Ever since Amazon came along, retailers have been forced to convince people it’s worth their while to shop any place else. As an online company that can ship products right to your door, Amazon’s convenience factor often (and sadly) trounces the impulse to shop at local mom and pop operations. Combined with competitive pricing—as well as a nearly infinite selection of products—that convenience can even dampen the desire to visit your local big box store (though that’s arguably a less sorrowful situation).
Even other online companies have trouble competing with Amazon. This is one conglomerate that doesn’t use guesswork to set prices and maximize profits. The tools at work at Amazon are high-tech and laser-focused on cutting out the competition. For years they’ve done the job just fine.
Competitive pricing is at the heart of Amazon’s advantage. From Robert Scoble.
But could Amazon’s reign come to an end as the world of online retail grows?
Quite possibly, according to Guru Hariharan, founder of analytics and pricing specialist at Boomerang Commerce, who’s clearly got a stake in this question. Hariharan asserts that the battle for online consumers has only just begun—and he’s determined to get an effective weapon into the hands of retailers.
Retailers other than Amazon, that is.
Hariharah’s weapon of choice in the fight for market space is Boomerang’s Dynamic Price Optimizer, a game changer designed to help retailers set the right prices to compete. Of course, the technicalities go way beyond that rudimentary description. The software allows retailers to test and compare pricing strategies, measure product performance, and monitor competitors’ prices and product offerings. It can analyze profitability and identify new opportunities for retailers. How does it do all this? By employing proprietary algorithms few everyday consumers can likely begin to understand. And according to Hariharan, it works, with most clients who use the software gaining an average of 15 percent in revenue and 10 percent in profit (though they do have to pay a seven-figure annual fee to Boomerang).
While we laypeople may not fully grasp the math, it’s worth pointing out that Boomerang’s clients include big name retailers like Staples and RadioShack—stores we’ve all heard of and respect as major players in the retail world. They’ve accepted that successful modern commerce requires high-tech and even costly solutions. Long gone are the days of setting prices by simply marking up a bit above the wholesale cost for products.
The complicated process of pricing doesn’t sound like much fun for today’s retailers. But it sure seems to benefit the shoppers.