How to correctly interpret price changes in competing e-stores?

Your e-commerce store can’t run its operations in isolation from the competition, just taking internal actions and ignoring market conditions and competitors updates.

With hundreds of different options and the ability to reach the information in seconds, today’s customers have great power in their hands. Moreover, competition is really fierce and so, consumers do not hesitate to compare all of your offerings with those of your competitors and it’s, therefore, really important to be aware of your price position in the market.

Among different data points relevant in the online area, competitor price changes and product ranges can show how the market is changing and evolving. So, gathering pricing information and structuring it is really important in interpreting the price situation. Also, at the end, you have a better decision-making process.

If you are able to collect the data and transform it into actionable insights, you will definitely have better analysis and ability to predict the market status – how your competitors apply pricing strategies and change their own prices. Then, armed with the right price information, you will have solid positioning and the ability to respond to different scenarios.

Which metrics should you look at while analysing your competitors’ prices?

Basically, you need to find answers to the following questions while analysing and interpreting your competitors’ price changes:

– Which competitors should I be monitoring?
– When do I need to look at their prices?
– When and how often do they change their prices?
– How much do they increase or reduce their prices?
– What is the reaction of online shoppers towards the competitors’ price changes?
– What are their price reactions towards your moves and market demand?
– Do they have any seasonal price changes?
– How do they change their prices on special days like Black Friday, Back-to-School?
– How can I respond to them? What is the reaction of customers to my prices?
– Based on the answers to the above questions, how can you predict their pricing moves and respond to their strategies?

After gathering all the above information, you’ll be able to get rid of guessing your own pricing decisions and make predictable decisions powered by data. Analysing and interpreting in this way helps you to boost your growth and profitability.

Tip 1: It is better to focus on key categories and competitors who have complementary products.

How to manage the process of analysis?

You may have questions in your mind about how to build the end-to-end price interpretation cycle. The process should look something like;

Gathering – Visualizing – Analysing – Taking Action – Monitoring performance – Optimizing

However, too much manual effort will be an immense burden and loss of valuable time spent answering the above questions and building the process. That’s why you have to find more productive ways; by using the right pricing tool, you will have greater ability for gathering data, visualizing them, and interpreting the results.

Tip 2: Of course, you have to deal with lots of data but keep in mind that you are not a data company. Instead of losing tons of time, focus on your core business and use the structured data to improve your business. Use the abilities of technology providers to gather the data and generate insights for you, then you can spend your time and energy on analysis and taking strategic actions.

So, what kind of benefits will I get by interpreting competitors’ prices?

Assuming you implemented the solution and established an ongoing insight generation process, you should have a clearer idea about your own positioning, market trends, and evolution such as:

Product lifecycle of your product. You can decide what price you should apply during which stage? For example, an initial low pricing policy to get into the market during the introduction stage.
– Detecting price trends if price wars are happening in the market.
– Detecting pricing patterns repeating every year or seasonally.
– Detecting if your prices are low or high in the market.
– Analysing the reactions of the market and customers to your prices.
– Creating opportunities to launch promotions, set discounts or increase prices.

Another goal of this article is to show you a few pricing scenarios, how to interpret them, and how to make decisions.

Before jumping into these scenarios, a quick reminder should be given; interpreting your competitors’ prices shouldn’t always lead to cutting your prices below the competition and being the lowest in the market! The purpose of adjusting your prices wisely is finding the optimal price at the best time in order to generate maximum revenue from your sales.

Read more: Why cost-plus strategy is insufficient now and how to make it better?

Now, let’s jump in…

Your prices might be too competitive

In some scenarios, there is a risk of being priced too competitively compared to the rest of the market and even increasing your prices by a small percentage won’t affect your best-offering position. If you are not able to detect the opportunity you could see an increase in your sales but not your profits. When that happens, it may be a great sign for you to think about adjusting your prices.

Let’s go through it with a real-time example!

Look at the two product pages below from real online stores.

The Monster-Shop and Home Beauty & Gift Shop are selling the same X-Box White Console. As you can see the first retailer sells the item for £199.99 and the closest competitor sells the same for £249.90.

It is apparent that there is a huge gap between these two competitors. In this case, The Monster-Shop can raise its price and set it just below Home Beauty & Gift Shop. With that decision, the Monster-Shop can both improve the profit margin and keep its competitive position.

Sounds like a great opportunity, right?

With the right technology implemented, you can detect that huge price gap at first glance and position yourself to respond quickly by increasing your prices. If you track competitor prices manually, it can cause an extreme burden and significant inaccuracy. But thanks to the price monitoring solution, you can figure out these sneaky opportunities just by analysing competitor price changes through the solution panel and setting alarms to alert you to the market.

After gathering all the data, you have a greater chance to change your prices for the purpose of adapting to market standards.

Are you winning in key value categories and key value items?

Key value categories (KVCs) and key value items (KVIs) play a critical role in price awareness because KVC and KVI help retailers to attract value-conscious consumers. These items are really helpful as they drive 50% of shopper’s perception, cover the majority of the revenue, and generate footsteps to your online stores.

So, losing out to the competition on these products can be harmful to the business. If you detect sales or traffic loss in these products or categories, it may be an apparent sign that you need to re-evaluate your pricing strategies at KVC or KVI level. That’s why sacrificing minimal amounts of your margins in these areas could be acceptable.

To prevent this problem, applying dynamic pricing would be a wise and sustainable decision for e-commerce retailers. If you have a list of key items, then repricing them to %5 per cent below the competition allows you to compete more effectively in key categories and products. Moreover, whenever your competitor drops or increases its prices, you will always be following them without any hassle.

Or, think of the opposite scenario. Imagine that you discover your competitors are charging lower prices for key items. If you do not want to diminish your prices on these specific products, then adjust your marketing message and let your customers know your superiorities. In other words, educate your customers as to how you differentiate your products and convince them why they should pay more for yours.


The world of E-commerce moves really fast and is becoming more and more dynamic. Deciding on the best method for collecting your competitors’ price information and detecting the critical points should be the first thing that you agree upon.

Armed with that ability and covered by the questions above, you can interpret the price changes happening in competitors’ stores correctly. Moreover, you will have a mapping of when to worry and be able to do something to respond to competitor price changes.

Look at your own pricing performance and its effect on conversion rates, then go beyond and try to understand the competitors’ regular patterns and the reaction to demand.

Please do not hesitate to ask us your questions. We would be glad to answer them all and further enrich our knowledge base.

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Dealavo Smart Prices is a tech company specializing in web scraping, data cleansing, data analysis and delivering powerful and actionable e-commerce insights to brands and e-shops. For more than five years we have been delivering services for many clients from 30 different countries. We have gained the trust of global brands including Samsung, DeLonghi, MSI, Xiaomi, Acer, Epson, and many more, including one of the top 10 biggest pure play e-shops in Europe.