How to boost operational profit in 90 days

Winning the customer without  discounting

Aimondo measured the exact impact dynamic pricing might have on operational profit for retailers and eComm brands. In this study we cover the experiment setup and how we managed to get a 21% boost in profitability.

An experiment Aimondo team ran with a Germany-based multi-brand omnichannel retailer lasted for several months.

We extracted data from all the channels across the customer's distribution pipeline (offline stores and online channels) tracking meticulously every price adjustment and mapping them to the number of items sold and the revenue numbers.

The results were mind-blowing: every average purchase made due to the dynamic price adjustment turned out to be more profitable than an average  purchase made within the control group (manual pricing strategy execution).

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Experiment setup

6.4% increase in turnover and 21% in profit margin

All selected items had to be present in all the available distribution channels.

The customer had to keep the items always in stock to avoid the impact of "out of stock" mode to the sales numbers.

Aimondo tracked sales across online and offline channels for several months.

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Timeline

February 2022 — June 2022. Actual dynamic pricing was applied throughout April to June.

Category selection

We have selected helmets, accessories and clothing as the most promising categories. Overall 400 items from 60 000 were selected.

Product segmentation

The sample contained goods that had high, medium and low rank on the purchase frequency scale, as well as different potential for price sensitivity.

Experiment results

Regardless  of the price adjustments vector  (Price Up or Price Down) the overall operations profitability went 20-25% up

Price adjustments strategies were brainstormed and selected by the customer.

Price adjustment strategy:  market leadership & maximum profitability

Automatically raise the price to maximise net profit margin without losing the position of the category leader.

Automatically decrease the price to match the price of the closest competitor to get to the position of the category leader.

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Conditions

A "Price Down" strategy was applied when a customer wanted to rank for the best offer and leverage the volume of sales effect. It was also applied to items with promo prices (stock sell-off mode). As well as items with the the highest price sensitivity rank.

Comparison

Each item's price was compared 24/7 in the real-time mode against direct competitors (specified by the customer).

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