The Price Competition Problem: How Dynamic Pricing is Shaping Retail
posted on: 11.09.2024
In today's fast-paced retail environment, pricing strategies are more important than ever. Traditionally, physical stores operated on fixed prices—every customer paid the same amount for a product, and there was little room for negotiation or flexibility. However, the rise of online marketplaces has drastically changed this dynamic. Today, online platforms have embraced dynamic pricing, where prices adjust in real-time based on demand, competition, and customer behavior. This has placed immense pressure on brick-and-mortar retailers, causing many to lose sales to online competitors.
The Rise of Showrooming: Lost Sales for Physical Stores
One of the most significant challenges faced by physical retailers today is showrooming. This refers to the growing trend where customers visit a store, try on clothes or shoes, then leave without making a purchase, only to search for better prices online. According to recent data, 55% of consumers visit physical stores to explore products but later buy them online to take advantage of lower prices. This behavior is hurting traditional retailers, as they struggle to compete with the dynamic pricing strategies used by online platforms.
Additionally, 59% of shoppers use their smartphones in-store to compare prices on the spot, further intensifying the price competition between physical stores and online retailers. For brick-and-mortar stores that rely on fixed pricing models, this shift in customer behavior represents a major threat to their business model.
The Power of Dynamic Pricing in Online Marketplaces
Dynamic pricing has become a powerful tool for online retailers, allowing them to adjust prices based on real-time factors such as product demand, time of day, and competitor pricing. By using algorithms to continuously evaluate and adjust pricing, online retailers can offer better deals and capture sales more efficiently than traditional stores.
In comparison, physical stores, bound by static pricing, often miss out on opportunities to adjust prices based on current market conditions. As a result, customers are more likely to leave the store empty-handed and purchase online, where they perceive they are getting a better deal.
How Bidygo Solves the Problem
At Bidygo, we’re tackling this challenge head-on by empowering physical retailers with dynamic pricing capabilities. Our platform allows customers to scan products in-store, propose their own prices, and receive real-time feedback through automated price negotiation. This not only makes the shopping experience more interactive for customers but also helps retailers compete more effectively with online marketplaces.
By embracing dynamic pricing in physical stores, retailers can retain customers who might otherwise shop online for a better deal. This strategy helps drive more in-store sales, improves customer engagement, and provides valuable insights into customer preferences and behaviors.
Conclusion: The Future of Retail is Phygital
The competitive retail landscape is forcing physical stores to rethink their pricing strategies. As 55% of consumers are showrooming and comparing prices in real-time, physical retailers must adapt to remain competitive. Dynamic pricing, once a tool exclusive to online platforms, is now critical for brick-and-mortar stores to maintain their market share.
At Bidygo, we believe the future of retail lies in the seamless integration of physical and digital shopping experiences. By offering dynamic pricing in physical stores, we are helping retailers close the gap with online competitors, transforming the shopping experience, and ensuring that physical retailers thrive in the age of e-commerce.