I will start with a truism and even two:
- Market knowledge is necessary to run a business
- Data collecting and data analysis are required in every modern business
Almost every company that I know (in the context of collecting data about their own products and competition products), is aware of this… but it’s only a theory 🙂 Everybody knows that they should have such a knowledge but they don’t know how to use it in practice.
Below I answer to some the most often asked questions:
What should we monitor and how?
I recommend to monitor the biggest online stores (the most often it will be less than 10-15 stores, depending on the country), price comparison websites and auction sites.
I already monitor price comparison websites, is it enough?
Definitely not. Here are some reasons:
- Stores don’t present the full offer on price comparison websites
- There is no reliable information about product availability
- There are several product pages of the same product at stores (different prices, sets, special offers)
What should be monitored?:
- Stores – price, availability, special offers
- Price comparison websites – price
- Auction sites – price, number of sales
Why should we monitor prices, availability and sales of our own products?
- Putting pressure on stores, which reduced the price as first ( it’s not legal in every country:)). Taking care of a right margin level on the market is considered to be one of the key challenges, especially in the case of low-margin products.
- Detecting potential frauds (financial, tax frauds, customs frauds) – stores with very low prices
- For some store chains it’s possible to determine product availability at particular traditional stores
Why should we monitor our competition?
- We monitor changes in price strategy
- On the basis of sales data from auction sites we can define popularity of products, and even try to estimate the effectiveness of promoting products by our competition
- Comparing our sales with competition sales enables us to increase the quality of the analysis of our own promotional actions ( removal of external factors)
- We can easily check the number of available, competitive products at stores (share of shelf)
Should we monitor foreign stores?
The answer isn’t so obvious, because it depends on many factors, for example … shipping costs. However nowadays limits in e-commerce are disappearing and a customer can choose any Amazon store from Europe and order a product there where it is
the cheapest. So if there is no logistical and tax barrier, the availability of cheaper product abroad will influence sales on the local market.
Basic benefits from price monitoring, product availability and product sales:
- Price monitoring – detecting which store has lowered prices as first – support with management of additional payments
- The analysis of influence of changes of competition prices on sales of own products – the diagnosis enables us to set reaction strategy to price changes at competition. Example: competition lowers prices what causes drop in sales of our products. Reaction: lowering prices of our products straight away after price changes at competition
- More accurate estimation of effectiveness of our own promotional actions. It is especially important, because relying on sales reports provided by stores can be confusing.
- Share of shelf in comparison to competition
For some store chains the possibility of setting product availability in particular traditional stores