Has Amazon changed Retailers’ price strategy ?

Michael StoneInnovation

Amazon Australia Invigor pricing solutions for retailers
Amazon dynamic pricing capability is changing the retail industry and the way retailers should develop a winning price strategy

It is no secret that pricing has long been a core capability for retailers, being one of the key value elements in retailers’ strategy. Over the past decades all big players have worked hard to optimize their pricing tactics in order to remain competitive in a fast-changing industry.

The new digital era and the emerge of big shopping sites have changed completely the game and the general understanding of shopper behaviour. Elements like Big Data, mobile commerce or omnichannel retailing have forced retail industry to make a drastic overhaul in retail pricing strategy.

Retailers against Amazon-AustraliaThe world’s largest online retailer has recently launched its services in Australia. According to a research from Nielsen, 3 out of 4 Australians say they are “interested” in Amazon Australia and 56% say they will buy when it launches. With its revolutionary delivery policies and its competitive prices, Amazon is having a significant impact on the retail industry. There is no doubt the giant online shopping site has become a game changer in the retail industry and it will affect retailers no matter what.

According to a recent research made by Invigor Group, Amazon has landed in Australia with an aggressive pricing strategy. Invigor has collected -using its competitive pricing intelligence solution–  a total of 561 consumer electronic product prices to compare main retailers’ prices against Amazon.au prices. The comparison has been made with the leading retailers in the Australian market such as David Jones, Harvey Norman, Myer, JB HiFi or Officeworks among others.

As a result of this research, Invigor found that Amazon is offering more competitive prices in 30% of the listed products (169 products). This is a significant percentage to take into consideration by top retailers in order to optimise their pricing strategy. Among the main findings of this research, it should be highlighted that top players in the retail industry are seeing how their prices are significantly higher than, not only their main competitors, but also than Amazon.au, causing a big number of lost sales opportunities.

To be able to run this research, Invigor has collected price data through Retailer, a price monitoring tool that provide effective processes and systems to manage price relationships between their own item prices and competitor’s prices. This implementation of these types of solutions have increased recently among leading retailers to remain competitive against new players such as Amazon.

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