Dynamic pricing in commerce refers to a certain pricing model that requires the sale of products in a fixed quantity at a fixed price for a pre-determined amount of time. This pricing model is used to minimize costs and improve efficiency in ecommerce systems. In this modern online business world, where competition is very stiff, dynamic pricing gives businesses an edge. The dynamic-pricing-in-ecommerce helps businesses to provide goods and services more efficiently.
It is one of the largest retailers in the world. With its wide selection of both standard and hot products, it offers consumers a wide range of items at very competitive prices. Hot product bundles from it are a bestseller on eBay, which enables them to reach an international audience. As an example, an order for a two-hour delivery of a flat-pack lamp shade can cost $20, which is much less than the price of the same item at a traditional bricks-and-mortar store.
The direct to consumer ecommerce strategy is a result of the combination of several factors such as demand, supply, and product mix. It has used its scale advantage to reduce prices. The use of a multiple-store network provides a good number of outlets and thus, allows them to offer lower prices to customers. They have also developed a reputation for customer service, quick delivery, and low pricing. A good combination of these factors allow them to offer the lowest prices around.
It has used a dynamic pricing strategy to increase its profit margin. The cost savings it has realized from its network of outlets, the sales volume of each outlet, and the reduction in variable costs caused by the elimination of sales floor space and overheads are some of the factors that led to the lower prices. It also reduced inventory costs by using warehouses and fulfillment centers located in key states. These factors have led to an increase in customer traffic and further drive down the cost of goods sold.
It's decision to adopt dynamic pricing in ecommerce is a very smart business move that should be emulated by other online retailers and sellers. It should spur other sellers to reexamine their strategies and come up with new pricing structures that can sustain the market conditions. This would help them achieve the goal of increasing profit margins. This would help them in maintaining or increasing their customer base and driving more sales and more business.
They have a dynamic pricing strategy that has helped them achieve success in this market. However, the emergence of ultra large cloud-based solutions like Uber and IaaS has provided strong competition to these established players. With companies like Uber emerging as solid cloud-based alternatives to existing onsite application vendors, companies will need to find ways to maintain the competitive advantage they enjoy over their existing vendors. By adopting a multi-store retailing platform that includes surge pricing, dynamic pricing, and more, they can continue to realize the success they have already achieved and continue to drive sales growth and revenue growth at a higher level.
Check out this post that has expounded on the topic: https://en.wikipedia.org/wiki/Electronic_business.