Back in March, we talked about the way large-scale businesses can use big data and analytics to determine optimized pricing for products and personalized pricing for select customers. What's a small-scale Amazon merchant to do, though? It's easy enough to check competing sites and set prices slightly lower, but that's a losing strategy, unless you're watching them 24/7 and you don't mind chipping away at your margins until they're gone.
Enter Feedvisor, an algorithmic pricing engine delivered via a SaaS model. Any Amazon merchant can sign up and grant Feedvisor access to its e-commerce backend, and then the software begins optimizing prices automatically.
The trick, according to the site, is not to set prices lower but to tweak prices based on seller rating, inventory available, and dozens of other variables. The goal is not to undercut any particular competitor but to "win the BuyBox" as often as possible. From the site: "As well as checking your competitors' prices thousands of times an hour, Feedvisor takes into account their shipping options, available stock, seller ratings, and a multitude of other variables that Amazon looks at when calculating the BuyBox."
In addition, the software considers historical pricing trends when formulating its models, and it learns from each successful or failed transaction, so it's constantly refining its algorithm to suit each customer.
The software is so impressive that Feedvisor won a Best of SaaS Showplace Award this week from the Cloud Computing Showplace, a vendor-neutral site hosted by the consultancy THINKstrategies that delivers insight around cloud providers.
The rapidly growing and thoroughly confusing cloud services market is a quagmire of unreliable information and competing claims, and the Showplace aims to cut through some of that hype and help businesses navigate their cloud journey more smoothly.
In a press release on the award, THINKstrategies highlighted one Feedvisor success story. Vanko Trading Inc., which maintains several retail websites, reported a 50 percent increase in profits after implementing the software. Steven Kirchhof, an executive at Vanko Trading, said in the release:
The Feedvisor algorithm determines the best possible price, balancing sales volume and profit margins. With Feedvisor running in the background, we can concentrate on the other aspects of our business, trusting that our prices are being continuously and automatically optimized.
Feedvisor not only sets pricing dynamically, but it also balances inventory to ensure that high-selling products don't deplete supplies. It also masks remaining inventory from competitors, so merchants can decide how much of the kimono to open, depending on varying conditions.
The best parts of any SaaS tool are the subscription pricing and the fact that it can be set up in minutes. Feedvisor offers a pay-as-you-go model, and it takes a percentage of each successful sale. If profits go up at rates similar to Vanko Trading's, it's well worth the investment.
Members, what do you think? Is anyone else providing this kind of service? Is price setting best carried out the old-fashioned way? What variables do you consider when setting prices? Share your insights below.
— Michael Steinhart, , Executive Editor, AllAnalytics.com