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Ken Van Haren

Managing Costs: Modern eCommerce Business Ops

Businesses across the board are experiencing rising costs and a shift in the consumer environment. In order to maintain a consistent profit margin, businesses need to have a flexible approach to pricing their products. In order to properly maintain a consistent net profit, a pricing strategy needs to incorporate:

  • Higher shipping costs
  • Supply chain disruptions (and associated price increases)
  • Inventory costs rising
  • Tightening price competition
  • Customers losing purchasing power

Rising Costs

Patterns’ helps businesses combine their own internal data from across these buckets, make adjustments dynamically, and saves energy spent researching market trends.

In this post, we will discuss how Patterns customers are using the platform to:

  1. Monitor competitor pricing
  2. Power internal alerts when pricing changes should be considered
  3. Improve conversion rates within the eCommerce customer funnel

Pricing with the Competition

Pricing conversations within eCommerce businesses are often reactive- only assessed at month ends or as a product is listed. There are typically two approaches eCommerce businesses take to pricing their products:

  • Competition-Based Pricing- This involves checking the competition’s pricing to ensure that similar offerings are not drastically out of market (usually within a 5% price range, dependent on the item).
  • Cost-Based Pricing- Companies price their product a set percentage above the cost of their item.

As costs change rapidly, pricing can no longer simply be monitored at the normal inflection point of a listing or a restock. Most eCommerce business owners or site managers don’t have the bandwidth to monitor their competitors pricing.

At Patterns, we have helped our customers build real-time pricing dashboards to monitor their competitors using a plug-in with Webscraper.io (here is an example of us setting one up in 5 minutes!).

Price Scraping in Patters

With Patterns, you can build a dashboard that shows all of your competitors current pricing for a similar product and set-up an alert system (through Slack, email, or SMS) so that you know when pricing changes and can react accordingly.

With our full-scale ETL capabilities, you can even automate the pricing changes through our platform. Meaning, if one of your competitors drops or raises their prices by 5%, you can automatically change the price on your Shopify store to remain in line with their offering. This kind of data pipeline typically costs businesses $5k+ per month to maintain (hint- it costs less to build and is easier to maintain with Patterns!).

Keep the Bottom Line Rising

Maintaining margins as costs change is an uphill battle. Many eCommerce business owners report using automations to streamline their inventory stocking, fulfillment, and advertising processes. While automations are truly a time-saver for a small business, they can create a distance from the day-to-day costs of running a business.

Patterns works with eCommerce companies to simplify their daily view and operation of their business by focusing on the most important numbers- their bottom line. Ensuring that their profits do not become separated from their costs is essential.

The Patterns platform makes this easy- ingest, transform, visualize, and ETL all in the same place. Through direct integrations with eCommerce sites, inventory services, ad platforms, accounting services, and financial tools- our customers set baselines for what their margins are today, what they need to be in the future, and set alerts for themselves when a cost (or profit) moves them off their intended trajectory.

A common example looks something like this in Patterns: eComm data sync

  • Plug-n-play Integrations with Shopify, Stripe, PayPal, Quickbooks, Google Ads, and ShipEngine
  • Patterns powers a Daily Dashboard of total ad spend spend, sales, supplier costs, and fulfillment costs
  • Patterns triggers Email Alerts to business decision makers when ad spend spikes or supplier/fulfillment costs change by X%

Patterns eliminates tool, dashboard, and cost bloat- while helping analysts focus on what they do best- analyze data.

Keep your Customers Converting

Analysts and business owners all have their eye on their Customer Funnels. Ensuring that customers who see a business’s marketing, end up completing a purchase, is the key to driving growth for a modern eCommerce business.

Generally, there are 5 stages of any good funnel:

Funnel Stages

  1. Awareness
  2. Interest
  3. Desire
  4. Action
  5. Sale

Ensuring that metrics for conversion are remaining consistent is essential for maintaining strong performance as costs become less predictable.

Using Patterns, our customers take their existing performance metrics as baselines for growth, and trigger alerts to provide automatic insights when one area is flagging or improving drastically.

A common model for eCommerce business marketing includes:

  • Ad Services (Google Ads, Facebook Ads, Instagram Ads)
  • Email Marketing (Mail Chimp, Customer.io, Klayvio)
  • Social Posts (Instagram, Facebook, LinkedIn)

Using tracking tools like Posthog or Google Analytics, Patterns can easily help businesses narrow down on their most successful campaigns and most efficient spend.

For example, when ad clicks rise above X%, Patterns triggers a text notification so that businesses can make the decision to increase their spend if they have the opportunity to capture additional clicks/sales!

Automated Price Updates

Another important metric that Patterns’ eCommerce company clients monitor is Cart Conversion. Tracking events like:

  • Checkout started
  • Payment Method Provided
  • Purchase complete

All of these numbers can help a business know where they might need to optimize to improve their final sales numbers. A Patterns customer used this data to help inform a change in their shopping cart. They were experiencing a lower conversion rate once the checkout process started than they showed in 2021. They tested adding a Pay Later option at checkout (like Klarna or Affirm) and showed their conversion jumped 8%!

Wrapping Up

As an eCommerce business, there are a thousand different ways that resources are constrained and dedicated. As costs are shifting rapidly, it’s essential that decision makers are connected to the right data at the right time.

Setting up a data pipeline, resourcing it to answer the right questions for your business, and ensuring that it gives you the right information ahead of time is no longer an expenditure that only large businesses can make.

Patterns modern data warehouse operating system lowers the barrier of entry so that any business can ensure they have the right data at the right time to make the right decisions.