the smaller-scale retailers, there’s planning to
capture international markets. Firms like FiftyOne, which helps domestic
retailers with offshore fulfillment, have filled smaller retailers’ desire to
meet international demand.

Best says people are focused on Europe and Australia because of the exchange rate. “Some of it is
the fact that you have cheaper, higher capacity shipping options for actually
drop-shipping product overseas,” he says. “And some of it is that there are
software tools that are available that make it easier to do current [currency]
conversion and handle international fulfillment.”

Another 2011 shift is that consumers’ capriciousness is being
indulged through private sales sites like Rue La La, Gilt, Groupon and
LivingSocial. “[These sites] have implications for the holiday,” Best says. “We
saw it last year. From October [2010] to January, we had a big U-shaped curve
where December and January represented a spike. There’s always the peak selling
days of December 12 and 13, but in the aggregate the days following Christmas
and heading into early January actually contributed more volume overall than
those peak selling days.”

Best believes this new consumer behavior is a reflection of the
Groupon and LivingSocial deals.
“Consumers are doing exactly what retailers
are training them to do, which is to either take advantage of those early
door-buster discounts or wait until December 26 to take further advantage of
discounted pricing,” he says.

For retailers that have yet to complete their holiday planning,
Best recommends locking down promotional calendars while becoming more front-
and back-loaded than in years past.

“The overall holiday sales volume is going to occur around
Black Friday, Cyber Monday and post-Christmas,” Best says. “By August, you
should have variable capacity to be more responsive to last-minute opportunities
that are presented either through your advertising programs or through your
supply chain.

“You should be thinking about what happens if sales
significantly outpace or under-pace your expectations,” he says. In other words,
“What are your contingency plans?”

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