Dynamic Pricing – the future of ecommerce in India

Today, approximately 60% of Indians are shopping online and it is anybody’s guess on what would be the future of ecommerce in India. As the Indian e-commerce industry grows, practices such as dynamic pricing will gain significance and give strategic advantages to the e-retailers who use them.

What is Dynamic Pricing?

Simply put, Dynamic Pricing is the multiple price changes in a product at different times of the day. These price changes can be based on the consumer behavior on the website, the browsing patterns, etc.

Amazon changes its price every 10 min on an average

The most notable proponent of dynamic pricing is the airline industry – the sheer range of variation of ticket price can surprise even those who are in knowledge of this widespread practice. The airlines have been able to maximize their profits using this. The e-commerce industry statistics point out that Amazon changes its price every 10 mins on average1. They have been intelligently using dynamic pricing for more than a decade to undertake empowered business decisions. Offline retailers like Walmart have also followed suit in recent years.

Not leveraging pricing as a factor to drive sales? You are missing out on a big chunk of your revenues.

With technology as its backbone, the e-commerce retailers have the complete information from the pages browsed to the time spent on each page to the past purchase data. Moreover, you cannot simply change the price tag once a customer steps into the store, but in an-online counterpart you can change the prices for every customer who logs in using a plethora of information including browsing history.

Just think of a case where you browse through a product category for a long time and yet does not carry out a purchase transaction. In such a scenario, the e-commerce retailer has the data available and can roll out an immediate 24-hour expiry coupon for the purchase within that product category. This not only sounds interesting from a user point of view, but also makes business sense for the retailers.

If a number of e-retailers offer a standardized product, then in that case, price becomes the differentiating factor. Consider the following example for Samsung Galaxy S5:

Social Beat Ecommerce dynamic pricing

Is dynamic pricing alone going to win it for the e-retailers?

Though many would want to differ on the importance of pricing, citing other factors like shipping, products on offer and customer service as equally important. Of course, these factors are also important, but in a price-sensitive market like India, dynamic pricing is going to play an important role in shaping the future of e-commerce.


1Amazon price changing machine http://www.retailwire.com/discussion/17222/amazons-price-changing-machine

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