So What is Best Price?

What is the right price?    It is always a tough question in retail.  Prices map to profits, and also strongly influence how consumers regard the retailer, both about a particular product and about the retailer in general.    Prices are increasingly transparent.    I was involved with a study recently which looked at how shoppers are increasingly using smartphone scans to compare prices on all sorts of products in-store.   The scans can easily be stored so they can use their laptop at home later to investigate alternatives.   Now people are no longer afraid to do a scan.    The world has changed.  When I asked them what they were doing when scanning in the store, they emphatically said things like:  'Making sure I am getting the right deal".

The scan also provides you with new kinds of information to structure how you intract with product choices.  The challenge is on. How do you assure you do have the right price to not scare off the shopper and still make a profit?  How does this relate to your long-term relationship with the shopper?   With promotional choices?   The increasing trasparency of prices to the consumer makes this crucial.

We talked to DemandTec as early as 2002 to better understand their methods.  I was impressed by their approach in category data and price management.    A unique quantitiative model that we had thought of,  but were unable to solve at the time.

They have come out with a paper regarding a customer success story for a direct delivery e-grocery, FreshDirect.   Also a concept we examined in some detail to understand one future view of grocery.  It is an ideal example of how to leverage cost, price and behavioral data that leads to new kinds of convenience for the online consumer that still needs physical goods.   By its interactive nature it can leverage new kinds of acquired data.

Check out their white paper for more details about how FreshDirect leverages their unique data to better serve their customers with the right price and product offerings, and build stronger loyalty to the convenience of FreshDirect.

FreshDirect is a pure play e-commerce retailer. As such, the data available to them provides a unique opportunity for competitive differentiation. "We know precisely every purchase for every customer, and a lot of surrounding behavioral data. We also have absolute compliance with all our pricing changes with absolutely no effort," ... 

 FreshDirect had a unique opportunity to leverage its data and allow it to compete more effectively. Thus, FreshDirect decided it needed a price optimization solution and DemandTec's Everyday Price Optimization software service on the DemandTec network fit the bill.