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With the pandemic affecting the world, more and more brands are digitising their business and increasing their online presence. Online fashion marketplaces are usually the go-to option for fashion brands, as it can help them grow their outreach and sales. However, this also means the competition is tight with thousands of sellers selling over millions of products on marketplaces. This is especially true when it comes to pricing, where online shoppers are regularly comparing sellers to find the best prices for similar products across various categories.
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As marketplaces typically charge fees to brands that sell on their platform, getting pricing right is even more crucial. Thus, being well-versed with marketplaces’ charges and fees is a must for brands before coming up with their own competitive pricing strategies. Here, we’ve outlined some proactive pricing strategies and best practices that are guaranteed to keep you ahead of competition using Omnilytics’ dashboard.
#1 Understand each marketplace positioning and performance
In order to optimise brand performance in marketplaces, it is important for brands to first understand the positioning and performance of each platform.
Price summary by retailer. Source: Omnilytics
The price summary shows that Shein has the lowest median price amongst the 5 marketplaces, while Nordstrom and Farfetch both have higher than average median price. Focusing only on Asos, Macy’s and Nordstrom, we can see that Asos is positioned to target affordable fashion products with high accessibility while Nordstrom focuses on selling higher-end and exclusive products.
Mapping out the marketplaces using external data in the perceptual map above enables brands to identify opportunities and risks clearly to further formulate their strategies.
Looking into the marketplaces’ performance, Asos registered an above average total sell-out but was mainly driven by discount. The retailer also had high discounted products, whereby 83% of its products were marked down in the past 3 months. This indicates that Asos’ customers are generally bargain hunters and are more price sensitive, making it a platform suitable for brands to clear their off-season products or run tactical promotions.
Nordstrom on the other hand had the highest proportion of full price listings of 86%. It also performed strongly at full price, reflecting a customer profile that is willing to spend more generously and less price sensitive.
Macy’s had the lowest number of product listings on its online platform but the highest sell-out rate at 68%. This presents a marketplace opportunity for brands looking to expand their online presence as there is less competition in the platform.
#2 Constantly monitor your direct competitors’ pricing strategies
Overpricing or underpricing is something that brands would want to avoid. One thing they can do is to identify and monitor their competitors’ optimal price range on the marketplace by category level and benchmark against it. Such granular insights can be helpful for brands to establish a competitive pricing model.
Taking Asos marketplace as an example, the top 3 brands listed on its site are its private label, Asos, followed by Topshop and River Island. We can see that the median price for women’s Tops on Asos is at USD 28, led by River Island with a median price that is 75% higher than average.
The largest proportion of Tops is priced between USD 20-30, mainly driven by T-shirts. Brands can establish a competitive pricing model for T-shirts by adopting the good-better-best pricing ladder to meet customers’ perceived value.
For instance, USD 0-20 bracket is a “good” pricing tier for women’s T-shirts, as they consist of basic t-shirts in solid colours.
The mid level of the price ladder, the “better” tier, is in the USD 20-30 range. T-shirts in this price range feature more style attributes, such as big graphic prints in oversized silhouettes and higher quality fabric.
Finally, the “best” tier, which is the highest tier in the pricing ladder, is priced above USD 30. Products offered in this tier feature the most elaborated design and style details, such as all-over prints, ruffles, fashionable necklines, puff sleeves, and made from special materials such as PU leather, sheer and mesh fabric.
Identifying the 'good-better-best' pricing ladder in a marketplace can help brands optimally price their products based on the perceived value of an item. By using fashion market insights tools like Omnilytics, brands have the full visibility of competitors' assortment to establish their own competitive pricing model. It is a good practice to review the marketplaces and competitors’ pricing strategies on a regular basis so that you are up to date with the pricing structure adopted by them.
#3 Be proactive in identifying pricing opportunities
In order to optimise your performance in marketplaces, brands need to identify if there are pricing gaps and opportunities they can tap into.
To spot pricing gaps in the marketplace, brands need to deep dive into the sell-out rate and product contribution across different price ranges. Products with high sell-out rate but low product offering displays a great opportunity for brands to fill.
For instance, Outerwear shows a good sell-out rate at 35% for items priced between USD 30-40. However its product offering is low at only 12% contribution, hence brands should grasp this opportunity to offer more Outerwear at this price range.
Zooming further into Outerwear, there’s a missed opportunity for Suit Jackets priced at USD 30-39 range, whereby the sell-out rate is higher than the product contribution. The Suit Jackets in this price bracket are generally lightweight with classic notch lapel and tie-waist detail. They are mostly in core colours - black and brown, with a few muted seasonal colour options.
#4 Leverage on deals and promotions
Marketplaces often run various sales promotions or marketing campaigns such as free shipping, bundle deals, flash sale, coupons, product giveaways and holiday promotions. As these key events tend to drive high traffic, it is a great way for brands to boost their sales for slow-moving items and keep inventories in check.
Omnilytics’ dashboard allows brands to track the promotions or campaigns run by the marketplaces. We can see from the chart above, Asos ran frequent promotions in a year. The retailer had the most discounted SKUs on the 25th and 26th November 2021, which was during the Black Friday sale period.
The below chart shows the effectiveness of the campaign as the sell-out rate on Asos spiked on the week of 22nd November, which was the week of Black Friday sale. This proves that the campaign is successful in driving traffic and sales.
Conclusion
Fashion marketplace is a key sales channel for brands to expand their business and boost visibility. However, fierce competition makes it difficult for brands to optimise their performance.
Using a real-time market insights tool like Omnilytics can help brands tailor the right pricing with the right assortment according to different sales channels with minimal risks. By continuously monitoring pricing on marketplaces and being proactive in applying these best practises, brands can stay on top of the competition and make informed decisions with confidence.
To find out more about how you can succeed in online fashion marketplaces, head on to our article here.
