Omnichannel retailers face a pricing dilemma: Is it better to set channel-specific prices or adopt an omnichannel retail pricing strategy that sets the same prices regardless of where customers shop? Like a true dilemma, there are problems with both sides.
Pricing for Profit Alone
Treating different channels like they are different stores allows retailers to optimize margin based on costs to the business. eCommerce sites don’t have the same operational costs as physical stores, so when you take away rent, utilities, payroll, technology and other services, a retailer may be able to charge a lower price online and still make a profit compared to the prices that they calculate for brick-and-mortar stores. Moreover, catalogs and social media ads could offer items at still different price points that would mean profit.
It sounds like a good way to go until you consider omnichannel customers. Today’s shoppers don’t necessarily take a direct path to purchase — the coupon you send them for an in-store offer may inspire them to visit your website to browse. They may decide to order an item for in-store pickup or visit the store to personally inspect the items they found online. Inconsistent pricing throughout this journey can lead to frustration, and it discourages customer loyalty.
Pricing for Consistency
With the desire to provide great customer experiences, you may consider uniform pricing across all channels. After all, shoppers have the ability to buy at the lowest price anyway. They can stand in your store, check your online price on their smartphones, and order the item for home delivery. If you give customers the option of buying online and picking up in the store, a customer could potentially place an order on a smartphone that could be ready for pickup in your store before the customer is ready to leave the mall.
What you don’t want to happen, however, is the scenario in which shoppers pull out their smartphones and find the same item your business is offering at a lower price from another retailer. So you may resort to price matching, which will drive the prices (and your margin) down even more.
The Crux of the Matter
The answer to the retail pricing strategy dilemma has to be somewhere in the middle. Connected retail has made pricing more transparent than ever, so it’s important to recognize that customer expectations that the merchandise you offer will to be priced the same regardless of how they choose to buy it. A robust management solution will be vital to setting prices from a central location to maintain consistency.
There is nothing wrong, however, with occasionally running a promotion on a single channel for strategic reasons that isn’t reflected in pricing on other channels. You may also price according to regional differences or to capitalize on demand during certain seasons. Be deliberate in your retail pricing strategy, and always aim for the goal of providing great shopping experiences for your customers to build loyalty and long-term gains.