As the use of pricing intelligence tools by retailers becomes more and more prevalent the question you hear over and over again is "How do I choose the best pricing intelligence tool vendor?" Choosing the best pricing intelligence tool vendor is incredibly important for retailers who take their competitors’ pricing into account on a regular basis. In fact, it’s a highly strategic move that will be one of the most important business decisions you make. Having the best quality competitive pricing data at your fingertips can make a huge difference to your bottom line. Having poor quality data that you think is good can be disastrous. Here are the are seven of the most important things to consider when selecting a pricing intelligence tool vendor:
In pricing intelligence, it's not enough to follow your competitors' prices. The real value comes from matching up your competitors' products to yours, and then comparing the prices. The better a vendor’s matching engine -- the part that matches your products to your competitors’ -- the more competitor products you will be able to track. This is called coverage. Be certain that the vendor's tool will provide you with the highest level of coverage possible. Otherwise you may be missing out on very important data without even knowing it.
#2: Quality Assurance
Data accuracy is key when talking about pricing data. There’s no room for error because any mistake directly affects the bottom line. Although pricing intelligence tools automate the process of collecting pricing data, human-based quality assurance (QA) checks, performed on a regular basis, are still necessary to verify and ensure 100% accuracy of the data. It's not enough to count on automated systems alone to verify themselves. Make sure that there is a strict QA process in place.
#3: Technology Expertise
Pricing intelligence is not easy to do well. It's not simple website 'scraping' as some people may think. Websites vary dramatically in the way they are structured and the product information they provide. This variation presents a formidable challenge to doing crawling, extraction, and data analysis well, for these are the building blocks of any pricing intelligence tool. And not all matching-engines are the same. The result of a poor matching-engine is incomplete and inaccurate data. Thus, it’s critical that there is a very strong technical team in place to be able to meet all the challenges inherent in providing good pricing intelligence.
Price is also an obvious and important consideration when choosing the best pricing intelligence tool. In the past, retailers would pay maybe thousands or even hundreds of thousands of dollars for competitive pricing data collected either manually, or using primitive data scraping tools combined with manual data handling. Today, the advent of cutting-edge pricing intelligence tools has made the collection of competitive pricing data not only much easier, but also, through automation, has reduced the costs dramatically. It’s now possible to find great pricing intelligence tools from as low as hundreds of dollars to several thousand dollars a month.
#5: Contractual Flexibility
Many of the up-and-coming pricing intelligence tool providers allow you to pay for the tool on a Software-as-a-Service (SaaS) model. This means that you subscribe to the service and pay on a monthly basis. This allows you to start small, say, with a few thousand products and a few competitors to track, and then grow as you become more comfortable with the tool. There is often no complicated contract to sign. Typically, there’s a discount for paying upfront.
Integrating the tool with back-end systems is something that many retailers eventually do, but is often overlooked when selecting a vendor. A good set of APIs (Application Programming Interface - programming code your IT department can use provided by the vendor) is critical to allow IT to easily stream all the data collected in the pricing intelligence tool to your back-end systems. Make sure you thoroughly check out the APIs the vendor offers before making any decisions.
Often, retailers like to start by tracking a smaller set of products and competitors, and then scale up. It's very important that the vendor will be able to scale up the operations without compromising quality and performance. Many of the new pricing intelligence tools sit on a cloud which makes scaling easier, but when you’re talking about tracking hundreds of thousands -- or even millions -- of products, maintaining peak performance and quality is something you should NEVER take for granted!
Online retailers face many challenges. It’s critical to use every possible tool that provides the edge to compete and survive. I’ve listed seven primary benchmarks for selecting a high-quality, competitive pricing intelligence tool provider. The savvy online retailer will want to make sure that the intelligence tool provider will meet, and exceed these criteria, as well as provide the ability to meet changes and growth happening in real-time. In other words, “Don’t stop thinking about tomorrow…” – but you must think about, and plan for tomorrow, today.
What would you add to the list of criteria for choosing the best pricing intelligence tool vendor? Please comment below. Thanks. Gilon