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It’s no secret that retail is a margin game. For every dollar of sales, retailers must extract a profit. With focus shifting to meaningful personalization and alternate monetization strategies, retailers are exploring how data technology, automation and ROI linked pricing models can increase their margins.
In this post, learn about smart pricing strategies that don’t create a ‘race to the bottom’, ways to generate other revenue streams onsite using PA Retail Media, and how retailers can optimize their online store with AI powered tech (making the most of the huge data sets they have available).
Anytime a consumer shops for a specific product, there are often complementary products available that increase the ultimate utility of the base product itself.
In traditional retail, these groupings of complementary products are known as bundles. Historically, products have been grouped together at manufacturing or distribution for ease of sale. Manufacturing a bundle reduces the allocation flexibility of the items within it, can create inventory issues, and can add costs.
Introduce AI powered product bundling: the ability to dynamically group complementary products together for each customer at scale, without adding any of the complexities of physically associating the products with one another.
AI powered Product Bundles are the lowest hanging fruit in any eCommerce store.
As the number one driver of basket size for Amazon, Bundles are a powerful way to increase average order value (AOV) through incremental revenue and units per transaction.
Our machine learning models predict complementary items and groups of complementary items a customer would natively purchase along with the base product. We ‘bundle’ these items together on an ecommerce website, allowing a customer to add all items from the PDP in a single click.
AI bundles create a smooth and intuitive shopping experience for customers and are a big win for Ecommerce Managers. Our AI predictions have such high confidence levels, retailers using PA’s AI Powered 1-Click Bundles see a 30% to 60% increase in units per transaction.
Smart Pricing Strategies
Price conscious consumers are always looking for a deal, but this doesn’t mean retailers need to drop prices across the board.
Smart pricing strategies such as Price Beat, price match and competitive pricing tools can delight customers with real time best value, and preserve margin while converting double the number of customers.
Chrome Extensions, like Similarinc.com, enable real time price comparison for consumers, but retailers can benefit from this product too. Retailers can use technology like this on their own sites to price beat competitors.
By utilizing smart pricing strategies, shoppers that would otherwise abandon your website are incentivized to stay onsite, leading to higher conversion rates. The impacts of this tool can be as extreme as a 102% increase in conversions at a cost of as little as 2% to margin.
Named a “$100 billion media opportunity for retailers” by BCG, Retail Retail Media platforms enable multi-brand retailers to monetize their site traffic by selling ad placement on their websites for suppliers and brands to market directly to the end consumer. Think Google Ads or Amazon Advertising marketing platforms democratized and localized for every retailer.
Retail Media is scalable, high margin ad revenue enabling retailers to increase their monthly bottom line from as little as $5k to as much as $10m, relative to their traffic.
Brands and suppliers can pay per click to have their products featured in a product carousel, on a category or listing page, or sponsored keyword search result. All of this is accomplished while a retailer retains direct control over which strategies and placements of their website are “biddable”, ensuring the customer gets the most relevant experience possible.
Unique to PA Retail Media, when electing to use hybrid relevance strategies, customers are provided the most personalized experience, where ads are only deployed if a product is predicted for a specific consumer through our recommendations machine learning models.
Did you know top search results can deliver ~30% of sales. It stands to reason that brands that rank (or pay to rank) higher will get more sales. It’s thinking like this that netted Amazon US$39bn from their Retail Media business in 2021 alone.
Platforms, like PA Retail Media, allow for all retailers to have this same Amazon-like Retail Media functionality. The bonus is that you don’t need to be Amazon to access it. So, retailers can generate more revenue from ad sales, the shopper receives the most contextually relevant product first (with easier and faster checkout time), and the brand uses their conversion marketing funds efficiently. It’s win-win-win.
Ecommerce Managers looking to optimize their stores are using a range of strategies, such as smart pricing, AI powered Product Bundles and Price Beat tools to smooth the path to conversion, as well as exploring alternate monetization strategies such as Retail Media.
By implementing these products, retailers are optimizing the huge datasets available while also improving customer experience and adding incremental high margin revenue streams to their businesses.