How to Build a GTM Strategy Anchored in Value-Based Pricing for E-commerce Success

India’s e-commerce sector, projected to exceed $200 billion by 2026, faces a critical juncture. Aggressive discounting, once a growth driver, has eroded margins, pushing senior leaders to prioritise profitability. Value-based pricing, which aligns prices with customer perception of value, offers a strategic path forward. This article outlines a go-to-market (GTM) strategy rooted in value-based pricing,customised for India’s dynamic e-commerce landscape, addressing recent developments, challenges, and actionable steps to enhance ecommerce profitability and brand differentiation.

Industry Context: Why Value-Based Pricing Matters in Today’s E-commerce Market

India’s e-commerce market has thrived on deep discounts, capturing market share but at the cost of rasor-thin margins. This race-to-the-bottom approach is unsustainable as consumer behavior evolves. In Tier-1 cities, and increasingly in Tier-2/3 markets, customer perception prioritises quality, unique features, and service over price. This shift creates fertile ground for value-based pricing, where prices reflect perceived benefits rather than production costs or competitor benchmarks. By emphasising a strong value proposition, e-commerce brands can move beyond transactional competition, fostering loyalty and sustainable profitability in a maturing digital retail environment.

1. Recent Developments Impacting Pricing Strategy

Several trends are reshaping ecommerce pricing strategies in India:

• ONDC Integration and Pricing Transparency: The Open Network for Digital Commerce (ONDC) democratiss e-commerce, enabling smaller players to compete. Its transparency demands clear value propositions to justify pricings, making value-based pricing essential for maintaining margins while leveraging ONDC’s reach.
• DPDP Act and Personalised Pricing: The Digital Personal Data Protection (DPDP) Act of 2023 regulates data usage but allows consented data for personalised ecommerce pricing. Brands can customise prices to individual preferences, aligning with customer perception of value, provided they navigate compliance challenges like transparent consent mechanisms.
• Evolving Customer Perception in D2C and Premium Segments: Direct-to-consumer (D2C) and premium brands see growing demand for unique, high-value offerings. Customers value sustainability, innovation, and exclusivity, reinforcing the need for value-based pricing to justify premium pricing.
• Push for Profitability Post-Funding Winter: The 2023–24 funding winter shifted investor focus to profitability. Venture capitalists and private equity firms now emphasise metrics like customer lifetime value (LTV) and customer acquisition cost (CAC) payback, making value-based pricing a critical lever for financial viability.

2. Key GTM Challenges in Pricing Execution

Implementing value-based pricing within a GTM strategy presents hurdles:

• Lack of Clarity on Unique Value Proposition: Without a clear value proposition, brands struggle to justify premium pricing, falling back on discounts.
• Overreliance on Cost-Plus or Competitor Benchmarking: Traditional pricing ignores customer perception, limiting profitability by focusing on costs or competitors.
• Misaligned Pricing with Customer Perception: Prices that don’t reflect perceived benefits such as quality or experience lead to lost sales or eroded trust.
• Operational Friction in Localising Prices: Dynamic pricing across India’s diverse geographies and platforms (e.g., ONDC, marketplaces) requires sophisticated tech infrastructure, like AI-driven pricing tools, to adapt to regional preferences without compromising value-based pricing.
• Difficulty Linking Pricing to Profitability Metrics: Connecting pricing to LTV and CAC payback remains challenging, hindering long-term profitability optimisation.

3. Strategic GTM Implications Using a Hybrid Consulting Lens

A GTM strategy anchored in value-based pricing integrates management, finance, legal, and technology expertise to overcome these challenges:

• Segmentation & Targeting

Segment customers by value sensitivity using data analytics, compliant with DPDP regulations. Customise communication to highlight relevant value propositions, such as luxury for Tier-1 or affordability with quality for Tier-3, enhancing ecommerce pricing effectiveness.

• Product Positioning

Highlight differentiators like sustainability, innovation, or superior service. For example, a D2C fashion brand can emphasise eco-friendly materials to justify value-based pricing, appealing to conscious consumers.

• Pricing Mechanics

Develop tiered pricing models to cater to diverse segments. Use anchor pricing to make standard options seem appealing and test price elasticity via A/B experiments. AI-driven tools can optimise value-based pricing by analysing customer perception and willingness to pay, ensuring profitability.

• Marketing

Employ narrative marketing to emphasise value over price. Partner with influencers to reshape customer perception, showcasing benefits like durability or craftsmanship. For instance, a premium electronics brand can use testimonials to reinforce its value proposition.

• Distribution Channels

Align value-based pricing across ONDC, marketplaces, and D2C storefronts to prevent channel conflicts. Adapt pricing to platform dynamics while maintaining consistency in perceived value, leveraging ONDC’s transparency for credibility.

• Customer Success

Reinforce customer perception post-sale through loyalty programs, premium unboxing, and strategic upsells. These efforts strengthen the value proposition, boosting LTV and profitability.

Illustrative Examples

• D2C Skincare Brand: A D2C skincare brand restructured its ecommerce pricing by using survey platforms to map customer perception in Tier-1 versus Tier-3 markets. Emphasising organic ingredients and personalised regimens, it adopted value-based pricing, achieving a 35% improvement in contribution margin. Tier-1 campaigns highlighted luxury, while Tier-3 focused on affordability with quality.
• ONDC Electronics Player: An ONDC-participating electronics retailer used data analytics tools to conduct customer perception surveys, repositioning mid-tier SKUs with value-based pricing. By emphasising durability and after-sales service, it increased average cart size by 20% and retention by 15%, enhancing profitability.

Conclusion

A GTM strategy rooted in value-based pricing transforms India’s e-commerce landscape by aligning prices with customer perception, driving ecommerce profitability, and fostering brand differentiation. Overcoming challenges like unclear value propositions and operational friction requires tech-led solutions, such as AI-driven pricing tools and DPDP-compliant data strategies. Continuous experimentation, robust feedback loops, and cross-functional alignment across marketing, finance, and technology ensure seamless execution. By embracing value-based pricing, e-commerce leaders can build sustainable, profitable businesses while delivering exceptional value to customers.

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