Dynamic Pricing as a Service for E-Commerce Applications

E-commerce is one of the few sectors in the current Dutch economy that is still experiencing substantial growth. This growing industry faces two key challenges: international expansion and the phasing out of warehouses. Dynamic pricing can aid in meeting those challenges. However, this is currently only available as tailor made solutions for companies with big IT development budgets. In this paper we research the possibility of offering dynamic pricing functionalities to web shops as a service, in line with the service oriented architecture (SOA) paradigm. We focus on e-commerce retailers that sell non-perishable goods in plenty supply. We introduce a categorization of dynamic pricing strategies with a threedimensional model. On this we base a design of a SOA which we analyse using theoretical grounds and a practical case study. Two major problems have arisen from this analysis. First, a potentially negative impact on customer loyalty. Second, a potential problem with the data model for storing prices used by the underlying ERP system of the case study web shop. Based on these problems we had to conclude that we cannot confidently say that such a service is feasible.