Efficient use of price and market transparency in purchasing – Minimize effort for market observation

The unsparing price transparency and the resulting dynamic pricing of products in e-commerce makes it easy for consumers to use market platforms and price search engines to research and compare the best market price for the desired product.

27 April, 2020

This article will show you how to 

  • improve your negotiation position in purchasing through better knowledge of price and market changes, 
  • find out the ideal purchase time as a buyer 
  • and how automatic market observation reduces your efforts to a minimum. 

Impact of increased price transparency on purchasing 

The unsparing price transparency and the resulting dynamic pricing of products in e-commerce makes it easy for consumers to use market platforms (such as Amazon or real.de) and price search engines (such as Google Shopping or Idealo) to research and compare the best market price for the desired product. This evolution of the B2C market has now also found its way into the B2B business. 

Many online retailers in B2C as well as in B2B are already very actively using the opportunity of price transparency. This is visible to buyers through rapid price changes and adjustments. An agile adaptability of retailers, usually the ones with the best (price) strategy, then results in more sales and very likely more satisfied and loyal customers. Extensive market knowledge thus becomes a clear success factor.  

For purchasing, on the other hand, especially in B2B, the increased transparency regarding market prices and the view on price changes means a shift in paradigm with regard to the assortment and purchase prices. Transparent market and competitive prices support buyers in strengthening their own negotiation position. This results in optimized purchase prices at the best price and at the right time. Previously, a buyer had to manually request the prices of suppliers or look up prices in catalogues in order to define a strategy and approach, but this effort and time can now be saved. Nowadays it is possible to compare prices at a glance and to focus on the main activity, which is purchasing at the best possible price. 

Differences between online prices and those of framework agreements with suppliers 

While it has been standard practice for some time to compare market prices for private purchases, the procedure of not always ordering from the main supplier is only gradually emerging in B2B. Increasingly, the price or the offer is being put to the test before orders are placed. For instance, employees nowadays compare the market prices of flight tickets, hotel accommodation, work materials or other C-goods. In case of significant price differences, decisions are then also made outside of established suppliers and existing purchasing processes of the company. 

The continuous comparison of prices shows that up-to-date online prices are often much more attractive than the conditions negotiated with contracted suppliers. This is especially true for product categories such as easily accessible and comparable electronic goods. Companies prefer to buy at annually negotiated prices via electronic catalogues, specified in binding framework agreements and with the smallest possible number of different suppliers. For buyers, however, the advantages of competitive online prices now outweigh those of central purchasing, which has been effortfully consolidated. Low process costs and company-wide savings often have little or no impact on both the buyer’s budget and personal goals. 

Furthermore, competitive online prices attract the employees of the business units to buy Maverick. Maverick buying reduces the unauthorised procurement of goods outside standardised purchasing processes to a single term. However, this effect may become more prominent in the future if suppliers’ unattractive purchase prices unnecessarily minimize the buyers’ available budget. Naturally, the product categories most affected are those for which the prices of framework agreements and online marketplaces are particularly divergent. But how can purchasing benefit from price volatility in specific product categories during the year and achieve significant savings?  

Minimize effort and costs through automated market monitoring of your purchasing objects

An answer to these questions is provided by XPLN with the SaaS solution of the name FIGHT CLUB for automated market intelligence. The benefit: Assortments and purchasing catalogues are checked and analysed for current market prices and their changes on a daily and hourly basis. These detailed reports provide buyers with a solid basis to establish a strategically advantageous negotiation position. If daily and hourly updated market prices are reliably taken into account in procurement processes, the Maverick buying rate can be reduced additionally. 

Purchase prices that are determined automatically and are more cost-effective compared to framework agreements and greatly reduce manual searches lead to more efficient purchasing. In concrete terms, the market price analysis for procurement products looks like this: The purchasing employee uploads product data and prices. The system collects market prices, availability, delivery times and shipping costs from over 50,000 international online sources. The collected data is compared to the existing data of the uploaded products to enable a better negotiation position towards suppliers. The resulting price transparency, which end consumers have been accustomed to for a long time, is thus finding its way into the procurement processes of purchasing. And the most important thing – with the same advantage: The protection of the available budget! 

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Kai Hilsenbek
Director Customer Success & Partnerships

I support you in making confident e-commerce decisions through market intelligence.