The impact of Covid-19 on price & price comparison
Skuuudle insights report
The Covid-19 pandemic has had a significant impact on eCommerce, and indeed the economy as a whole. It has changed the way we do business. As a result, companies must reflect on how their pricing decisions can impact their business and customers.
The economy is still incredibly uncertain right now, and businesses face multiple challenges, supply chain disruptions, a possible decline in demand and the acceleration of the migration to online sales. Equally, many consumers are facing economic hardship or reduced disposable income, as well as changing priorities.
One thing is clear - with the shift to online shopping and value becoming more crucial than ever to customers, price is going to be the strongest differentiator for eCommerce businesses.
According to Gary Kirkbright, Price and Promotions Director at Groupon: “Customers are becoming more and more brand agnostic. Price is becoming the decision-maker of where they shop.”
We have seen Gary's view reflected in the results of our survey. "In comparison to last year, how much more likely would you say you are to shop with a company that you haven't used before, based on price?"
35% would be more likely to choose a brand they haven't used before based solely on price.
So what does that mean for pricing going forward?
The consumer will know the price of your competitor’s products.
With more comparison tools at their disposal than ever before, consumers can compare prices of similar products before committing to a purchase.
According to our consumer data, 96% of respondents said they compared prices before buying. 79% said that comparing prices was important to them.
Of course, this also creates the opportunity to attract new customers, as they look to move away from their existing providers in search of a better price.
Online marketplaces are making comparison quicker and easier.
The online marketplace gives consumers quick and easy access to compare prices of similar products. What’s more, customers are motivated to spend time comparing prices. With many consumers having their incomes reduced, and concerns about the future, they are more likely to spend time searching for the products they want at a lower cost.
Prior to the pandemic, 42% of consumers responded that they would spend between 11 and 30 minutes comparing prices before they made a purchase. The average time spent comparing prices from all respondents was 23 minutes and 41 seconds.
Since the pandemic, 40% stated they are comparing prices more often than before. Only 2% said they compare prices less often.
Gary said: “With the internet making prices transparent, businesses need to be aware of where they stand within the market. Otherwise, the market could change with such speed that you would have missed margin and sales opportunities.”
There are small margins to play with when developing a pricing strategy, meaning competitor-based pricing or Marketplace pricing may be the best strategies for businesses to adopt as they attempt to navigate this new environment.
Monitor consumer metrics.
In the current, uncertain environment, businesses need to review their pricing strategies more frequently so they can be adjusted quickly as conditions change.
We recommend monitoring the consumer metrics that provide a reliable indicator of current customer feeling, including:
- basket size
- basket price
- conversion rate
Gary added: “Price has always been important. This pandemic has made it even more so. With rising unemployment, inevitable inflation as a result of a protracted recession, not to mention Brexit around the corner, monitoring price should be a top priority for businesses.”
In our survey, over a quarter of all consumers stated that they had experienced ‘too many rules’, making shopping ‘complicated or unpleasant’. 23% said they had experienced ‘poor signage or lack of store guidance’, while almost 1/3 of retail shoppers experienced a verbal disagreement due to Covid restrictions, during this past Christmas period.
The best performers will have the ability to react to external forces quickly.
If further lockdowns are imposed, some workers will return to furlough, resulting in consumer cash flow becoming a key priority again. Ecommerce businesses must be quick to respond. In this case, offering temporary pricing or discounts, one-time promotions, flexible payment terms, credit for future purchases, and flexibility for future pricing would help optimise sales.
Other businesses will be watching and adapting their prices accordingly, and you must do the same to avoid getting left behind and priced out of the market.
During the first lockdown, for example, we saw digital services quickly respond in order to survive. Many created three-month promotional offers, helping them gain market share, preserve the long-term price points of their value propositions, and assist customers in a critical time of need. The result? They were able to solve the business problems caused by the pandemic while also addressing customers’ cash flow concerns.
“As a result of the pandemic, customers are looking for offers. The number of promotions being offered by your competition will inevitably go up. Not having visibility of that, will detrimentally impact your trading figures.”
Pricing needs to be at the heart of your strategy if you want to attract and retain customers, maintain your market share, and come out of pandemic stronger.
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