International e-commerce is a data-driven arena where understanding the key performance metrics is becoming more critical every day.
Although eBay equips sellers with a powerful toolset that enables them to monitor their performance, merchants contemplating expanding beyond their domestic marketplace cannot rely entirely on these tools when crafting their international pricing strategy.
Even so, conducting thorough research is the first step toward an international marketplace because sellers must understand the new environment before choosing the best way to approach it.
What’s more, the information sellers gather during this initial step can be instrumental in choosing the pricing strategy that will generate the desired results during the peak sales season or throughout the rest of the year.
It’s also important to understand that you don’t have to choose one pricing strategy over the other and that often combining psychological pricing strategies with volume or value-based strategies produces the most favorable outcomes.
Let’s explore the most common pricing strategies eBay sellers use in their online stores to remain competitive in international markets.
Key takeaways
- Fair prices are among the key reasons shoppers on eBay purchase a product from a seller.
- Implementing a pricing strategy in a new market can take more than a year.
- Geographic and localized pricing strategies are vital for international eBay sellers.
- Customer Lifetime Value, retention rates, and market share are among the best indicators of a pricing strategy’s effectiveness.
- Sellers must factor in currency conversion rates, logistics costs, and other factors when setting the prices of their products in a new market.
- Product Research and Sourcing Insights tools help sellers research a new marketplace before choosing a pricing strategy.
Product pricing challenges on international marketplaces
Entering the international ecommerce arena creates a myriad of challenges for sellers on eBay and other major online marketplaces.
Most notably, consumers’ purchasing power varies by market, influencing the maximum price at which sellers can offer specific products. Additionally, the complexity and cost of the logistics process can force retailers to increase their product prices.
Consequently, setting a product’s price in a new eBay marketplace can easily become a balancing act between profitability and customer expectations, since most online shoppers expect fast delivery and free returns.
Currency conversion rates are another factor sellers must consider when planning an expansion into a new eBay marketplace, since online shoppers are more likely to purchase an item if its price is displayed in local currency.
The statistics show that offering payments in local currencies can increase sales by 12%. Still, currency exchange rates frequently fluctuate, making it paramount to adjust the prices in real-time.
Additionally, tariffs, taxes, and regulatory requirements like the GPSR cut into sellers’ profit margins and affect the prices of their products in their online stores on international marketplaces.
Factors worth considering before choosing a pricing strategy
Understanding the cultural nuances of the target market can be vital for selecting the most effective strategy for your business.
The market research stage involves more than competitor analysis and comparing product prices.
Conducting a deep dive into market conditions will help you understand which items are in demand and fully grasp your target audience’s purchasing power, shopping patterns, and periods of peak shopping activity.
Defining your target customers and segmenting them according to their preferences can help you attract shoppers searching for the best deals and those whose buying decisions are driven by product quality.
Furthermore, being aware of how saturated a particular niche is can help you decide whether a penetration pricing strategy is better for your business than a competitive pricing strategy.
Additionally, eBay’s algorithm considers the item’s price when suggesting products in the search results, so your pricing strategy can profoundly affect the visibility of your listings in a new market.
Understanding the importance of ecommerce pricing strategies
Entering a new marketplace without a pricing strategy can hamper your efforts to establish a strong presence there, since simply offering products at a discounted price isn’t enough to ensure a high sales volume.
Nonetheless, your pricing strategy should only serve as a guideline since you must be able to adjust it if it initially doesn’t produce the desired results.
Establishing a data-based approach towards pricing your products will help maximize your sales opportunities by taking into account the nuances of the target market.
For instance, lowering the prices of your products in a new market can help you attract customers early on, but it may make it challenging to retain them once you gradually start increasing the prices of those products.
Hence, your pricing strategy should address your immediate business goals without affecting the long-term approach to that market.
Utilizing seasonal pricing strategies like bundling, promotional pricing, discounts, or limited-time offers can improve product sales during the peak shopping periods.
However, to maximize the strategy’s potential, you must identify the market’s key sales events and prepare for them by adjusting pricing, launching ad campaigns, and increasing promotional activities across all channels.
Choosing the right pricing strategy for your eBay business
There is no one-size-fits-all pricing strategy. Psychological pricing can be effective in certain contexts, while premium pricing might work better in others.
Each has advantages and disadvantages, so choosing the right one often comes down to customer demand and business goals.
So the most effective strategy for your business will depend on whether you want to attract new customers and increase sales volume quickly or slowly build a presence in the target market.
Here are a few questions that can help you choose the right pricing strategy:
- Are you prioritizing profit margin growth or the average order value?
- Would you like to offload the inventory quickly or capitalize on seasonal sales opportunities?
- Are you launching new products or offering items currently in your inventory?
- Do you plan on marketing your products as premium?
- Are your target audiences willing to pay the product’s projected price in a new marketplace?
Answering these questions can make it easier to decide which pricing strategy is the best option for your business. Keep in mind that combining two or more pricing strategies often yields the best results.
The most effective pricing strategies for international sellers
eBay sellers utilize a wide range of pricing strategies to attract customers and gain a foothold in new markets.
Still, knowing which strategy will produce the best results is difficult before you test it, so flexibility and adaptability are key to finding the winning approach to pricing on a new marketplace.
We’ve shortlisted some of the most common ecommerce pricing strategies that online sellers in international markets use to attract buyers and keep up with the competition. Let’s look at the pricing strategies that can help you expand your eBay business internationally.
Penetration and competitive pricing
Penetration strategy centers around offering products at low prices with the goal of gaining a market share quickly. eBay sellers utilize it to attract new customers and encourage repeated purchases in a new marketplace.
Conversely, the price skimming approach involves offering items at higher prices to attract early adopters and then reducing them gradually to appeal to a broader audience.
The downside of this approach is that it sets customers’ expectations, making it difficult to gradually move on from economy pricing.
On the other hand, the competitive pricing strategy or competition-based pricing involves setting product prices based on an analysis of your competitors’ prices for similar products. When executed correctly, this strategy can help sellers attract shoppers and boost sales.
Loss-leader pricing method is another common strategy based on volume. Similarly to the penetration strategy, its goal is to attract customers by offering products at a selling price that is below the market average.
Geographic and localized pricing
Localized and geographic strategies are based on the same principle. However, localized pricing takes a broader approach and accounts for factors like market conditions, online shopping habits, currency conversion rates, and consumers’ purchasing power.
Geographic pricing strategy involves setting prices based on a customer’s location and adding shipping costs, taxes, or the product’s average price in the target market.
Combining these two approaches to factor costs into the item’s price while paying attention to the market’s economic conditions often delivers good results.
Value-based pricing
This consumer-centric strategy utilizes the buyers’ perceived value of a product as the foundation of the seller’s pricing model.
Still, implementing the value-based strategy requires a deep understanding of the local market and the product’s target audience, since the consumers’ perception of value can depend on a broad spectrum of economic and cultural factors.
The value proposition approach enables sellers to adjust price points based on demand and set themselves apart from the competition. International eBay sellers often combine this tactic with a premium pricing strategy.
Dynamic pricing
Much like the competitive pricing strategy, this strategy involves closely monitoring market demand and adjusting the products’ pricing accordingly.
Hence, businesses can increase the prices of seasonal products during high-demand periods and decrease them during low-demand periods.
Additionally, sellers who offer products with different levels of popularity throughout the year can utilize this strategy to adjust their prices based on the current demand. Still, it’s important to note that sellers must actively monitor the market trends to implement this strategy successfully.
Seasonal and bundle pricing
Halloween or Black Friday are just a few among countless online sales events that offer a perfect opportunity to use these pricing strategies.
A seasonal pricing strategy can involve increasing the prices of popular products during the summer or winter and reducing them in the off-season. Additionally, flash sales,
Moreover, sellers commonly combine in-demand and less popular products to create a bundle pricing strategy, to incentivize price-sensitive customers, and maximize profit margins.
Cost-plus pricing
A cost-plus pricing strategy is perfectly suited for eBay merchants who produce items they want to offer in a new marketplace. It allows businesses to set prices based on distribution and production costs with an added profit margin.
Nonetheless, sellers shouldn’t rely solely on this strategy because of its lack of flexibility, making it difficult for sellers to change the products’ prices in sync with the fast-paced marketplace, like eBay or Amazon.
Instead, combining cost-plus and dynamic pricing strategies gives sellers more flexibility and allows them to retain competitive pricing in a target market.
Fine-tuning your pricing strategy
our initial pricing tactics aren’t set in stone, and you should review them frequently to measure their effectiveness and increase the sales volume.
It’s also paramount to remember that attempting to copy the strategy you’re using on your domestic eBay market to a new market can produce underwhelming results and result in substantial revenue losses.
Still, predicting how an untested strategy will perform in a new market is difficult.
That’s why regular strategy reviews are particularly important during the early stages of marketplace expansion. They enable businesses to evaluate the strategy’s profitability, fine-tune the pricing approach, and find their competitive advantage.
Also, frequent reviews can help you understand if your current pricing strategy meets your business goals. Examining the data can reveal flaws in your current approach and provide direction for your pricing strategy.
Ultimately, the pricing strategy is only one element of your ecommerce store’s broader expansion strategy, so its effectiveness will depend on how well you execute other aspects of your marketplace expansion strategy.
Achieving international success with the right pricing strategy
Modern online marketplaces like eBay are fast-paced environments where new trends emerge and shopping habits change on almost a daily basis.
As a result, sellers must remain agile to monitor the market fluctuations, anticipate shopping spikes, and ensure that their pricing strategy is on track with the latest market developments.
However, determining the right ecommerce pricing strategy or strategies that work best for your business involves quite a bit of trial and error. So, remaining flexible and quick to optimize prices can help you establish a lasting presence in competitive markets.
Are you considering the expansion to a new eBay marketplace but don’t know where to start? Schedule a call to learn more about our International eBay Sales Accelerator solution.
About Webinterpret
Webinterpret supports merchants selling on eBay.
Our AI-based solutions enable more effective selling through automated listing localization, advertising, and returns and ensure all products placed on EU markets are GPSR-compliant.
By giving your international customers a full, end-to-end local shopping experience, Webinterpret improves your conversion and helps establish your business globally.
