Every now and then I help a friend with sales at various outdoor venues where plants and flowers are sold. And I found there's nothing like being right there in the trenches when it comes to getting a first-hand look at how pricing affects sales.
I can't count the number of times I saw resistance to sales based on price. Some folks come right out and said that our prices were higher than Home Depot's garden section. Other folks would make a more general excuse of some sort not to buy -- often the phrase "I just can't grow plants."
Clearly there was interest, otherwise why would someone who can't grow plants
spend 10 minutes looking them over? And just as clearly, there was a real reason not to buy. Quality plants aren't cheap.
Working at a booth in a venue like this also lets you experiment with prices -- the plants we marked down to $10 sold out within two hours or so; whereas at $15 they remained unsold much of the day.
Shoppers at almost any e-commerce site no doubt are similar -- certain items will sell at certain prices, and not at other prices. I'd bet you can even price things so cheaply that sales slow down because customers think there is something wrong with the merchandise!
And of course, in cyberspace, no one can hear their customers scream.
Interestingly, a Palo Alto, Calif. company named Optivo Corp. has just come out with a new product that addresses pricing concerns for e-commerce sites.
Called the Optivo Pricing Solution, the company claims it can deliver gross margin increases of 20 to 40 percent by adjusting prices on the fly.
What makes it different from other pricing aids is that the application features a "live testing" capability to test different price-points, and to measure and respond to changes in market demand in real-time. You can gather data such as how many people looked at an item, but didn't buy, for instance. The app conducts live tests with customers in real-time.
The Optivo Pricing Solution can then recommend an optimal price for each product based on an online merchant's business objectives, maximizing profit, a clearance sale, what-have-you. These recommendations can be manually approved and implemented, or automatically put into place by the Optivo application through tight integration with a retailer's online infrastructure.
Optivo says its pricing solution was designed to address the different phases
Of a product's lifecycle, from setting a product's original price to determining
its optimal prices during an inventory liquidation period. And it's scalable, capable of automatically managing prices for millions of SKUs.
It is not for Mom and Pops, however. Pricing, including implementation, begins at $200,000.
An Optivo spokesman said the company sees Zilliant as its only real competitor because only Optivo and Zilliant do live-testing on the Web.
But live or not, other companies that are part of the retail pricing landscape are Manugistics, DemandTec, ProfitLogic and Khimertics.
Austin, Tex.-based Zilliant, whose entry is called Dynamic Price Manager, has yet to officially launch.
Zilliant, which secured $7 million in additional funding in March, says on its site that "companies can utilize the direct customer feedback created by Dynamic Price Manager across multiple channels to drive more predictable financial performance throughout the enterprise."
There are a lot of competing options in the e-commerce pricing area, so if I were looking for such a solution, I'd do a lot of checking around. But I might start by taking the Optivo Challenge, which the company offers as "a fast, cost-effective way to evaluate the benefits of the Optivo Pricing Solution - with little effort from your scarce IT resources."
Too bad no such help exists in the real world of small, start-up flower businesses. My friend could save a lot of floundering around.
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