Negotiation is as old as trade. From the days of ancient bazaars, to the modern day flea markets, it’s never been uncommon for retailers to informally haggle with some of their customers. Yet most online retailers in the US and Canada have not considered negotiation as an e-commerce tactic to increase conversions and sales. There are many advantages to negotiate for both shoppers and sellers and the retailers that have made the plunge are seeing consistent incremental profitable revenue.
Many furniture retailers informally haggle with some of their customers at their brick and mortar locations. A quick five percent off from a salesperson to a couple looking to buy a new sofa for their apartment may close that deal before the couple leaves to shop elsewhere in town. Closing a deal with showrooming shoppers just makes sense. It also works online, but much better.
For customers, making an offer on a product page online is much less awkward than that conversation with a salesperson on a showroom floor. Let’s face it: the shopper doesn’t want to feel embarrassed if the salesperson turns down their counter offer. Online negotiation is more efficient and private for both parties involved. For example, a shopper can easily tell you what they are willing to pay for that sofa. A shopper with a $900 budget might be willing to make an offer on the $1,100 couch that would be out of reach without negotiation. The customer gets to push for an upgraded model, and the retailer saves time by either automatically responding to the offer in real-time or routing the details directly to the decision-maker of the organization. There is no risk of slowing the sale by having a customer sit idly while asking a manager or letting them leave.
Furniture retailers that have made the plunge and incorporated negotiation tools onto their product pages see consistent incremental profitable revenue. Online negotiation also helps retailers standardize their policies and procedures that can easily get lost in the subjectivity or mood of showroom salespeople. For example, online negotiation tools can be configured to accurately respond in real-time to a high volume of requests and maximize profit by also relying on real-time inventory and cost/margin data. Even the most senior salesperson can’t juggle all of that on the fly for thousands of SKUs. Automating the follow-up for each conversation also increases conversion rates and cuts down on human costs.
Many retailers assume that once they open up their catalog to negotiation, it will lead to a loss in margin or gaming of the system. While negotiation inherently requires a discount, it doesn’t mean that all products should use it or that the same logic should be applied to each category or brand. Segmentation is important. As with most online conversion tactics, negotiation technology should also be properly tested so that the objective data can help answer the ‘incremental profitable revenue’ question.
Not only should retailers segment their catalog for different levels of aggression (e.g. be most aggressive with clearance), they should also consider how to sync that data with online and in-store promotional calendars. Some furniture retailers are also more aggressive with their online audience once it enters the funnel, as that first web visit may be the only chance to sell to a shopper from across the country.
E-commerce retailers considering price negotiation may wonder how it works with Minimum Advertised Pricing (also known as M.A.P.). First, the entire process must be private. Engaging users with a unique call-to-action and starting this dialog is much more private and effective than the “add to cart to see the price” method seen throughout the industry. Negotiation also preserves the manufacturer's brand more effectively than the out-of-control methods seen at many online stores. When retailers integrate online negotiation tools, they can maintain Minimum Advertised Pricing while retailers sell more. Manufacturers will sell more and shoppers are able to earn that win they’ve been wanting. Price is now back in the marketer’s toolkit, just more private and in a tasteful manner.
While average online shopping cart abandonment rates are at 68 percent and the average conversion rate for online retailer is at 3.64 percent, furniture retailers need a way to capture the attention and the shopping carts of more customers. Online negotiation tools
are a solution for furniture retailers working to combat low conversion rates, shopping cart abandonment, Minimum Advertised Pricing and comparison shopping.
Although some shoppers may believe that negotiating in person might be the best way to get the product that they want, negotiating online can serve as a more reliable option. With all the online negotiating and deal-grabbing tools available today, shoppers who may not feel comfortable negotiating in person can see how easy it is once the retailer finally says, “sold.”
About the Author:
Andrew Scarbrough is the co-founder and COO of PriceWaiter, a leading e-commerce negotiation platform. He has played a significant role in the development and execution of successful SEO, e-commerce and web marketing strategies for companies both large and small. For more informatin visit https://www.pricewaiter.com
Furniture World Magazine-Business solutions for furniture retailers