Marketplaces are really hot right now. On the freelancer sites I see daily requests to help create new ones. Marketplaces for fitness equipment, used goods exchange, health foods, and more. It makes a lot of sense because a marketplace owner can create a robust products collection by aggregating offerings from other vendors. However, I see one common flaw in those systems.
Most often the marketplace owner requires the vendors to import data on their own. It usually means submitting CSV files into a magical portal or manually updating products one-by-one. Not a lot of fun, right? Sometimes these vendors are not very technical so asking them to do this is a big job. It also puts the accuracy of the marketplace inventory in their hands. What happens if they get busy and forget? The marketplace will oversell which will frustrate customers.
A better way is to use automation. If the vendor already has a web store, just connect it to the marketplace. New products can be added automatically, existing inventory and pricing can be refreshed, and products which are no longer being sold can be removed. The vendor simply manages their own store and instantly has the benefit of exposing his products into a new market. Their store has essentially become a drop-shipper to the new marketplace.
If a vendor does not have a store already, why not use their existing work process? Let them use their own Excel spreadsheet format or connect to their QuickBooks system. This allows them to focus on running their store while the marketplace increases its product set.
Data Here-to-There specializes in Marketplace automation. We can connect vendors to your WooCommerce, Shopify, Magento, or any other e-commerce platform. Products are imported while you sleep and kept fresh. We can also relay orders from your marketplace to your vendors, integrate shipping, or a variety of other online services.
Every store has a personality. Brightly colored kids toys, sleek and sexy swimwear, or maybe some tasty looking chocolates. When we go shopping we create an association between a niche of products and the store that sells them. The power of habit brings us back and quickly that place becomes our ‘go-to’ store.
A long time ago I went shopping for a pair of glasses. I was used to paying about $300 every two years because that’s what they had always cost. But then I heard from a friend that you could get the same style online for $25. That’s amazing! They sell glasses. Just glasses. Not contact lenses, not laser surgery, and they make it easy to see what you’re buying. They have focused their product line.
Product curation is the process of selecting products which fit a merchant’s niche. It is very strategic and defines the store. In the good old days a merchant would go to the supplier and buy products, box them up, and bring them to his store to sell. But today this is much more virtual. We have drop-shippers and marketplaces with lots of button clicking.
There are many innovative ways to select products from supply data feeds.
– Choose products by categories. Perhaps the merchant has a supplier who provides all kinds of clothing – kids, women’s, men’s, and chic pet cardigans. A simple form of curation is to choose the categories which will look good in his store.
– Choose specific products. Sometimes there are very specific products so we can select them by their title or SKU.
– Choose by keywords. Each product has a description which contain valuable information. Keywords can be used to narrow in on specific products. Perhaps the merchant wants all ‘garden’ related products.
In a future article we will look at what it means to automate Product Curation. How can we choose products on behalf of the merchant?
Pricing is a critical part of an E-Commerce store’s strategy.
Well tuned prices will bring in customers. Bad pricing will turn them away. Customers are always looking for great deals, suppliers are looking to preserve their minimum advertised prices, and stores need to make a profit. That’s why vendors need to have a pricing strategy. They need to make a profit and compete in the online marketplace or else there is no point selling anything. We need to find the right mix between competitive pricing and long-term sustainability of the store.
Data Here-to-There provides a wide range of pricing strategies. Here is a quick overview.
This is the simplest approach. We use the MSRP from the drop-shipper for each product. It comes with a built-in profit margin but is not very competitive.
We can discount MSRP values based on a dollar amount or percentage. This allows the vendor to undercut other stores which are simply using the de-facto MSRP value. Prices do not appear ‘on sale’, they simply show a lower value. It applies to all products uniformly.
Standard Margin Pricing
This option is the most popular among our clients. They choose a margin (percentage) that they wish to add to the warehouse cost of each product. Here is an example where the store owner has chosen a margin of 1.25 (25% above cost).
Item ID / SKU = BK13934
Name = Peter’s Favorite Recipe Book
Cost = 44.47
MSRP = 59.95
Using the Cost field of $44.47 and a margin of 25% we end up with a store price of $55.59. The MSRP is $59.95 so the store will show ‘on sale’, discounted by $4.36. The same rule will apply to all products. The margin will always be preserved because it is added to the warehouse cost. If the supplier increases the warehouse cost, the system will automatically increase the price accordingly.
Category Based Pricing
Some categories can be set up as ‘loss leaders’ to entice customers into the store. Other categories can be higher. This is a good strategy for selling accessories. For example, we can price printers at a lower margin than printer ink.
For this approach we assign a default store margin to catch any products that aren’t categorized. We then set margin for each category which differs from the default margin. For example, printers and plotters should be set to 10% which printer ink and toner has a margin of 25%.
Category based pricing gives the vendor more control over pricing.
This is one of our more advanced pricing strategies. We can design a system which pulls prices from competitor web stores. For example, we might find the following prices for “Peter’s Favorite Recipe Book.”
Walmart shows a price of $62.33
Indigo Books shows $68.34
Mary’s Books shows $59.95
We can set it up to take the lowest price (or the average price) then subtract a fixed amount. For example the lowest price is $59.95. If we subtract $1 the store price would be $58.95 which is lower than all of the other stores.
We can also set up a lower limit so that the system never goes below a minimum margin. This ensures that the competitive pricing does not drop below the vendor’s comfort level. So taking our previous example with a margin of 25%, if a competitor drops below $55.95 this store will not chase it down any further.
We can integrate third party pricing feeds or web scrapers for this purpose.
Data Here-to-There can ‘decorate’ prices to a common value. You’ve probably seen stores where prices always end in .99 or .95. We can do this for any store. For example, $14.23 would become $14.99 if you set a ‘.99’ price decoration.
Sometimes it makes sense to adjust the price based on the wholesale rate. Perhaps the prices range so much that a general store margin provides too little profit on the low-priced items. We can create ranges for each margin based on the wholesale price. i.e.
If the wholesale price is between $0 – $25, add 65% margin.
If the wholesale price is between $25 – $50, add 45% margin.
If the wholesale price is between $50 – $100, add 25% margin.
For everything higher, add 15% margin.
We can create multiple ranges and margins to suit the supply data.
In addition to the above strategies we can also develop completely custom solutions – integrate with an online pricing service, create custom rules, synchronize prices across multiple stores or markets, and much more.
Regardless of the strategy chosen, Data Here-to-There ensures that prices never drop below a special safety margin. No matter what happens, products will not be sold at a loss. We also ensure that any minimum advertised price (MAP) restrictions from the supplier are enforced. In addition, we also handle bad data problems which should never happen (but do!) where MSRP is lower than cost, MSRP is not available, cost is not available, etc.
Pricing is a very strategic part of an E-Commerce store therefore our system has been built to be flexible. Contact us today to discuss your E-Commerce automation needs.