Automated eCommerce Pricing – is prevention better then cure?

It has been two weekends now since the media reported the issues with pricing on the site.

For the unaware, online shoppers visiting the website found all items - from expensive power tools to big ticket items like ride-on mowers which cost thousands of pounds, retailing at a bargain price of £34.99 for a few hours.

It was an obvious error and one that is by no means unique to the DIY sector as it can be a common problem in any sector trading an eCommerce site.

Needless to say in the case of, a number of people had a field day bagging bargains while they lasted at the vendor's expense!

Pricing is consistently changed in a lot of sectors as it must react to constantly moving market conditions.

Managing pricing sounds simple but can be costly if it is done incorrectly. 

Unfortunately, the fact of the matter is that not enough time nor thought is given into looking at what the effects could be should something go wrong with this process leaving vendors vulnerable.

How can this happen?

With the vast catalogue of products that offers to customers, it is not practical for each price to be individually managed via the eCommerce platform. 

As such, the common approach to deal with this is that pricing is mastered in an enterprise resource planning (ERP) system, retail management system (RMS) or product information system (PIM). This data is synchronised to the eCommerce platform.

While this is good practice, there are typically no safeguards to stop situations where prices are updated to potentially commercially destructive values.  

These values are either updated to wrong values due to manual error, perhaps where a large discount is applied in the ERP system across a large number of categories in error, and have not been reviewed before the commerce site has been automatically updated.

It is also possible technical problems can occur meaning bugs in the systems being synchronised leading to invalid data being sent or interpreted thereby causing incorrect pricing.

How can this be prevented?

There are a number of different options available to try and reduce the risk of this happening.

Whilst the ideal way would be for someone to manually check pricing on a continual basis, this is not practical nor cost effective - especially when dealing with large catalogues.

However, an approach to consider is to have some automated check to ensure large price difference changes do not happen without some form of manual approval.

On a recent eCommerce implementation which Greenlight delivered for our client, electronics retailer Maplin, we set up rules that are configured by the trading team which will not allow any price change to be automatically made above a certain percentage threshold.

This is set at category level so should a price be changed for more than 50 per cent of its current price for example, then the eCommerce system would not allow it and a notification is sent to the trading team to flag this having occurred.

Should they wish to manually override the price then, they can tell the system to do so and to approve change where the threshold is allowed for that particular product.

Whilst quite a simple thing to do and an intrinsic safeguard that can be the difference between having a good sale and an actual "giveaway", it is not often done.

Considering a good and robust pricing approach to your commerce site is very important but also understanding how this can go wrong and what the impact is, will then help identify the level of safeguards that should be put in place to stop this happening.

After all, by the time the price has been changed and is noticed it may be too late!

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