1. Dynamic Pricing in E-commerce Betl Gke Mnir Geden
Supervisor: Assist. Prof. Dr. Hseyin Karaca
2. Outline What we had done before? Price-Awareness Survey
Interview with an Expert Our Business Model External and Internal
Pricing Parameters Similar Emerging Businesses
3. Pricing Literature Review Return for a product in a
commercial exchange Subject Main References # of Literature
Reviewed PRICING Dynamic Pricing Liang Peng & Haiyun Liu,
Prithviraj Dasgupta & Louise E. Moser & P. Michael
Melliar-Smith, 2001 Virginia Journal of Law and Technology, Simon
Lee and Abdou Illia (2010) & Assion Lawson-Body (2011), Ellen
Garbarino , Sarah Maxwell (2006) Pricing Strategies Pricebots 13
Pricing Goals Kang Bae Lee & Sungyeol Yu & Seong Jun Kim,
Dong-Qing Yao, Ziping Wang, Samar K. Mukhopadhyay & Yu Cong
(2010), Ravi Arona, Arun Sundararajanb, Siva Viswanathan (2004),
Grover, Varun;Ramanlal, Pradipkuma (2000), Xing Pan, Brian T.
Ratchford & Venkatesh Shankar, Ram Bala (2004), Raj Venkatesan,
Kumar Mehta, Ravi Bapna, Kurt Komaromi, Robert J. Kauffman (2004)
14 Profit oriented Market oriented Competition oriented Yuxin Chen,
K. Sudhir (2004), Michael D. Smith (2002), Amy R. Greenwald,
Jeffrey 0. Kephart, and Gerald J. Tesauro (2000), Mui Kung, kent B.
Monroe, Jennifer L. Cox (2003), Narahar,Cvlraju, Ravikumar and
Sourabh Shah (2005), Jeffrey O. Kephart, Amy R. Greenwald (2002),
Roger Waldeck (2005) 11
4. Pricing Strategies Coupons A quick and simple way to save
money for customers! Coupons offer a great incentive especially for
new customers and increase cart size of the store as customers may
purchase over coupons amount. Discounts Different ways to offer
discounts Seasonal discounts Product specialized discounts Customer
based discounts Best Price Companies guarantee to give the best
price for some or all products Best Price Guarantee strategy offers
customers to pay back in a case of lower price of the same product
on another online store. Loyalty Companies value continued business
of customers thru a token of appreciation Loyalty pricing is a way
to consider the loyalty points at the time of purchase and push the
customers to a further purchase on the same store.
5. Price Comparison Sites (Pricebots) Price comprasion sites
are an electronic intermediaries between the sellers and the
buyers. Aggregate the price data of different online merchants and
provide as comparable information to the customers. Mostly, the
price data is collected directly from the sellers by data
integration. Other solution is to implement shopping search
comparison (SSC) algorithms that can collect the prices data by
crawling on the web. Most of the revenue models are per-click rates
and advertising is another option
6. Consumer Survey Aim of the survey To collect information
about shopping behaviours, expectations, price awareness of Turkish
e-commerce customers. Methodology and Tools Multiple-choice and
scaled type questions, Google forms, ~150 responses Metrics 1 5
scale (Never Always, Aggre Strength )
7. Consumer Behaviours
8. Expectations from the Retailers
9. Price Awareness and Pricebots
10. Interview with an Expert A. ztrk Education Bogazici
University - M.Sc, Biomedical Engineering Technische Universitt
Mnchen - BSc., Electrical Engineering Career Profile Quality
Manager & Online Marketing Visual Meta GmbH Berlin Team Leader
Ucuzu A.S. - MIH Allegro Group / Naspers Academic Staff Bogazici
University Student Trainee Technology Marketing Department -
Technische Universitt Mnchen
11. Interview Highlights What are the expectations of
e-commerce websites from price comparison websites? Price
comparison websites are effective alternative conversion channels
for reliable e-commerce platforms like hepsiburada.com, Teknosa,
Kliksa and e-commerce platforms offering price advantage. Price
comparison websites are effective tools to increase e-commerce
website traffic for e-commerce platforms offering average prices
with the aim of attracting attention of purchasing companies. What
are the main factors determining pricing strategy on e-commerce
platforms? Competition in the market Positioning of the company
Reliability and credibility of the company in the market Overall
cost of the product How e-commerce platforms track competitors
products and pricing strategies? Use price comparison websites.
Track in market valuable products manually.
12. Interview Highlights How is the feedback exchange between
price comparison & e-commerce websites? Price comparison
websites take over consultancy role and give advises how to improve
its traffic, conversion rates, reliability. i.e. improve cpc and
bidding rates. Do e-commerce websites give customized offers in
Turkey? Offer x% discount for remaining items in the basket Reminds
products in the basket Offer discount within a restricted time as
of the visit of the customer. Is there any legal restriction? There
isn't any legal restriction for customized offers.
13. A New Business Model Internet became the largest
marketplace of the history. All of the price information of the
whole world is now reacheble by just a few clicks. What if the
pricebots evolve to B2B tool instead of B2C. Possibly, they are
used by price definers of merchants to manually adjust the prices.
Why pricebots cant form a basis and provide data for a computer
based dynamic pricing mechanism that works by needless of human
labor.
14. Our Business Model Collect competitors prices and stocks
with pricebot agents by web crawling. Provide price comparison
service to customers. Collect customer analytics data on price
aggregator site. (Searched products, most clicked competitors). Use
the data to forecast demands and position competitors. Provide the
vertical(customers tracks) and horizontal(competitors prices and
stocks) information for the company also in historical dimension.
Build an expert system that uses these information for dynamic
pricing.
15. Dynamic Pricing Mechanism External Parameters f: Demand
forecasts of the product p: Product price of the competitors s:
Product stock information of the competitors r: Competitors
credibility and market reputation t: Historic market price
information of the product (trend) Improve the Expert System Trace
and Analyze Effects To Sales Internal Parameters or: Retailers own
credibility and reputation oc: Cost of the product os: Stock and
availability of the product op: Current sales performance Adjust
Prices with an Expert System Internal Parameters Price Adjusting
Function f(f, p, s, r, t, oc, oc, os, op) => new price An expert
system that runs for a new competitive price or an acceptable or
reasonable new profit margin, which can result in higher or lower
prices. And coefficients of parameters can be improved by a machine
learning system(Neural Networks) by collecting the adjusted price
effects to the sales. External Parameters
16. Constraints and Necessities To sell or to use the price
data of the e-commerce companies, crawling technique should be
used. Data integration between e-commerce sites and price
aggregator sites cannot be used since nobody will permit usage of
their price information data horizontally. Well-designed database
infrastructure needed that stores internal parameters for each
product. (cost, sales performance, etc.) In the long-run, these
expert systems can be applied by competitor retailers and can cause
to lower profit margins and be closed perfect market
efficiency.
17. Similar Emerging Businesses PRISYNC WISEPRICER Turkish
entrepreneurship founded in at beginning of this year in Bogazici
KOSGEB works employee number under 10. Founded in 2012 and get seed
funding at the end of the year and now works 18 employees. Got 4.25
million $ funding and supported by TUBITAK They claim that
retailers can increase their revenue by 22% and bottom line margins
by 7%. http://www.youtube.com/watch?v=J0Bggqb2jEA