A Secret Weapon of an eCommerce Manager: Price Monitoring and Dynamic Pricing

July 19, 2023

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Using competition-based dynamic pricing to fight high inflation rate, small average basket size and a dead stock problem.

Life as a UK eCommerce player in 2023 is a bit like a roller coaster ride, except the safety bar is loose, and someone replaced the fun loops with more drops. It's been a wild ride, with inflation rates ballooning like waistlines after Christmas dinner, basket sizes shrinking faster than your patience in a traffic jam, and overstock issues piling up like unread emails after a holiday. But fear not, there’s a ray of hope, and it's beaming from the world of very advanced AI-powered tech and old good market intelligence.

The Three Key Pain Points of UK eCommerce-2023 

High Inflation Rate

It would have been a good time to crack a joke about the wild inflation rate, which is seemingly wilder than Boris Johnson's hairdo on a windy day. However, the current economic turbulence is neither joke-inspiring nor funny. We all know the reason behind it, and it's nothing to laugh about either. The fact is, the inflation rate is driving up the cost of goods and services, including those sold by eCommerce businesses. Consequently, sales are taking a hit. The increase in prices presents a significant challenge to end consumers, whose natural inclination amidst uncertainty is always the same: save as much as they can.

The average basket size in the UK in 2023 has been shrinking — in terms of its size as well as the value.

Decreased Average Basket Size

Linked closely to the inflation challenge, the average basket size in eCommerce has seen a noticeable decrease. According to the Office of National statistics, the average basket size in the UK has been shrinking for several months now — in terms of its size, as well as its value. No surprise here either. The rise in costs of living and tightened consumer budgets mean shoppers are being more selective and buying less per transaction. This trend was predicted by the McKinsey report on the future of eCommerce in the beginning of 2023 when all the surveys they ran clearly indicated customers' desire to save. Both in low income groups, as well as in high income groups (the change in attitude towards pricing has been even more prominent for the high income customers than for the low income ones).

Source: McKinsey report The State Of Grocery Retail 2023, Europe

Increased Overstock

Lastly, the issue of overstock has become a significant burden for eCommerce companies. 2022 (especially in the beginning) looked promising, and businesses were hopeful about the future. The post-Covid era was supposed to bring more consumer confidence, more active economic behaviour, and as a result, more revenues for eCommerce. However, expectations rarely match reality. A sad testament to this has been the Pedal Group, who had to cancel a year-long order line for bikes as they were unable to sell the stock they already had.

Other businesses "came prepared" — or at least, they thought so. In order to get rid of the "dead stock", they were forced to offer substantial markdowns, robbing not only themselves of any profit margin whatsoever, but also affecting other market players across different categories. Because let's face it, if someone sells vacuum cleaners at a 70% discount, new shoes, coffee machines, and even spa treatments can wait.

In general, overstocking is a major headache. And it costs businesses a fortune.

The Power of Price Monitoring and Competition-based Dynamic Pricing

So, how can price monitoring and competition-based dynamic pricing help tackle these issues?

Fight Inflation with Market Insight

Price monitoring provides real-time insights into market trends and competitor pricing strategies, which can be invaluable in an inflation-hit economy. By understanding how competitors are pricing the same items as you, eCommerce businesses can capture profit margin and increase revenue flow with ease.

Especially, when more and more consumers are looking for a better price, according to McKinsey.

Source: McKinsey Report The State of Grocery Retail, 2023

Let’s take a real-life example.

One of the companies we ran a random research on recently. A big player in Kitchen appliances and Electric products retail. Still, they do a very poor job monitoring the market and being strategic with their pricing. They are one of the market leaders who position themselves as a "discounter" — a store that always offers the best price. It's not the case, however.

As you can see on the screenshot, they offer the cheapest price on only 1 product out of a random selection. The y can definitely get away with it BUT only if this product is chosen strategically. If this toaster is a real traffic and revenue driver, and it is really important to keep prices low on this particular item. Otherwise, it looks like a finger in the air.

Source: Aimondo Control Panel

Capture Margin With Accurate Market Data

An inevitable result of economic trends and customers' close attention to pricing is a stronger pressure on the profit margin. Again, no surprise here. And this trend is confirmed by the above mentioned McKinsey Report (in case you though you're the only one who struggle with this — relax, it's an industry-wide issue).

Source: McKinsey report The State of Grocery Retail, 2023, Europe

But the fact is — you don't have to suffer so hard. There are tools that might help to overcome this margin-related problem. All you need to do is to get accurate market data.

Let's get back to our real-life example, the Kitchen appliances and Electric products retailer we study.

Right now they are the only seller of Russel Hobbs Mini Cooler. Indeed, as you can see on the screenshot, no one has it in stock — not on Amazon, not on eBay, not anywhere (we did a 360-degree monitoring of all available sellers). Still they prefer to keep their price at an old good charm-pricing level (£39.99). Does it make sense if a customer has no choice anyway? Why not increase it to the higher level of the market average?

£3.2  is not a big difference, right? Of course not — if you sell 1 item a week. If you sell 10 items it’s already £32. And if you miss these £30-worth opportunities with 900 SKUs, not just this one? It’s £28,800  difference in revenue WITHOUT any extra effort. Just because you have this 360-degree snapshot of the market, very accurate data that unveils hidden opportunities.


You might think the company is missing the opportunity on only one, maximum 2 product? Here's another screenshot. Apparently, they have made up their mind to go with the competitive pricing to the extreme and waste up to 72% on every item sold.

Increase Basket Size through Dynamic Pricing

Having accurate data is one step. The next one is to use it dynamically. Competition-based dynamic pricing can be a powerful tool to increase the average basket size as well. By adjusting prices based on demand and competitor pricing, businesses can offer attractive deals on complementary items or upsells, incentivising customers to add more to their baskets. Imagine this: you know your customer’s demand (obviously, you do as they are already at the check out stage).

AND you know the lay of the land — the products you’re currently selling cheaper than anyone else (obviously, using advanced price monitoring solution). Why not offer a customer an upsell that they will benefit from. Your basket size goes up. Your customer saves. Win-Win.


Manage Stock Discrepancies through Strategic Pricing

Overstock is a pressing issue, but dynamic pricing can help manage it effectively. Actually, it is currently considered one of the most efficient tools to mitigate stock discrepancies.

This techniques is called price optimisation. What does an optimised price mean?

The graph below shows that if you offer a product at the low price of $10 (Perhaps at a discount store), you might sell 100 units and make a revenue of $1000.

price optimisation explained
price optimisation explained

On the other side of the pricing spectrum (perhaps at an exclusive luxury brand), you can set the high price of $100, which will lower demand to only 10 sales, but will still get you $1,000 in revenue.

If you want to find the “optimal price” that makes the most amount of revenue, you will choose the price at the peak of the curve below. In our example, this would be $50, increasing demand to 62 sales which would yield $3,100 in revenue.

In this simplified example, the retailer can more than triple revenue by identifying the optimal price for this specific product.

Using price monitoring and price optimisation basically allows eCommerce businesses to exit stock at a controlled pace without necessary markdowns and offer the optimal price a to very single point of time.

How do you get the best price monitoring service that allows you to achieve all these tremendous results?

Implementing price monitoring and competition-based dynamic pricing is a strategic move, and choosing the right service provider is crucial. When looking for a service provider, consider the following factors:

In this simplified example, the retailer can more than triple revenue by identifying the optimal price for this specific product.

Data Accuracy and Timeliness: Your provider should offer accurate and up-to-date pricing data. If you pricing data provider can’t find the right match for your product all further steps are irrelevant. At Aimondo, we’re proud of your high level of data accuracy — even for products without proper EAN.  

Easy Integration: Look for a provider that can integrate seamlessly with your existing eCommerce platform and can handle your volume of products.

Customisation: Every business is unique, and your pricing strategies should be too. Choose a provider that allows customisation of pricing rules and strategies based on our business goals. Make sure your provider supports price optimisation —otherwise, you won’t be able to exist stock at a predictable pace.

Support and  Training: A provider that offers robust support and training will ensure that your team can maximise the benefits of the tool. At Aimondo, we have dedicated Customer Success Managers and training team that would help your employees with pricing product adoption.

Ana Bibikova, a Head of Marketing at Aimondo

Ana Bibikova, a Head of Marketing at Aimondo


Ana is a rare breed: T-shaped marketer with a wide experience in eCommerce, B2B, B2C and B2B2B marketing. Writes about unconventional strategies for exceptional growth.

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