How Mirakl leverages AI for price management
Pricing remains one of the most critical and sensitive elements of the online shopping experience, today.
For retailers and marketplaces alike, pricing errors — often referred to as price glitches or anomalies — can have far-reaching consequences. From operational inefficiencies to eroding customer trust, these errors can severely impact a business's overall performance and reputation.
This article will explore the causes and impacts of price errors, provide actionable strategies for managing and avoiding them, and introduce solutions that leverage AI to mitigate the risks associated with pricing anomalies.
When price glitches cause chaos
Price glitches have affected even the biggest names in the retail world. Take, for example, Zappos in 2010, when a pricing error led to items being sold at a fraction of their intended cost. Despite the significant financial loss of $1.6 million, Zappos chose to honor the transactions — a decision that brought them both praise and criticism. More recently, in 2023, Electronic Arts, the company distributing the FIFA 23 video game mistakenly priced its Ultimate Edition on India's Epic Games store at less than $1. It disrupted sales during a high-stakes promotional campaign, resulting in customer frustration and diminished brand reputation.
These examples underscore the potential risks of price glitches, that include but are not necessarily limited to:
Customer frustration: Cancelled orders due to pricing errors lead to disappointed customers and negative reviews, damaging brand image. According to a report by PwC, 32% of customers stop doing business with a brand they love after just one bad experience.
Lost revenue: Decimal point mistakes or other errors — and how you handle those errors — can directly impact your bottom line by turning off current customers and making loyal customers reconsider future purchases. In fact, research has shown pricing errors increase perceived deception and dissatisfaction, as well as negative attitudes towards retailers, thus increasing negative word of mouth, in both brick-and-mortar and eCommerce settings.
Resource drain: Staff spends countless hours manually addressing pricing issues, diverting focus from strategic initiatives.
Brand damage: Pricing inconsistencies erode trust, and rebuilding that confidence is a long and challenging process. According to Marketing Week, a recent study by Adobe found that 54% of customers say they already stopped purchasing from a brand last year owing to their trust being broken.
Why price anomalies are a persistent challenge
The root causes of pricing anomalies are diverse. Issues can stem from EAN mismatches, human error in pricing files or even intentional price manipulations. The unpredictable nature and complexity of these errors make them particularly difficult to detect and address without intervention.
For ecommerce businesses, the challenges include:
High operational costs: Customer support and operational teams spend valuable time resolving issues caused by price glitches, contributing to an estimated $3.7 trillion of 2024 global sales at risk due to poor customer experience, according to new research by the experience management company Qualtrics.
Missed sales opportunities: When it comes to items consumers comparison shop, pricing errors can lead to missed opportunities, and at scale. McKinsey notes these items typically make up 10-20% of a retailer’s sales. While investing in keeping these prices competitive will result in better price perception, more frequent visits, and larger baskets, pricing errors can have the exact opposite impact.
Reduced customer trust: Negative experiences resulting from pricing errors discourage repeat purchases, turning loyal customers into detractors. A Bain & Company study found that a 5% increase in customer retention can increase profits by 25%.
Addressing the challenge of pricing errors
Mitigating pricing errors in eCommerce requires a strategic approach that combines technology, processes and best practices. Here are several strategies that eCommerce businesses can consider, each with its own set of advantages and disadvantages:
1. Manual Monitoring and Checks
Pros:
Control: Provides a direct, hands-on approach to monitor and adjust prices.
Customization: Allows for tailored solutions to specific pricing issues.
Cons:
Resource intensive: Requires significant time and manpower, diverting resources from strategic initiatives.
Prone to human error: Manual processes can lead to more errors due to oversight or fatigue.
Scalability issues: Becomes increasingly challenging as product-catalog sizes grow.
2. Rules-based price management systems
Pros:
Automation of simple tasks: Automates basic price adjustments based on predefined rules, reducing manual workload.
Consistency: Ensures uniform application of pricing policies across products.
Cons:
Rigidity: Lacks flexibility in adapting to complex, unforeseen pricing scenarios.
Limited scope: Cannot handle anomalies outside the predefined rules, potentially missing critical errors.
3. Third-party audits and reviews
Pros:
Expertise: Provides an external perspective and expertise to identify pricing issues.
Accountability: Adds a layer of credibility by involving independent auditors.
Cons:
Costly: Can be expensive, especially for frequent audits.
Time-consuming: Requires coordination and may lead to delays in addressing pricing issues.
4. AI-powered price anomaly detection
Pros:
Accuracy and precision: Utilizes advanced machine learning to detect anomalies with high accuracy, minimizing false positives.
Real-time monitoring: Provides continuous oversight, catching errors before they impact business operations.
Adaptability: Learns and evolves with new pricing patterns and market conditions, ensuring relevance and effectiveness.
Efficiency: Frees up resources by automating the detection process, allowing teams to focus on strategic growth.
Cons:
Initial setup: Requires an initial investment in technology and integration.
Dependence on data quality: Effectiveness is reliant on the quality and comprehensiveness of the input data.
Among these strategies, AI-powered price anomaly detection stands out as the most accurate and effective solution.
By leveraging machine learning, it not only automates the identification of pricing errors but also continuously learns from historical data to adapt to new patterns. This ensures that e-commerce businesses can maintain pricing integrity without the extensive manual input required by other methods.
Furthermore, the proactive nature of AI detection allows businesses to prevent errors before they occur, safeguarding revenue, brand reputation and customer trust.
By integrating AI-powered tools into their pricing strategy, eCommerce platforms can optimize operations, enhance customer satisfaction and drive sustainable growth in a competitive market.
Price anomaly detection: your virtual pricing guardian
At Mirakl, we're excited to unveil our latest innovation: our price anomaly detection feature, now available in beta. This new tool is crafted to empower eCommerce businesses by proactively managing and mitigating the risks posed by pricing anomalies.
Mirakl's price anomaly detection leverages advanced machine learning to automatically identify unusual price variations in your marketplace and dropship product catalog. Whether the anomaly is an accidental decimal point error or an attempt at price manipulation, the AI-powered system catches it before it impacts your business.
This powerful new feature is transforming eCommerce price management in a number of ways, including:
Automated detection: By analyzing historical pricing data, our system flags atypical price changes in real time. With alerts sent to retailers and vendors, pricing issues can be resolved proactively.
Trained for excellence: Built on the foundation of over 20,000 real-world anomalies across diverse sectors, our AI model continuously learns and adapts to new patterns and risks.
Seamless integration: The feature operates across your entire product catalog, offering comprehensive and consistent pricing oversight.
The benefits of Mirakl’s price anomaly detection
Our price anomaly detection feature is more than a tool — it’s your 24/7 pricing partner. Thanks to Mirakl’s AI, built specifically for eCommerce, this new feature delivers:
1. Maximized profitability
Quickly identify and correct pricing errors to ensure you’re not leaving revenue on the table. Mirakl’s price anomaly detection helps your eCommerce business capture optimal revenue by rectifying anomalies before they go live.
2. Brand integrity
Consistent and fair pricing ensures your platform, and marketplace or dropship program, maintains its exceptional reputation. By leveraging this new feature, your brand can maintain the trust and confidence that customers and sellers have come to expect.
3. Operational efficiency
Automated alerts and insights free up your team to focus on innovation and strategy instead of firefighting pricing errors.
4. Empowered sellers
Proactive price anomaly detection creates a seamless experience not just for customers, but for sellers, as well. By providing immediate feedback and alerts, it makes it easier for sellers to address issues before they escalate.
Partnering for a future of seamless price management
Today, eCommerce companies find themselves fighting over ever-smaller slivers of market share, making even minor mistakes — like price glitches — a major issue. Utilizing AI-powered tools like price anomaly detection can save businesses from unnecessary losses and build stronger relationships with customers.
By future-proofing your pricing management, you’re not just mitigating risk — you’re optimizing your operations, empowering your sellers and strengthening your brand.
At Mirakl, our mission is to help your business thrive through intelligent, innovative solutions. Automating the detection and management of pricing errors is just one way we’re delivering on that promise.
Learn more about how Mirakl's price anomaly detection capabilities can revolutionize your e-commerce pricing strategy and protect your business by contacting us today.
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