AI technology has penetrated almost all the major industries in the world. Recently, it is being introduced in retail, and eCommerce businesses to promote more effective pricing and discount management. For example, both businesses and individuals use Ximple and similar platforms to compare the prices of similar products. It helps you to browse through different price rates of a particular product offered by different brands. That being said, let’s find out how AI improves pricing for businesses.
AI and Pricing
Brands can’t keep up with the fast-changing trends and conduct surveys to look for opportunities. Providing regular rotation of discounts to customers is more challenging than it sounds. It is because of this reason that retailers are utilizing the power of AI and machine learning to roll out promotions and discounts. AI is highly efficient when it comes to setting optimal prices. It analyzes both competitive and historical data, customer behaviour, and seasonal trends to come up with the right pricing.
Intelligent AI can help retailers with dynamic pricing based on customer engagement reports. To set optimal prices for thousands of products weekly requires your manager to be a superhuman. It is nearly impossible to handle so many things for a human. This is where the need for AI comes in as it can help with fast decision making.
Retailers opting for AI-led price optimization have to go through several stages. They need to learn to set optimal prices by stock-keeping unit, channel, product portfolio, point of sale, and also by customer. This helps in improving profitability. In other words, it can help boost sales and revenue by up to 9% or more. (Read – Diving Head First into Deductions- and Why It’s Costing You)
Why is AI so effective for pricing and discount management?
AI makes use of self-learning algorithms to scan huge amounts of data and check through endless pricing scenarios to come up with the most relevant price for products and services. This is why more brands are implementing AI in the retail pricing landscape.
Algorithm-based models consider several unrevealed relationships between the products in the portfolio to suggest individual prices to boost sales and revenue for brands. AI can be used to automate all the labor and time-consuming tasks and thus, allow your team to make faster customer-centric decisions.
Knowing what discount to offer is always a tricky situation. You want to get more customers, but at the same time, you don’t want to lose out more on profit. Luckily, you have AI to help you decide the right discounts for your products and services.
An efficient AI system can suggest the ideal discount rate and ensure that you are making more profit from it. It looks into specific features of each past deal that was lost or won. This is what makes AI so useful and efficient in discount management.
Getting Ready For AI-Driven Pricing
Price optimization led by AI requires retailers to follow five steps.
- Prepare the required data
- Hire a technological provider or look for an in-house solution
- Select products for AI to suggest prices
- Educate and train managers
- Keep the system up and running
AI is a very powerful and beneficial technology when used correctly. Retailers can gain a lot from implementing the power of AI in price and discount management.
This article is written by Purtika Choudhury Arc Digitech (arcdigitech.com)