SUCCESS STORY: ECOMMERCE
“A dynamic pricing pilot opened our eyes, and we saw how it could boost our sales and revenue”
An ecommerce company piloted dynamic pricing for selected product categories during a few weeks trial period. The results were good and, in addition to the increased revenue, provided them with important information about customer behavior.
How we were able to help
Ecommerce is a booming industry and is growing by leaps and bounds. Despite two-digit growth figures in ecommerce, companies want to maximize their future sales and revenues.
During the dynamic pricing pilot, the prices of selected products were allowed to fluctuate according to demand. The minimum price was set to cover the profit margin. The maximum price was set according to the revenue targets for each product.
Usually Company’s products are priced as fixed, with occasional promotional campaigns. Due to their extensive product portfolio, the pricing process has been challenging. After the dynamic pricing pilot, the company is now considering eliminating manual price updates and focusing on managing the algorithms.
During the trial period of dynamic pricing, the sales in two product categories almost doubled and in other categories grew 120% on average. The overall increases in sales were considerable, taking into account that there had already been substantial growth in the market overall.
The aim of the company is to become the leading seller in all its product categories by utilizing the dynamic pricing algorithm also in the future.
“The algorithm informed us about price elasticity. During the pilot we found out which products did not decrease in demand, even though their price was increased. Thus, the algorithm also produces information on how the customers behave.”
The Director of Ecommerce Company