The effect of the weather on retail sales cannot be underestimated. The recent spell of hot weather in the UK and most of Europe has certainly had an impact on retail performance across various sectors. However, several marketing departments still poorly utilize links between marketing decisions and the weather. Understanding these links would give them a framework to take the weather changes into account, and thus potentially increase sales and profits. Omnia's algorithm includes input from a weather API in calculating optimal price and CPC bids so can easily incorporate weather changes into their pricing and marketing decisions. This blog describes examples of how incorporating the weather forecast in your commercial strategy can boost both your sales, as well as your profits.

 

Increase Google Shopping bids for weather-sensitive products

For some product groups, there is a correlation between weather changes and sales probability. As the probability of conversion depends on the temperature, a retailer wants to take advantage by adjusting Google shopping bids dynamically, based on the weather. Manually, it isn’t possible to do this for your complete assortment. Therefore, Omnia offers you the possibility to incorporate this automatically into your bid calculation.

 

Read more: The Ultimate Guide to Dynamic Pricing

 

The example below shows that you can increase bids when the weather forecast shows that the temperature will exceed XX degrees. Based on experience, we all know that when the temperature increases, consumers will, for example, start searching for air conditioners and are more likely to buy (e.g. higher probability of conversion). As a retailer, you can take advantage of this by using a business rule that increases your Google Shopping bid for this product group.

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Another case in which weather data could be valuable is as winter approaches. When the temperature decreases, and chance of frost starts to increase, search volume for ice skates will increase. The weather API allows you to not only adjust your bids and prices based on temperature, but also on for example chance of frost or snow.

 

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Increase prices for weather-sensitive products

Weather data could also help to boost profits when it is incorporated to a retailer’s pricing strategy. Several retailers did not anticipate the recent spell of hot weather and as a result they run out of their inventory of for example air conditioners. Whenever there’s limited supply available, a retailer may want to optimize profit by using a combination of weather data and their inventory. In this scenario, a business rule could be:

If:

  • ‘# Stock months = (inventory / # units sold last 28 days) < 2’
  • And: ‘Temperature in 2 days is greater than 25 degrees‘
  • And: ‘Product group is equal to air conditioners’

Then:

  • Take XX% margin

This business rule ensures you won’t price too competitive when it’s not needed and optimize profits when demand exceeds supply.

 

Concluding

Weather can affect the sales of certain products. Omnia makes it easy for every retailer to boost profits by automatically adjust prices and cpc bids for weather-sensitive products. Are you interested to learn more about what Omnia’s software could offer for your company? Request more information or a demo here or give us a call at +31 (0) 85 047 92 40.