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E-commerce Pricing Factors and Strategies that Works the Best

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reputed news daily reports “Amazon sold more iPhone on the first day of Great Indian Festival than in entire 2019”. While Amazon is the epitome when it comes to offering an enamoring customer experience but it was the unbelievable pricing of these phones that made people be a little extravagant.

Customers today are skeptical about getting in business with stores that have bad customer experience but if the price parity is big, they are choosing otherwise. Price has always played a role and it continues to be a key decision influencer for sellers too that is why 50% of all sellers who sell on Amazon are selling on other platforms too.

Is Price Still an Important Factor?

The Internet is congested with guides that helps sellers find the perfect price for their online catalog. The studies very-well cover the nuances related to shipping and government taxes but they fail to consider the customer’s viewpoint. On the contrary, customers today want their products to be delivered at the earliest, they want it to come with easier return and instant refund policies. Customers are not shying away from paying extra for these luxuries.

Here are some statistics and facts that prove, a part of all the commotion, pricing continues to be an important decision influencer:

  • 46% of online shoppers will choose price over loyalty
  • 78% of e-commerce stores are investing in Price Benchmarking
  • 20% of e-commerce traffic comes from websites that offer a price comparison
  • Stalwarts like Amazon, Noon.com, and Flipkart keep an eye on their competitor’s pricing
  • Premium sellers constantly track their contemporaries on other marketplaces too
  • Sellers are constantly bugging marketplaces to minimize commission so that they can offer better rates

Must Read: What is E-commerce Product Enrichment and How It Influences Revenue?

What are the Constituents of the Final Pricing and how they Influence it?

To understand the impact of pricing and discover solutions to how it can be leveraged for improving e-commerce conversion, one needs to understand the constituents of final pricing first. Here’s all that combines to make up the price we see on varied online catalogs:

Marketplace Commission: Be it Amazon or Noon.com all of them charge sellers a commission on every unit sold on their platform. This commission starts as low as 1% and goes up to 30%. Home appliances and electronic gadgets have the least commission ranging somewhere between 0.1-8%.

Taxes: Government taxes like GST or Sale-tax are also labeled on every product sold online. Just like the offline market, these taxes are included in Max Retail Prices displayed on products. While categories like books are exempted from taxes in India, the entertainment segment comes under the biggest tax slab of 28%.

Shipping charges: Marketplaces divide location based on distance from the warehouse. Shipping charges vary based on the delivery location, size, and nature of the product. Fragile and big products generally invite higher shipping charges.

Handling charges: Handling charge is also added on p