Black Week in old ruts is not enough - time to be more efficient

Black Week and Christmas shopping are over for this time. Time to think about how we can do better this year. That's what Martin Granberg, chief strategy officer at Priceindx writes - and shares his advice.

Although the dust has basically just settled, Black Week and Christmas shopping have been blown out of memory and new ambitious targets for Q1 have been set by most e-tailers.

Many traders did this year exactly as they have done in previous years, some perhaps with an even more porky campaign to assert themselves in the competition.

This without reflecting on the fact that it might be possible to do it in other, more efficient ways.

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I am an advocate of a healthy mix of a promotional portfolio combined with a greater proportion of dynamically priced products. By having products or even entire brands in the campaign portfolio to be used in tactical sales, you have a message to be able to communicate to the customer, and at the same time be exposed in different media. Not infrequently these are products or brands where the supplier provides support to drive sales of their products through a campaign.

Before Black Week, or before any other campaign you run, as most people are familiar with, you need to lock your prices at a higher level in order to then offer a juicy offer. Many times this means that you need to lock your prices at a level that makes the company's product relatively irrelevant in the market because you are so far above the market price.

"By selecting the right assortment to work with, the dynamically priced products will out-perform the promotional products"

There are of course exceptions, for example if everyone has a promotion on the same products and follows the rules by increasing before Black Week. In that case, you would have remained relevant, but when will that happen.”

When you work actively and with your mix of campaign products, you come to the conclusion that there is a large percentage of the products that react more positively to being dynamically priced than to being on a campaign schedule.

Through dynamic pricing, relevant prices are kept for the entire period before a larger campaign period, this at the same time as the competitors are forced to have a higher price, which leads to naturally "boosted" sales during that period.

When you do it this way, during the campaign week/period you will sell less of the dynamically priced products than usual because the campaign products take up exposure space and there is a lot of noise through the products you and all your competitors have on campaign.

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Depending on the range and category, you can expect a sale that looks something like the one below. Where the dynamically priced products over-perform during the "pre-campaign" period, and then underperform during the actual campaign period.

By selecting the right assortment to work with, the dynamically priced products will "out-perform" the promotional products in both sales and margin development. Depending on how long the campaign period is, the results will be different.

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A prerequisite for being able to do smarter pricing is the right tool for dynamic pricing, but also knowledge of "best practice" and how to actually do the analyzes and everything operationally to be able to take action on the data you collect during the period.

This is so that during the next major campaign period, perhaps during next year's Black Week, we do not follow the same old ruts as before.

Martin Granberg,
chief strategy officer, Priceindx