In omnichannel retail, dynamic pricing is becoming a necessity with varying market trends. It is transforming retail operations, allowing retailers to appropriately respond and make changes in retail strategy to boost sales and clear inventory with FIFO (First in, First out).
Merchants can track and automate a quick price promotion, remove excess inventory, and respond immediately to demand shifts by having real-time visibility in product movement and inventory levels. RFID integration in retail allows supermarkets to change their product pricing up to six times per minute using RFID tagging and tracking, which enables real-time dynamic pricing.
As a pricing strategy, dynamic pricing aims to encourage retail customer consumption at varying levels of customer demand, ensuring that retailers can meet customer requirements and serve them better. Global retailers such as Amazon and Walmart have their own Dynamic Pricing Strategies to meet customer expectations and ensure adequate inventory in their stores and warehouses.
In this blog, let’s analyze how dynamic pricing works and how RFID and other technologies like QR Codes, BLE and IoT help retailers meet customer expectations during volatile demands.
What Is Dynamic Pricing in Retail and Why Does It Matter?
Dynamic pricing is the process of setting a product price considering its demand, available supply, competitive promotions, location, and even customer preference. Although dynamic pricing is widely used among e-commerce pioneers, it enables retail businesses to maximize and capture value and reduce waste as well as inventory carrying costs.
For understanding, Amazon's dynamic price engine refreshes its product prices every 10–15 minutes according to competitor pricing and supply-demand factors. Likewise, Walmart's dynamic price model uses artificial intelligence to match store prices with e-commerce channel trends, local market pricing activity, and other factors.
Role of RFID in Enabling Dynamic Pricing
RFID is just a part of a dynamic pricing solution, but when it is coupled with a pricing algorithm or an artificial intelligence-powered dynamic pricing platform, RFID will be the facilitator of dynamic responsive pricing for the physical retail world.
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1.RFID Reader reads product-level information on the shelf, in the stockroom, or warehouse.
2. Sales velocity, expiration, and on-hand inventory are logged by the system.
3. Price is established by an AI dynamic pricing algorithm based on a balance of supply and demand.
4. Prices are pushed to electronic shelf labels or Dynamic QR Codes for dynamic pricing in real-time.
How RFID Works in Dynamic Pricing?
1. RFID Captures Real-Time Product Data- RFID devices send signals to in-store RFID readers on a continuous loop. The readers take live feeds on inventory levels, shelf data, speed of sales, and restock levels.
2. System analyses data- All RFID data is routed to a central pricing engine that uses artificial intelligence or a dynamic pricing algorithm. The engine looks at demand patterns, competitor prices, inventory levels, customer traffic or buying habits, and seasonal or timed considerations.
3. Dynamic Pricing Rules are triggered based on real-time information. The system triggers dynamic pricing rules, including price drops for slow-moving or overstocked products, surge pricing in high-demand or low-stock situations, and getting ready to mark down items as they near expiration.
Dynamic QR Codes for Dynamic Pricing
Another great tool for Dynamic pricing is QR Codes. In brick-and-mortar retail, dynamic QR Codes are changing how prices are displayed and adjusted alongside dynamic pricing initiatives. While a static QR code represents fixed information, a dynamic QR code links to a live Uniform Resource Locator (URL) that can be updated remotely at any time, allowing for the replacement of the printed QR code with a new one.
How Does It Work in Retail Pricing?
1.The product contains a QR code on a label, shelf tag, or packaging.
2. The QR code connects to a cloud-based price system (or product-specific URL).
3. When a shopper scans the QR code, it will display the price in real-time from the retailer's price engine.
4. If a stocking level, demand, or day-of-week necessitates a price change (if RFID and AI algorithms are employed), the price through the QR code would also change printed QR code would not be modified or reprinted.
Real-Life Applications: RFID and Dynamic Pricing
a.Walmart Dynamic Pricing
Walmart is implementing dynamic pricing artificial intelligence to coordinate the prices in-store and online. They are implementing RFID and mandating their suppliers to use RFID tags on supply packages. With RFID, Walmart tracks on-shelf inventory and local pricing on the item based on information about the shelf that RFID captures and the competitive data in the market where the store is situated.
b. Amazon Dynamic Pricing
Amazon has been employing algorithms for advertising to adjust the price of more than 2.5 million items daily. If RFID were to perform likewise in a real-world scenario in the retail industry, the item-by-item pricing could be connected with actual time product performance, without generating supply problems in regards to local pricing.
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c. Grocery Retail
Grocery store chains are employing RFID tags to label sensitive products that are nearing the sell-by date. After the perishable product has been tagged, the dynamic pricing process can be automatically launched to remove the perishable product from inventory, thereby decreasing
food wastage and enhancing sales.
Finally, the retail future will belong to brands that price their products as quickly as they stock. Through the convergence of dynamic pricing, AI, and RFID, retailers can capture the pricing efficiencies of these online channels in physical stores. With RFID, quick and intelligent auto-pricing, and profitability are now scalable, whether it is about copying Amazon's dynamic pricing capabilities or merely emulating Walmart's data-driven promotional replications.
Frequently Asked Questions on RFID and Dynamic Pricing
Q1. How do retailers choose dynamic pricing?
Retailers choose dynamic pricing according to real-time data and market trends. Their goal is to maximize the revenue and stay in the competition, by focusing more on consumer conversion rates and doing slight changes in pricing.
Q2. What strategies does Amazon use for their product price change?
Amazon often changes its product pricing multiple times a day according to the customer location, purchase patterns, and browsing history. They do this via competitive monitoring, capturing the AI algorithm.
Q3. What industries opt for dynamic pricing?
Dynamic pricing is widely used in industries like healthcare, aviation, manufacturing, entertainment, hospitality, and many more beyond retail.
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