3 Current Challenges Facing Multi-Channel Pricing

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Multi-channel pricing currently faces a ream of challenges in the retail industry. With the marketplace constantly evolving, the way manufacturers are selling products is drastically changing. There are a variety of ways for your product to land into a consumer’s hands. You have traditional brick-and-mortar stores, eCommerce sites, third-party sellers, and hybrids that bring together many of these facets into a unique platform.

Regardless, it has truly changed the way retail functions in the eyes of the manufacturer and for the consumer. Not only is the experience much different, but the pricing models must adapt as well. There are numerous challenges faced by manufacturers because of the sales climate and how it currently functions. Let’s take a closer look at how this dramatic shift has impacted multi-channel pricing.

The rise of third-party e-tailers

Electronic retailing, otherwise known as e-tailing, has had a truly disruptive impact on the multi-channel market. Third party e-tailers are causing a stir and sending companies to battle for their brand, reputation and pricing model. E-retailers can on sell merchandise even if they aren’t the brand. They can sell it for markedly reduced prices and capitalise on their low overheads and decreased marketing budgets to provide these low price tags. Discounts can be as large as 25 to 40 percent. For the original manufacturer, their brand is at risk. E-tailers can alter the original manufacturer’s price positioning strategies. Consumers might view them and their brand differently when the product is significantly discounted. Since the third-party e-tailer can list any branded product online, there is a high risk of the manufacturer losing control of their product and brand.

The difficulty with inventory stock pricing

With multi-channel operations, a brand might have a brick-and-mortar store and an online shop as well. Often, you will see the inventory stock of the online shop managed separately to the brick-and-mortar store. Since the inventory stock is divided and they are managed as separate business units, the way they manage and price their product might not be in unison.

This means customers might see a flash sale online but opt to go into the store to buy it. Some retailers have streamlined this process where all prices are the same across their brand-managed channels, but some opt for a different approach. The different prices across multi-channel options can be confusing for consumers and difficult to manage expectations from a retail perspective.

Inconsistent product numbering

When a product spreads to a multi-channel level, there are challenges to keep consistency across the inventory. One of the biggest problems is that product numbering from a store does not match the product numbering from a piece of merchandise online. Recent studies suggest that nearly 50 percent of items do not have the same product number online as they do in-store. This inconsistency can enhance frustration alongside the pricing difference as well. If a consumer sees a product online but wants to try it on in the store, it is in their best interest to keep track of the product number. However, if they are different, this adds a layer of complexity to the consumer’s shopping experience.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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