This Week In Retail Marketing Innovation - July 29, 2019

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Personalized pricing is the future, but retailers are hesitant to hit the start button

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Back in 2000, Amazon conducted its first “personalized pricing” test, and the public was outraged. They felt “duped” when receiving different prices on the same goods. Nearly 20 years later, the e-commerce giant still avoids the practice

While personalized pricing may not have worked for Amazon at the turn of the century, the future of this concept is called “dynamic pricing.” Dynamic pricing allows retailers to change prices in an instant based on their data about competitors, among other factors, according to RetailDive

Personalized and dynamic pricing is the way of the future, yet retailers are weary to hit the start button. Not only is it a costly investment, but having robots assume the roles of pricing managers makes business owners apprehensive.

But the idea of personalized and dynamic pricing is tempting to retailers. E-commerce competition grows more and more fierce every day, not to mention, customers are willing give up personal data that would weigh into pricing strategy -- their locations, IP addresses, past purchases, education levels, and occupations, to name a few. 

Victor Rosenman, CEO and founder of Feedvisor, which specializes in price optimization on Amazon’s Marketplace, comments on retailers’ use of personalized pricing: “...[they] try to estimate basically your propensity to pay — if you can pay more, we should charge you more for the very same product.” 

For retailers, personalized pricing gives them the option to charge what consumers are capable and willing to pay for a product, eating up any “surplus” cash from those who can afford to pay more. Not to mention, those who normally could not afford products would now be able to with online promotions and discounts.

However, just as in the case with Amazon, consumers notice when retailers change prices, and they lose trust  in brands because of it. It’s even been deemed “first-degree price discrimination,” which, could pose several legal risks. That’s why Amazon now makes it clear that they change their prices to beat out the competition, “not based on a customer’s demographics or purchase behavior,” according to a spokesperson.

Finally, it’s difficult for retailers to adopt personalized pricing because they are forfeiting control of pricing strategy to robotic algorithms that are updating constantly. Santiago Gallino, an assistant professor of operations, information and decisions at the University of Pennsylvania's Wharton School of Business comments that retailers, “have a long tradition of people making the call on prices and how to run promotions, how to discount the pricing point that things need to start at, and so on and so forth.” 

However, he notes that smart algorithms won’t stray too far, but they need close monitoring and detailed programming to align with company supply, demand, margins, and other factors.

While personalized pricing has the potential to boost profits substantially and serve otherwise underserved markets, retailers aren’t quite ready to pull the trigger. It’s not only complicated the execute, but puts companies at risk for discrimination lawsuits and out of control of robotic pricing algorithms. However, according to the Deloitte report "Consumer Experience in the Retail Renaissance," 40% of retailers that have adopted artificial intelligence (AI) at all use it to tailor pricing and promotions in retail time, so it’s likely we’ll continue to see personalized pricing make its way into future retail strategies.

Giant Eagle partners with Grabango to offer checkout-free shopping to customers

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Giant Eagle, a grocer based in Pittsburg, has partnered with Silicon Valley startup Grabango, a checkout-free technology provider, to create a “no-wait” checkout experience, according to a company press release.

Similar to Amazon Go stores, the new technology will allow customers to fill their carts and use an app to check out traditionally using cash or credit. The technology will use computer vision, AI and cameras around the store to keep track of what customers add to their carts

The program will be tested at a single Giant Eagle store before launching a chainwide rollout, Grabango told the San Francisco Business Times

There are concerns, however, when it comes to the execution of this program. Amazon spent more than $1 million on hardware alone in its first Go store, and their store sizes are significantly smaller than Giant Eagle’s supermarkets. But there seems to be a lot of faith in the concept, as investors have given $12 million towards the project so far.

It’s possible that Giant Eagle may face some roadblocks backlash and government regulations against stores that don’t accept cash. In Philadelphia, state regulators instituted a ban on cashierless stores, followed by similar regulations in San Francisco and New York

Despite the possible obstacles, the “grab-and-go” technology sector has very little competition. Additionally, Standard Cognition, which has a similar checkout-free program in a retail store in San Francisco, has raised about $50 million in total funding over the past year for their tech-savvy store.


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Perch Is Recognized As One Of The 40 World's Most Innovative Marketing Technologies

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Technology continues to transform marketing by making campaigns more engaging and personalized for consumers. There are dozen’s of companies that are disrupting the consumer experience like Brightcove, Factual Inc, ReSci (Retention Science), ShopperTrak, RetailNext and others.

Considering such a competitive landscape, Perch is honored to be recognized as one of the Future 40 by R3, the 40 companies disrupting marketing technology. Download the report here!

This is a huge recognition for the Perch team.

Perfect Corp. launches “YouCam for Web” allowing customers to try on cosmetic products using AI

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Perfect Corp. has launched “YouCam for Web”, a virtual makeup try-on tool for customers, available to businesses looking to leverage AI and AR beauty tech solutions, according to a company press release.

The self-service subscription tool is powered by facial recognition technology and is currently in use by over 200 beauty brands, including Estee Lauder, MAC and YSL. The program offers a free 30-day trial for brands to experience the benefits of allowing customers to “try on” their products before purchasing. 

The program is available for integration with beauty brands’ websites, and offers a “Perfect Console” dashboard that uses analytics to create a private tracking dashboard allow businesses to track engagement, CTR, and sales.

“The implementation of virtual try-ons has completely reimagined the way consumers shop for cosmetics and we are so excited to create a self-service platform that will expand YouCam beauty tech solutions to even more brands,” shares Perfect Corp. CEO and founder, Alice Chang. “SaaS is the way of the future and YouCam for Web helps to cater to the growing needs of beauty tech solutions across all budgets.”

Besides increased sales, another potential benefit from this tool is cutting down the cycle of consumers buying, testing, and returning products, which can weigh on a beauty retailers’ supply chains.

The product will be showcased at Cosmoprof North America in Las Vegas at the end of July.

Sounding Smart by The Retail Water Cooler

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