Pricing top factor Zalando during Black Friday
In the three weeks up to Black Friday, Zalando’s product prices increased by 8 percent. At the start of Black Friday week, prices dropped again by 18 percent. At the end of the week, prices had dropped 23 percent.
While overall ecommerce turnover growth has slowed down, online sellers once again reached record sales during Black Friday week in 2022. In the Netherlands, credit card transactions and online sales reported a 12 percent increase in purchases. According to Dutch payment provider Mollie, turnover volumes increased by 13.6 percent during Black Friday week. Spending increased by 30 percent in the week before Black Friday.
Most online sellers and marketplaces try to use competitive pricing strategies around the holidays. Pricing software provider Omnia Retail analyzed 10,000 product prices on Zalando across multiple vendors and categories before and after Black Friday 2022, November 25th. “What I found most interesting about this is with the large amount of data we collected and analysed; it enabled us at Omnia Retail to open the ‘black box’ that is the Zalando algorithm”, said Sander Roose, CEO and founder of Omnia Retail.
Price increase of 8% in October
According to the research, the ecommerce giant started increasing its prices in October by 8 percent. On November 17th, it showed a significant price drop of 18 percent. By November 27th, prices had fallen by 23 percent. After Cyber Monday, prices increased back to pre-Black Friday levels, which remained higher than the prices in October.
Product prices changed every 5 hours on average.
During the Black Friday period, product prices would change once every five hours on average, instead of once every 24 hours. Normally, price is not the main driver for winning the Buy Box, but during Black Friday, Zalando’s pricing strategies made pricing the top factor. This instigated lower prices and stiffer competition for partner sellers on the online marketplace.
Factors influencing winning the Buy Box
There are other factors that can influence whether or not a seller wins the Buy Box on the fashion platform. According to Omnia Retail, delivery times are an important factor. A seller should not take longer than four days to deliver a product. The more vendors are available per product, the more important a short delivery time becomes.
Another important factor is availability of stock. The research data show that the Buy Box change ratio is 2.1 percent when all products of a vendor are available. When products are unavailable for up to 24 hours, the change ratio doubles to 4.09 percent. Having inconsistent levels of stock results in higher chances of losing the Buy Box for a vendor.
Zalando does not want a price war
However, Zalando has announced that its Buy Box does not work as Amazon’s Buy Box does. While the above mentioned factors do influence who wins the position, the platform wants to distance itself from the image of a platform where prices change within minutes.
“We do not want to enable a price war. Therefore, only one vendor offers a product. If more vendors offer the same product, convenience decides who is listed on the platform. This is calculated by an algorithm on the basis of factors such as shipment speed, trustworthiness and return speed. There is no pressure on price to win any kind of Buy Box”, said Zalando’s VP of Direct to Consumer Carsten Keller.