How e-retailers negotiate with customers

Shrikar Khare Posted On - March 19, 2015

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Of late, online shopping has become has become more or less like the to-and-fro negotiation process that does its rounds in the Turkish Bazaars, where consumers have the liberties to negotiate at a few particular sites.

Amazon’s Make-an-Offer

For example, top U.S. marketplace- Amazon, launched the ‘Make-an-Offer’ button which allows customers to negotiate the prices  for uncommon merchandises, such as sports souvenirs, rare coins and fine art materials.

The e-negotiation process

For instance, when a shopper wants to buy an Edmonton Oilers Jersey autographed by Wayne Gretzky, he has two options-either add to his cart instantly at the seller’s stated price of $99,000 or ask for a lower price. The consumer can also utilize the option to negotiate by suggesting a price which he can do by clicking upon  the Make-an-Offer button, located at the right hand side of the product page. Hence after, the seller either accepts or rejects the customer’s offer or may be even come up with a counteroffer. The process continues till both the buyer and the seller reach a concurrent point of price for the product.

Smaller hands in the line

Even better fact in the scenario is that smaller retailers are too, joining the band wagon. With the aide of technology vendors of the likes of  PriceWaiter and FreshPlum, they are getting into this negotiation game too, gradually.

The Beyond Stores started using the PriceWaiter’s technology way back in 2013, in order to negotiate with consumers. Mark Ginsberg, the managing director at the retailer said that allowing buyers to negotiate prices for the products they buy, attracts more and more consumers and makes them indulge in a research process for the purchase. Ginsberg further added that the nicest thing regarding PriceWaiter is this technology allows retailers to create an impactful in-store contact with shoppers and aide them negotiate with buyers in any normal bricks-and-mortar retailer way.

How consumers negotiate

The consumer has the provision to click the Make an Offer button to offer a different price than the advertised price. This button is located just beneath the advertised price on the product page. Hence after an e-mail is sent to those five employees of Beyond Stores who manage the PriceWaiter platform part-time.  The employees at Beyond Stores might accept the price or may even suggest a counteroffer. The average time taken from the submission of consumer’s price to the sale is at least five hours.

PriceWaiter is featured on most products of Beyond Stores. The exceptions arise only in when the retail store offers the cheapest prices possible on certain items, as per the monitoring of prices that Beyond Stores does internally. Certain brands, too, are not included owing to contractual reasons.

E-negotiation boosting revenue generation of retailers

This strategy has been noted to be working effectively. Around 44% of the accepted prices offered convert into sales, and also as much as 26% of the counteroffers generate into sales. While shoppers are said to be requesting an average discount of around 16%, Beyond Stores provides an average of 12% discount. During the initial three-months of using the PriceWaiter technology, Beyond Stores had an upsurge in sales by as much as 25.4% and a conversion increase by 22.8%.

Beyond Stores is reported to have sold a whopping $7.6 million online in the fiscal year of 2013, which is a remarkable 375% increase- from a mere record of $1.6 million in the year 2012.

The freemium model- Most used e-negotiation platform

PriceWaiter works on the model called ‘freemium’. A few merchants, including Beyond Stores have been using the basic version of the technology that comes around with no costs. Customers have the provisions for adding up features at a certain cost, ranging 1.4%-2.9% of the value on transaction basing on the volume of the retailer. The highest-volume customers need to pay a lower percentage whereas the lower-volume customers are required to pay a higher percentage.

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