5 key steps to AI-driven pricing for optimizing e-commerce

5 steps to improving e-commerce with AI-driven pricing

Creating a highly profitable e-commerce strategy can be a challenge for many companies. But when you deploy artificial intelligence (AI) you can accelerate the learning curve and ensure your margins are maximized.

AI and machine learning tools are exactly what the biggest platforms, such as Amazon, are using to optimize their pricing. Research shows that the prices of products on Amazon change on average every ten minutes. And that level of dynamic pricing can only be done effectively with deep data analysis.

So, to be more profitable and to exploit every opportunity, you need to take your pricing strategy to the next level. You need dynamic pricing, controlled by AI. To start collecting data and using it to your advantage, let’s begin with the processes.

Here are the five key steps to get you started.

1. Identify the impact

To build a strong business case, you need to understand the potential impact of dynamic pricing. This will help you to get the entire senior leadership team behind the pricing strategy. We usually see benefits around:

  • Improvements in gross margin
  • Time saved in the pricing process
  • More effective price forecasting

 

2. Treat it like a business solution

Dynamic process isn’t just an IT tool. It’s a business solution, comparable to the start of a new business idea. That’s why it merits the involvement of your best people.

The project and implementation process should be owned by a dedicated business team that has the capabilities to drive the project forward with your sales and marketing teams.

 

3. Change the mindset

Especially for B2B organizations, the introduction of dynamic pricing is a mindset change. Legacy systems will not be the reason that you may fail. Legacy thinking will.

Identify those potential promoters and detractors of new solutions who operate across your organization. Develop a strategy for amplifying and converting them accordingly. Most importantly, show people that you are all partners on the same journey.

 

4. Fail fast, learn fast, get agile

We find that companies frequently do better if they are entrepreneurial and think while they act. Fail fast and learn fast. Combine consuming the results with improving the technology. Often, it’s better to deploy a minimum viable product fast, get valuable insights in a matter of weeks, and set the stage for long-term impact.

Companies that follow this agile approach typically achieve the first bottom line impact within three months.

 

5. Success requires a broad mix of talent

To make it all happen, your people need to understand the value of analytics. You also need to form partnerships with companies that can help you implement a dynamic pricing tool. It’s a powerful combination of partners and data managers that’s the key to success.

There’s no doubt that dynamic pricing skills are essential to staying ahead of the competition and squeezing the absolute maximum value from your products. But tools and algorithms are not enough. Companies need to put equal focus on both people and processes.

 

Begin your AI-driven pricing journey

We’ve created a downloadable guide that will help you get the most from AI-driven pricing.

We show you:

  • How to start with AI-driven pricing
  • Which strategies to use at different stages in the product lifecycle
  • 8 different pricing strategies and how to use them
  • How to create success with AI-driven e-commerce pricing
  • The software that can help you optimize your margins

Download your essential guide now, and make the most of the AI-driven pricing opportunity.