November 6, 2023 • 36 mins
Get set to master the art of Black Friday and Cyber Monday pricing strategies with Luigi and Burc Tanir, the e-commerce pricing expert and CEO of Prisync.
Learn how to avoid common pitfalls most retailers fall into during the holiday season and how to strategically utilise agile pricing for success. Burc elaborates on why merchants should focus more on margins and volumes rather than just the top-line numbers.
This episode gives you a deep understanding of how to make the most out of these crucial shopping days!
Ever wondered how to utilise Black Friday and Cyber Monday to acquire new customers? Luigi and Burc uncover the secrets of this strategy, discussing the concept of loss leadership and how retailers can effectively use it, provided they have a well-thought-out plan.
Additionally, understanding the automation of pricing for a competitive edge is also explored with emphasis on product sourcing at competitive prices and leveraging automation for competitor price benchmarking.
By the end of this episode, you'll have a well-rounded understanding of pricing strategies to stand out in the market.
Join us for insightful discussions and strategies to ace your holiday season sales!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hi, welcome to the Big Commerce Podcast.
Welcome to, Brian, the episodeof the Big Commerce Podcast.
I'm your co-host, Luigi, and intoday's episode I'm joined by
Borch from Pricing.
Borch, often known as thee-commerce pricing guy, is the
CEO of Pricing, a dynamicpricing software for e-commerce.
It already has hundreds ofe-commerce merchants around 60
(00:24):
countries worldwide and intoday's episode we cover Black
Friday side, Monday pricing,Specifically common mistakes
that merchants make during thispeak season, effective tactics
that merchants could takeadvantage of to avoid said
mistakes, and how agile pricingduring the holiday season can
help merchants win.
I hope you enjoy the episode,Borch, welcome back to the show.
Speaker 2 (00:49):
Well, thank you.
Thank you for having me again,Luigi Pleasure.
Speaker 1 (00:52):
No worries, always enjoyed talking to you.
We were just talking about thelast few months, any e-commerce
being up and down, being a bitquiet, being a bit busy.
Now we're in Q4, which is sillyseason for all of us in
e-commerce.
We're going to be talking aboutpricing around Black Friday
(01:12):
side, monday.
Some of the mistakes thatmerchants can avoid and also the
importance of agile pricingduring, I guess, not just Black
Friday, but also the entireholiday season going through to
January sales.
Speaker 2 (01:26):
Yeah, yeah, well, always say to the chat this
quarter also is a pretty busyquarter for me because obviously
people sort of see this quarteras the pricing quarter, let's
say so I think how peoplesomehow react.
They sort of think that pricingis something like a sprint
rather than a monotone.
So they discount, and discountduring November, maybe October,
(01:49):
maybe September, and then forthe rest of the year they apply
list price and so on.
Occasionally they discount, butI'm actually a big believer of
like a monotone way of pricing,so we actually always come up
with optimized pricingthroughout the season,
throughout the years.
So, yeah, but I can understandthat people pay more attention
to discounting and pricing thistime of the year, and this time
(02:11):
of the year is the time when Ialso show up in these type of
podcasts, webinars, et cetera,more often than before.
Yeah, that's also a good thingfor me.
So it's sometimes tricky tomanage my calendar these days,
but that's always fun to chatabout pricing for me.
Speaker 1 (02:25):
Well, the reason why you're so busy this quarter and
obviously you mentioned aboutpricing.
Excuse me, let me start againthe reason why you are so busy
during this quarter and you talka lot about pricing is because
you are the e-commerce pricingguy.
So, for those that don't knowyou, why don't you tell us a bit
about yourself and the companythat you founded?
Speaker 2 (02:45):
Yeah, sure, well, pleasure.
As you said, lüge, I'm Burçalem, the CEO of pricing, one of the
co-founders and the CEO ofpricing, which is actually an
e-commerce pricing software.
So we primarily help e-commercemerchants of all sizes from all
around the world benchmarktheir prices against their
competition.
So, instead of doing that allmanually, like as they did in
the back in the old days, weactually helped them generate
(03:08):
all that competitive pricingintelligence in seconds, in
minutes or you name it like in anicely actually displayable web
dashboard.
And then we actually take astep further from that and we
help those merchantsautomatically reprice their
products depending on theircompetition, depending on their
you know target profit margins,as we also take their cost of
goods sold into account.
(03:28):
So it's essentially a pricingautomation software.
And, you know, since I've beenmanaging this company, let's say
, with my colleagues, with myteam, for about 10 years or so,
I sort of kind of technicallybecame the e-commerce pricing
guy because I have been sharinga lot of content on LinkedIn,
twitter, here and there, andthose are obviously like do
business mostly about pricing.
And you know, I started to getinvited to, you know, webinars
(03:51):
like this, sort of like podcasts, this and that.
So, yeah, eventually I decidedto call myself the e-commerce
pricing guy, because I reallybelieve that I am that.
So, yeah, here.
I am also like talking to you asthe e-commerce pricing guy.
Speaker 1 (04:05):
I think what you've kind of been able to position
yourself as is really important,because I think you know
e-commerce purelyヽ A lot of ourlisteners are small meat
enterprises.
You know they don't havenecessarily large merchandise
departments or pricingdepartments or you know, so for
them, really they are every dayis kind of a bit of a it's a
sprint, it is a marathon, butthey're sprinting every day, you
(04:26):
know, every day they're runningand so sometimes they don't
haven't got the time or theability to kind of just take a
step back and say, right, howcan I optimize my pricing
strategy?
Because most people thinkpricing strategy is well, you
know, if I've got a commoditizedproduct, I've got to compete
against my competitors.
If I've got a unique product, Ican charge a bit more.
But it's very much on kind ofyou know, the top line.
(04:47):
What I like about the way thatyou and pricing as well
approaches the pricingdiscussion is also around
margins.
It's like you know it's askingquestions do you need to reduce
that price for that product?
Because maybe that productdoesn't need to have its price
reduced, maybe that product hasa nice margin or maybe that you
know the volume is going well.
(05:08):
So you kind of put a slightlydifferent spin in it.
I'd recommend anybody who hasn'tlistened to the episode with
fortune will link to it and shownotes to go back and listen to
the previous episode, becausetoday, specifically around Black
Friday, cyber Monday, which iscoming up at the end of this
month, so let's, let's kind ofjump in, because I think you
know everyone's starting to kindof gear up and everyone's, you
(05:30):
know, buying as much as they can, I guess, inventory.
You know they're getting readyfor the, you know the packaging
and the extra resources and soon, and and the merchandising.
But let's talk specificallyabout pricing and maybe some of
the mistakes that you seemerchants either make or you
know as susceptible to making,or maybe pricing mistakes that
(05:51):
are quite easy to make.
Speaker 2 (05:53):
You see, around this period, yeah, well, I obviously
do, and that's that's what Iactually try to help our
merchants and all merchants thatI can actually touch, not
necessarily as clients, also asfriends, as you know, maybe like
just linking connectionsoccasionally.
So I think to name a few.
I think that the most commonmistake I come across, nearly in
100% of cases, to be honest, isthe blanket discounting, as we
(06:17):
call it.
So like I don't really see anylogical basis and data driven
basis on coming up with a 30% of50% of across all I don't know
t-shirts, all laptops, etc.
Because all those products arenot logically, like in a data
driven way, are not priced thesame, they don't really have the
(06:39):
exact cost, exact margin, etc.
So how come can you really makethe very same discount on each
and every one of those?
So discount should be actuallyapplied on on product level.
Or maybe you can categorize,you can segment your products
depending on their profitmargins, depending on their
competence, and then maybe youcan come up with a certain, you
(06:59):
know, blanket, let's say,discounting for that segment,
but you should never reallyapply something like 30% of
across the store or somethinglike that.
So this blanket discountingthing should die, in my opinion,
and the way to really kill itoff is to really segment your
products depending on theirfirstly, competitiveness, on
their profit margins etc.
And they're really trying tocome up with maybe 5%, 10%,
(07:23):
maybe 50% of groups and thentaking that 50% of group more
aggressively and then justleaving the 5% 10% of group
maybe more silently at the backof your store.
This blanket discounting is onething and also another thing
that I also commonly see is, youknow, as you also said, people
don't really think aboutinventory side of things before
(07:45):
really pricing things.
So they actually don't evenmaybe, like in some cases they
don't even consider how muchstock they have for certain
products, for certain brands,and they still apply the most
aggressive discounting that theycan apply in day one of some of
the marathon or some of thespring.
So, depending on how you see it, holiday season is also like a
(08:06):
you know marathon.
So it's not just one hour oneday.
It takes a few days, like nowin our today's environment.
It takes a few weeks, fewmonths occasionally.
So I mean, before really seeingthe velocity, before you really
seeing your sales velocity, Imean how many units you are
going to sell on a daily basisat that price point.
You shouldn't really put yourmost aggressive discount in day
(08:29):
one, because if you do so, youmight eventually let's say we
have two months of holidayseason, two months of
discounting periods somemerchants and you know these are
actually very, very common theycome up with a very, very
aggressive discount in day one,day two, day three, let's say
you have two months and in weekone they actually go out of
stock for that product and evenif they continue to generate
(08:51):
organic or paid demand for thatproduct during the rest of the
holiday season, they cannotfulfill that demand.
I mean, even if they were notalready going to fulfill that
maybe stock later on, they couldhave at least maybe kept the
product at a higher price and goout of stock in two months,
within two weeks, at a maybefull price, maybe at a higher
price and that, would you know,maintain a healthy profit margin
(09:12):
.
So this actually, let's say umLack of connection between
inventory is also one of theother mistakes that I come to
see.
So inventory management is verycrucial in also your pricing
management, especially duringhigh demand periods like holiday
season and the other maybeopportunity cost, I would say.
(09:34):
So missed opportunity in thisholiday season is that people
oftentimes forget to tie theirdiscounting strategies with
their marketing strategies.
So they sort of market theirwhole store, market their whole
campaigns etc.
And then they forget toactually again segment their
products, segment those brandswhere they have better prices
(09:56):
and actually they really don'tallocate their marketing budget
accordingly.
They'll actually allocate theirmarketing budget equally across
the whole assortment, so theyactually fail to maybe get
better return in investment.
So this is, I think, moretrickier than the first two, but
I think first two are reallybasic e-commerce 101 management
principles in my opinion.
Speaker 1 (10:16):
So one thing that you mentioned there was kind of you
know, being able to manageinventory and kind of that.
Normally within a business issometimes managed by different
departments, so who actuallyowns the pricing discussion
within a company, within ane-commerce operation.
Speaker 2 (10:30):
Well, I like to say that the pricing is a team sport
, honestly.
So it's not like tennis, it'snot like, you know, golf or
anything, so it's mostly like ateam sport.
So, in that case, if you'relucky enough, if you're actually
a sizable company where you can, you know, set up a pricing
team, even a pricing employeewell, you should do.
But even if you don't reallyhave one and if you really don't
(10:52):
have the budget for it, let'sat least make it a shared
responsibility across marketing,sales, advertising, etc.
Because unless you do so,people will just manage their
own KPIs in silos, so marketingwill just focus on getting you
know demand, without theprofitability in mind.
You know the purchasing teamwill always try to actually get
the best deals possible withoutreally also thinking the pricing
(11:14):
side of things, so they onlythink about buying but not
selling.
But when you actually take thisinto consideration as a funnel
where you would just sourceproducts, list products you know
, bidon products and theneventually sell those products,
it actually makes a lot of sense.
So, like my, my actually advicewould be to see this like a
shared responsibility across theteam, even if you already have
(11:36):
maybe a department or apersonnel for that.
For example, I think, like,like I said earlier, the big,
the biggest opportunity missedto me in today's inflationary
environment, especially where,you know, consumers are terribly
like price sensitive.
Unfortunately, marketing teamsare missing the cruciality of
price competitiveness, pricing,so they can really use pricing
(11:58):
as a marketing weapon in today'senvironment, but they are not
necessarily doing so.
So if you, for example, hadkind of like a pricing board,
pricing team, pricing projectteam, I don't know that meets, I
don't know, regularly, once inevery week, once in every month
or so, I think that could really, you know, generate some new
ideas for your growthinitiatives.
So a short answer I think it's ateam sport.
(12:19):
It should be sharedresponsibilities, even if you
have a responsible or not.
But I think it shouldn'tdefinitely be just a financing,
really like that you calculatein a bitters, in Excel files,
etc.
It should really be a livingorganism.
So it shouldn't be just anExcel cell that's static, that
leaves there for maybe likemonths or years In today's again
inflationary environment.
(12:39):
No, pricing really leaves formonths, but people still are
used to that, so they don'treally ever think of changing
those prices more often thanbefore, using those changes as a
marketing weapon or something.
So, yeah, I think it should bea shared responsibility again.
Speaker 1 (12:57):
We'll get on to how pricing can help.
Merchant pricing can helpmerchants shortly.
But a question for you, kind ofin.
So the cost of acquisition forthe customers acquire new
customers is quite high at themoment and I think one of the
tactics that some brands can usepredominantly, I guess the ones
that have a bit more of astronger relationship between
brand and customer you know wewill discount to get new
(13:20):
customers Because once we getcustomers it's a way of kind of
bring customers in, we canincrease the lifetime value.
So and I'm not a fan ofdiscounting at all, because I
think if you're competing orprice, you've got nothing else
to compete on.
Speaker 2 (13:33):
Really you can't you know, you've got no unfair
advantage.
Speaker 1 (13:35):
You've got no unique selling proposition, Unless
that's.
All you do is pricing, andanybody can, can you know, lose
money on a product.
So from that perspective, youknow what are your thoughts
around using campaigns such asBlack Friday, Sub Monday as a
customer acquisition channel.
Speaker 2 (13:52):
Well it's, I think, only makes sense if you have a
further plan.
So if you only just see thislike in a dummy way, where you
just generate the demand andthen you just repeat the same
thing with discounts etc.
At what lifetime of yourconsumers, well the numbers
won't really add up.
But, for example, one one veryspecific tactic that we
occasionally apply with also ourmerchants is called loss
(14:14):
leadership.
So if you, for example, have aQVL item in your assortment,
let's say you're a supermarketand you're selling eggs and
milks right, so people arereally anchored towards the
pricing of your milks and eggs.
And if you really discount them, people buy those products very
frequently.
So they will visit yoursupermarket and if it's actually
a physical visit, it makes alot of sense because you have
(14:35):
the right, we have the actuallyright, maybe moment right
opportunity to upsell them, tocross sell them because they're
already in the store.
The same might also apply inthe context of e-commerce.
So you say, have a certainamount of stock that can be kind
of like eliminated, that can beactually sold at a acceptable
like loss margin With only withan hypothesis of also
(15:00):
cross-selling higher marginproducts to that assortment, to
that actually demand mighteventually make sense.
For example, one use case we hadwith one of our consumer
electronics retailer wasactually where they had, for
example, some discounts withiPhones like an iPhone's, really
discounts, right.
So like they did, maybe a smalla German retailer they actually
(15:20):
made, with permission fromApple, I think, made a small
discount and when people sawthat apples are discounted, they
rushed into that website.
I think this was onlyapplicable to 5,000 or 50,000
Apple iPhones.
But when they had all thosesales made, they also had the
chance to sell accessories,cables like very, very cheap
China imported I don't know fewpence items at 10 euros, 20
(15:45):
euros.
So they actually recovered thatloss leadership from iPhones
via cables, et cetera.
So what I'm saying is that ifyou really tie this down to an
upsell strategy, a bundlingstrategy or something that would
eventually improve your bottomline, it makes a lot of sense.
But if you really do this asjust like a spraying and praying
(16:05):
I mean you just will make adiscount, people will just come
and buy and then you don'treally have another plan and you
will just do the same thingrepeatedly it eventually won't
really make sense and that'sreally a very common reason why
some companies have beenactually going bankrupt this
year and in the previous years.
So, like especially some D2Cbrands, for example, that have
been growing on pay debts thatwere maybe like fueled by free
(16:29):
cash that we had during COVID,like 2020, 2021, there were no
interest rates, so the cash wasalmost free, so they really
doubled down on discounting paydebts et cetera, so they
actually grew their audiences,grew their actually top lines,
but when the cash became kind ofexpensive in today's
environment, they had no chanceto actually offer those
discounts to their addicted,let's say, consumer base.
(16:51):
So the demand really dried offand they are keep now going
bankrupt.
All those D2C stars of thatperiod, for example, are having
this fate, but also not only D2Cbrands but also some
multi-brand retailers are alsogoing through this.
So I am not against discountsas you do, as you are, but again
, I am against discounts whereit's not really tied to a bigger
(17:14):
plan.
Speaker 1 (17:18):
I've read kind of about a couple of D2C brands in
North America that either kindof go into bankruptcy protection
or have felt for thatparticular reason.
And just on your point aroundthe iPhone, the conundrum that
people have, the challenge, Iguess, is if you said to
somebody, apple iPhone 900 eurosand you get $50 of free
(17:41):
accessories, that's not alwaysas attractive as you said as
like an $850 euro iPhone, maybeit's got a 50.
Because people know thatiPhones and Apple products
aren't normally discounted.
And to your point aroundconditioning customers, apple
have been very careful tocondition their customers to
(18:03):
know that those products cannotbe discounted.
So if they ever are discounted,you know that it's an exception
and it's not gonna happen allthe time.
Whereas if you've got saleafter sale and discount after
discount, then your customersare just gonna become
conditioned, like you say, toexpect the next discount and
actually you know, anchoring theprice becomes in some respects,
(18:26):
you know, futile, because yourcustomers are just gonna wait
for the next email to comethrough or the next coupon code.
Speaker 2 (18:32):
But the only legit way, maybe potentially a legit
way to really maintain thatcustomer like discounted to
consumer base, is to reallylimit those discounts to maybe
very specific product of likegroups of products, for example,
one product out of thousands ofinstruments, I don't know,
maybe just a specific brand perone month.
(18:52):
I mean, if you really do thatyou can at least, you know, make
sure that you will maybepotentially make less margin
from that brand, less marginmaybe occasionally lost from
that brand that month, but maybe, like, if the numbers really
add up, you might just get someadditional revenue from those,
you know, maybe newly acquiredor maybe newly re-engaged buyers
(19:13):
that can also buy other stufffrom your store.
But you should really need to,you know, prove that hypothesis.
You shouldn't really, just,like I say, spray and pray.
I mean everybody can, you know,assume this to happen.
It doesn't happen all the time.
So you know, you should reallycome up with such an hypothesis
of like upselling, cross-sellingyour customer base where you
also make discounts.
You should really measure yourlifetime values if it really
(19:34):
works.
If it doesn't, yeah, it's justreally a race to the bottom and
race to bankruptcy nowadays.
Speaker 1 (19:41):
One of the fundamentals of marketing is is
understanding your customer andthen tailoring the marketing to
your customer.
So on that basis, you know agood business should be
segmenting its customer base,understanding what each segment
wants, what it's.
You know the drivers are forthat, for that customer segment.
(20:02):
How important is it to do thesame with kind of your products,
because we've said that youknow it's, you can.
You know you shouldn't do ablanket discount.
You know 20% off Shareds or 25%off BrandX.
It is, I guess, getting tounderstand your customer, the
customer behaviors, how, whatproducts they're likely to buy
or what combination.
(20:23):
And then, really, for themerchandising team, go back to
your point at the beginning,around kind of it being a team
effort, the merchandising andbuying department coming
together and saying, right, howcan we segment our product
portfolio so that you know thissegment of products are
attractive to this by customerprofile and this one to this
customer profile, and then youcan tailor your promotions
(20:43):
around that.
So, like you say, you know,maybe with the same brand you've
got three or four differentdiscount levels because actually
you're bundling them together,whether that's as a loss leader
or actually as part of saying,yeah, we know that 80% of sales
with this product in it comewith these two or three
ancillary products.
Speaker 2 (21:02):
Yeah, yeah, well, I, like I said in the video, like
beginning in the opening,product segmentation on pricing
is, I think, vital and is alsonecessary and useful.
So one way to, for example, seethis is that when you also
combine that with, for example,customer segmentation because
that's what we also did in thepast for a few of our clients
together with some merchandisingautomation solutions, for
(21:23):
example, depending, like if youhave the data that we can
collect, which is thecompetitiveness of your products
let's say, out of 100, say, oneof your products is 10% cheaper
than the market average, butthe other one is 10% higher than
the market average.
So imagine that you cancalculate this index value for
all your maybe thousands ofproducts and if you combine that
(21:46):
maybe value per product withyour consumer's purchase
behavior, you might somehow spotgroups who are preferably
buying products that have anindex value below 90%.
So you can really spot a groupwhich buys from you only if it's
very competitive versus themarket, but whereas you might
(22:07):
also, for example, spot someother buyers who don't really
care about that value and theyactually also buy from you, even
if the product is, for example,more expensive.
So the best way to, for example, use.
That insight is, for example,maybe using coupon codes, let's
say, instead of discounts, forthat very specific segment of
buyers who only buy from youwhen you make a discount.
(22:28):
Because if you make a discount,let's say, you actually
decreased a product's price from110 to 100 and if you market
that to all your customersinstead of to a segment of your
customers, some people who wouldstill buy the product from you
at 110 will then buy the productfrom you at 100, so you will
actually leave 10 dollars on thetable.
(22:48):
But instead, if you group thatfor example, customers who buy
from you only if you are reallycompetitive and if you just,
let's say, send an emailmarketing a campaign to that
group by saying that, well, ifyou, you know, use this coupon
code for that product group, youcan buy this at maybe 100
instead of 100 times, by doingthat, you can really somehow
achieve the same number of maybeproduct sold by only making the
(23:12):
discounts where necessary.
So this is just a one veryspecific and real life example
of product and customersegmentation and another,
another smart way to do this.
Segmentation on product level isalso maybe.
We discuss this in the earlierpodcast, but let me repeat that
because I I I have been seeingthe strength of this strategy
(23:33):
more and more this year.
So, for example, on googleshopping.
So people are just looking forproducts and they typically
compare prices right.
So they actually search for aproduct.
They mostly not always, butmostly pick the best price
available there and convert fromthat.
You know merchant.
So if you have 5000 products andif you are not really the best
price merchant for all those5000 but say only for 1000 where
(23:56):
you're also profitable, itmakes a lot of sense to really
double down on those 1000products instead of the full
5000, so that you would knowthat you would eventually like
technically shout to yourconsumers that you have the best
price for those items.
So you would just agree, reallytry to convince them to convert
from you.
But if you do the same forthose remaining 4000 products
(24:19):
where you don't necessarily thebest price, it will mean that
like, imagine this like peoplewill just still market those
products.
Your consumer will just clickto your cpc listing so you will
just bid for those clicks.
That will just appear on thechrome browser of your consumers
as just as a tap to be closedbecause you will have another,
you know, tap next to yours froma merchant that's more
(24:42):
competitively priced than you.
So if you really use thatsegmentation insight and if you
really manage your google adcampaigns depending on your
product price, competitivenessand profitability, well it's,
it's it's actually proven returnon investment improvement and
this is actually what we havebeen experimenting with a lot of
ppc agencies across the worldright now.
(25:02):
So they are actually using thisinsight, like competitiveness,
profitability, in their googleshopping campaigns.
So, like these are just maybejust two specific segmentation
ideas around product pricing.
Speaker 1 (25:15):
I'm really glad that you mentioned, kind of you know,
when you're talking aboutGoogle Shopping and
pay-per-click, because pricingat the end of the day also
affects, like you said, amarketing strategy, how the
product is perceived, how themerchants perceive and, like you
said, talking about those tabs,how do you make sure that your
tab is the one that isn't closed?
And that comes down tomarketing, because it's the
(25:37):
marketing department'sresponsibility for getting those
points across and making surethat their customer converts.
So how can pricing affect amerchant's marketing strategy,
specifically around this time ofthe year?
Speaker 2 (25:49):
Well, like I said, I think the pricing should be
profitable at first hand.
So I think they should reallytry to find that sweet spot.
I mean, and since we talk aboutprofitability, it also is tied
down to cost, and I think thisis not just something that can
be applied during holiday season, but I think pricing even
starts with purchasing, andpurchasing really should be
(26:12):
about assortment planning aswell.
So you shouldn't really kind ofassume your assortment right.
So I mean no consumer websiteis actually just, you know.
I mean those products aredeliberately sourced by us.
So we actually make a, you know, a relationship with a certain
brand.
We like their look, we liketheir I don't know assortment.
We buy from them, but nobodyforces us to do that, right.
(26:34):
So if, for example, a certainbrand is no longer profitable to
sell, we can eliminate thatbrand and we can really try to
scout for you know, different,less competitive but maybe high
demand brands.
So by firstly, you know,questioning that part is also
important, I think.
I think no, not no, but I thinkthis is really a low hanging
(26:56):
fruit.
In my opinion, before reallytaking your assortment granted
is taking your assortment as anassumption you should really
also plan for your assortmentwith pricing in mind, with
profitability in mind.
And let's assume that youactually did that and now you
actually already stockedproducts where you can set
(27:16):
prices that will be profitableand competitive at the same time
.
If you really cannot do that,what I'm saying is that you
should just leave those productswhere you cannot match the
market price because there isjust maybe one specific merchant
who are like, let's say,brothers with that brand, so
they are suppliers, so they kindof technically have a black
hole.
You know just source theproducts at a very, very
(27:37):
competitive cost, so you cannotreally compete against those
guys.
So leave that assortment, maybefor organic demand, get rid of
that stock and don't source fromthem anymore, and then double
down on paid promotions forthose products, for those brands
, where you can really makedecent profits while being also
competitive.
So I think this is really anice fly view in some way.
(27:58):
So double down on products thatyou can source at a competitive
price.
So this is actually our firstthing procurement operation and
then promote products where youare both competitive and
profitable and repeat thiscontinuously.
Speaker 1 (28:14):
That's quite a lot for a merchant to take in, so
they're going to be busy thistime of year.
They hopefully have learned oneor two things about pricing.
So how can pricing help themwith that?
Because someone's going to sayI haven't got the bandwidth to
be able to do all these things,and I think this is really where
something like pricing notnecessarily it won't solve,
obviously, all the problemsaround this time of year, but I
(28:36):
think the insights that pricingwill give your product, will
give the merchants will reallyhelp them to not necessarily not
just stand out from thecompetition, but I think
certainly have some data pointsand some insights that will add
to compete effectively.
Speaker 2 (28:54):
Yeah, I think that the most basic thing that I can
say here is that if they areever doing this manually, like
we can at first hand automate it.
So if they are, for example,collecting competitor prices for
I don't know thousands ofproducts for their tons of
competitors on a weekly basis ora monthly basis, in some cases,
like dramatically, on a dailybasis, I mean I would really
(29:16):
recommend them stop doing thatand just automate that without
maybe with one of ourcompetitors, really, because
there's already an affordableautomation around that
competitor price benchmarkingthing.
And after that, when youalready compile this amount of
data, reacting to the market isthe, I think, crucial bit.
So we, for example, can helpthem maintain those sweet spots,
(29:37):
like competitive and profitableprice forms, automatically.
So they can set up repricingrules depending on their
branding strategies, marketingstrategies.
They can say stuff like, forexample, they don't necessarily
need to be the cheapest if theyreally think that they have the
branding power.
So they can say I would like tobe 10% higher than the market
average as long as I have Idon't know 50 pounds, 50 dollars
(29:58):
, 50 euros profit margin.
So they can technicallyautomate all those decisions
that they would otherwise do onExcel formulas as far as I can
see in the market.
And the next bit really is tomanage their marketing, as we
discussed.
So after automating all that,they can see which of their
products are really cheapest inthe market and also profitable.
They can use that insight intheir marketing campaigns.
(30:20):
But really I think the easiestthing that I can tell here is to
automate the very essence of acompetitive price tracking thing
.
If they are doing this manuallyI mean, it's 2023.
And it's not too expensivereally, considering all the
other expenses they have intheir business, it makes a lot
of sense to automate that bit atleast.
Speaker 1 (30:41):
And if you think about it, you know.
One of the difficulties I thinka lot of people struggle with
is quantifying time.
You know how long does it taketo manage that Excel spreadsheet
if you make a mistake, so addup those hours and put a cost to
it.
It's actually.
You know we're spending Xamounts of money each month
doing this work when actually,if we invested in the system
(31:01):
like pricing, not only do we getthis automation, but we also
get some additional data pointsto can help us make more
informed decisions.
Speaker 2 (31:11):
Yeah, yeah, well, that's all our marketing say
honestly.
So that's all the stuff that wesay.
But I really, you know, I'm notsure that I can really explain
a caricature in a verbal way,but there is this actually
cartoon where people areactually trying to push a square
wheel and someone who just hasthis you know rounded wheel
(31:32):
approaching them and saying that, well, you shouldn't really do
that.
But this guy who is pushing thesquare wheel saying that I'm
too busy.
Sorry, I cannot listen to you.
Speaker 1 (31:39):
Yeah.
Speaker 2 (31:39):
It's pretty much the same.
People really are having hardtime to get rid of their habits,
even if they are reallyridiculous.
But yeah, like thankfully some,you know a few hundred
merchants already listened tothis and using our software, and
so that it will becomethousands in a couple of months
or years.
Speaker 1 (31:56):
Well, I'm a big fan of your product.
I mentioned it to a lot of ourmerchants.
We've got mutual merchants aswell, and I think there's
different types of merchants.
It's not necessarily that it'spigeonholed in a particular type
of business, but if people wantto learn more about pricing, so
I think it's not necessarilytoo late to make the most of
(32:19):
Cyber 5.
So what should they do?
Speaker 2 (32:23):
Well, we, obviously they can visit our website and
we have a free trial.
So I openly invite people toabuse this free trial if they
like during the holiday seasonso they can really come and just
use the 14 day free trial andjust leave and don't pay.
I mean, I'm totally okay toopenly invite people to do so.
So because in minutes reallythey can come at their products
(32:45):
and they can get the very firstcompetitive Intel from the
software.
So they don't need to wait forweeks, months to actually deploy
the mechanism.
It's not an enterprise play, soit's really self-serve and
automated way to actuallygenerate those insights.
So I believe if they actuallyconvince themselves to use this
during the 14 days during theholiday season, probably they
(33:07):
will stick with it for the restof the rest of the year and
maybe in the coming year.
So they can firstly do that Ifthey like it.
They can obviously also find meon LinkedIn, twitter.
Probably you might also sharethem on the podcast.
Speaker 1 (33:18):
Yeah, we'll link to those in the show.
Speaker 2 (33:21):
I'm quite active on LinkedIn, as we discussed in the
beginning, so people can reachout to me either on LinkedIn or
Twitter.
Really, Cool.
Speaker 1 (33:29):
Now you know that at the end of the podcast, we like
to ask our guests if they listento a particular podcast or book
, and I know that you are moreof a fiction reader just to try
and get some distraction fromyour very busy life.
Speaker 2 (33:43):
I know you do a lot of traveling like I do.
Speaker 1 (33:46):
So what are you reading at the moment?
Speaker 2 (33:48):
Well, interestingly, I start this actually re-reading
period of my life, so I'm kindof trying to read books that I
read during my university years,the books that kind of shaped
my character, shaped mymentality, etc.
And now I'm on Saul BellowsDengligman, which is, I think, a
Nobel Prize winner author whois a Nobel Prize winner, so it's
(34:10):
only about like existentialismreally, characters that are
drifting away from the regularlife, etc.
I think I am in a very, veryorganized life, very disciplined
, etc.
So I really enjoy readingpeople that are quite the
opposite of that.
So that's one book that I canunder the Dengligman Literally,
the guy is Denglig throughoutthe book.
Speaker 1 (34:32):
Do you know what?
I'm not a fiction reader, but Imight have to give that one a
try, yeah, give it a try,especially that whole
existentialism.
Speaker 2 (34:39):
You know, books like Sartre, saul Bellows, all those
guys from France, us, etc.
Like I can tell you later, likenice, 5-10 books that could
really put you into that mindset.
Speaker 1 (34:50):
Maybe we'll have to do an episode just for that.
Speaker 2 (34:54):
Oh, I said before.
Speaker 1 (34:55):
Well, thank you very much for your time.
I appreciate that you're anextremely busy individual and
you're very insightful,especially around pricing.
I hope listeners found a lot ofvalue in how they can really, I
guess, stand out for thecompetition and compete
effectively.
We'll put all the links in theshow notes.
You should definitely followBuldt.
If you're on Twitter or X isit's now known or on LinkedIn
(35:17):
for sure, try out the product.
As Buldt said, there's no harmin a 14-day free trial, maybe
some time just to set it up, butI think it's worth pursuing.
And yeah, buldt, I look forwardto speaking to you again soon.
Speaker 2 (35:34):
Yes, same year, thank you.
Thank you for inviting me.
Take care, all the best Cheers.
Hi, welcome to the Big Commerce Podcast.
Welcome to, Brian, the episodeof the Big Commerce Podcast.
I'm your co-host, Luigi, and intoday's episode I'm joined by
Borch from Pricing.
Borch, often known as thee-commerce pricing guy, is the
CEO of Pricing, a dynamicpricing software for e-commerce.
It already has hundreds ofe-commerce merchants around 60
(00:24):
countries worldwide and intoday's episode we cover Black
Friday side, Monday pricing,Specifically common mistakes
that merchants make during thispeak season, effective tactics
that merchants could takeadvantage of to avoid said
mistakes, and how agile pricingduring the holiday season can
help merchants win.
I hope you enjoy the episode,Borch, welcome back to the show.
Speaker 2 (00:49):
Well, thank you.
Thank you for having me again,Luigi Pleasure.
Speaker 1 (00:52):
No worries, always enjoyed talking to you.
We were just talking about thelast few months, any e-commerce
being up and down, being a bitquiet, being a bit busy.
Now we're in Q4, which is sillyseason for all of us in
e-commerce.
We're going to be talking aboutpricing around Black Friday
(01:12):
side, monday.
Some of the mistakes thatmerchants can avoid and also the
importance of agile pricingduring, I guess, not just Black
Friday, but also the entireholiday season going through to
January sales.
Speaker 2 (01:26):
Yeah, yeah, well, always say to the chat this
quarter also is a pretty busyquarter for me because obviously
people sort of see this quarteras the pricing quarter, let's
say so I think how peoplesomehow react.
They sort of think that pricingis something like a sprint
rather than a monotone.
So they discount, and discountduring November, maybe October,
(01:49):
maybe September, and then forthe rest of the year they apply
list price and so on.
Occasionally they discount, butI'm actually a big believer of
like a monotone way of pricing,so we actually always come up
with optimized pricingthroughout the season,
throughout the years.
So, yeah, but I can understandthat people pay more attention
to discounting and pricing thistime of the year, and this time
(02:11):
of the year is the time when Ialso show up in these type of
podcasts, webinars, et cetera,more often than before.
Yeah, that's also a good thingfor me.
So it's sometimes tricky tomanage my calendar these days,
but that's always fun to chatabout pricing for me.
Speaker 1 (02:25):
Well, the reason why you're so busy this quarter and
obviously you mentioned aboutpricing.
Excuse me, let me start againthe reason why you are so busy
during this quarter and you talka lot about pricing is because
you are the e-commerce pricingguy.
So, for those that don't knowyou, why don't you tell us a bit
about yourself and the companythat you founded?
Speaker 2 (02:45):
Yeah, sure, well, pleasure.
As you said, lüge, I'm Burçalem, the CEO of pricing, one of the
co-founders and the CEO ofpricing, which is actually an
e-commerce pricing software.
So we primarily help e-commercemerchants of all sizes from all
around the world benchmarktheir prices against their
competition.
So, instead of doing that allmanually, like as they did in
the back in the old days, weactually helped them generate
(03:08):
all that competitive pricingintelligence in seconds, in
minutes or you name it like in anicely actually displayable web
dashboard.
And then we actually take astep further from that and we
help those merchantsautomatically reprice their
products depending on theircompetition, depending on their
you know target profit margins,as we also take their cost of
goods sold into account.
(03:28):
So it's essentially a pricingautomation software.
And, you know, since I've beenmanaging this company, let's say
, with my colleagues, with myteam, for about 10 years or so,
I sort of kind of technicallybecame the e-commerce pricing
guy because I have been sharinga lot of content on LinkedIn,
twitter, here and there, andthose are obviously like do
business mostly about pricing.
And you know, I started to getinvited to, you know, webinars
(03:51):
like this, sort of like podcasts, this and that.
So, yeah, eventually I decidedto call myself the e-commerce
pricing guy, because I reallybelieve that I am that.
So, yeah, here.
I am also like talking to you asthe e-commerce pricing guy.
Speaker 1 (04:05):
I think what you've kind of been able to position
yourself as is really important,because I think you know
e-commerce purelyヽ A lot of ourlisteners are small meat
enterprises.
You know they don't havenecessarily large merchandise
departments or pricingdepartments or you know, so for
them, really they are every dayis kind of a bit of a it's a
sprint, it is a marathon, butthey're sprinting every day, you
(04:26):
know, every day they're runningand so sometimes they don't
haven't got the time or theability to kind of just take a
step back and say, right, howcan I optimize my pricing
strategy?
Because most people thinkpricing strategy is well, you
know, if I've got a commoditizedproduct, I've got to compete
against my competitors.
If I've got a unique product, Ican charge a bit more.
But it's very much on kind ofyou know, the top line.
(04:47):
What I like about the way thatyou and pricing as well
approaches the pricingdiscussion is also around
margins.
It's like you know it's askingquestions do you need to reduce
that price for that product?
Because maybe that productdoesn't need to have its price
reduced, maybe that product hasa nice margin or maybe that you
know the volume is going well.
(05:08):
So you kind of put a slightlydifferent spin in it.
I'd recommend anybody who hasn'tlistened to the episode with
fortune will link to it and shownotes to go back and listen to
the previous episode, becausetoday, specifically around Black
Friday, cyber Monday, which iscoming up at the end of this
month, so let's, let's kind ofjump in, because I think you
know everyone's starting to kindof gear up and everyone's, you
(05:30):
know, buying as much as they can, I guess, inventory.
You know they're getting readyfor the, you know the packaging
and the extra resources and soon, and and the merchandising.
But let's talk specificallyabout pricing and maybe some of
the mistakes that you seemerchants either make or you
know as susceptible to making,or maybe pricing mistakes that
(05:51):
are quite easy to make.
Speaker 2 (05:53):
You see, around this period, yeah, well, I obviously
do, and that's that's what Iactually try to help our
merchants and all merchants thatI can actually touch, not
necessarily as clients, also asfriends, as you know, maybe like
just linking connectionsoccasionally.
So I think to name a few.
I think that the most commonmistake I come across, nearly in
100% of cases, to be honest, isthe blanket discounting, as we
(06:17):
call it.
So like I don't really see anylogical basis and data driven
basis on coming up with a 30% of50% of across all I don't know
t-shirts, all laptops, etc.
Because all those products arenot logically, like in a data
driven way, are not priced thesame, they don't really have the
(06:39):
exact cost, exact margin, etc.
So how come can you really makethe very same discount on each
and every one of those?
So discount should be actuallyapplied on on product level.
Or maybe you can categorize,you can segment your products
depending on their profitmargins, depending on their
competence, and then maybe youcan come up with a certain, you
(06:59):
know, blanket, let's say,discounting for that segment,
but you should never reallyapply something like 30% of
across the store or somethinglike that.
So this blanket discountingthing should die, in my opinion,
and the way to really kill itoff is to really segment your
products depending on theirfirstly, competitiveness, on
their profit margins etc.
And they're really trying tocome up with maybe 5%, 10%,
(07:23):
maybe 50% of groups and thentaking that 50% of group more
aggressively and then justleaving the 5% 10% of group
maybe more silently at the backof your store.
This blanket discounting is onething and also another thing
that I also commonly see is, youknow, as you also said, people
don't really think aboutinventory side of things before
(07:45):
really pricing things.
So they actually don't evenmaybe, like in some cases they
don't even consider how muchstock they have for certain
products, for certain brands,and they still apply the most
aggressive discounting that theycan apply in day one of some of
the marathon or some of thespring.
So, depending on how you see it, holiday season is also like a
(08:06):
you know marathon.
So it's not just one hour oneday.
It takes a few days, like nowin our today's environment.
It takes a few weeks, fewmonths occasionally.
So I mean, before really seeingthe velocity, before you really
seeing your sales velocity, Imean how many units you are
going to sell on a daily basisat that price point.
You shouldn't really put yourmost aggressive discount in day
(08:29):
one, because if you do so, youmight eventually let's say we
have two months of holidayseason, two months of
discounting periods somemerchants and you know these are
actually very, very common theycome up with a very, very
aggressive discount in day one,day two, day three, let's say
you have two months and in weekone they actually go out of
stock for that product and evenif they continue to generate
(08:51):
organic or paid demand for thatproduct during the rest of the
holiday season, they cannotfulfill that demand.
I mean, even if they were notalready going to fulfill that
maybe stock later on, they couldhave at least maybe kept the
product at a higher price and goout of stock in two months,
within two weeks, at a maybefull price, maybe at a higher
price and that, would you know,maintain a healthy profit margin
(09:12):
.
So this actually, let's say umLack of connection between
inventory is also one of theother mistakes that I come to
see.
So inventory management is verycrucial in also your pricing
management, especially duringhigh demand periods like holiday
season and the other maybeopportunity cost, I would say.
(09:34):
So missed opportunity in thisholiday season is that people
oftentimes forget to tie theirdiscounting strategies with
their marketing strategies.
So they sort of market theirwhole store, market their whole
campaigns etc.
And then they forget toactually again segment their
products, segment those brandswhere they have better prices
(09:56):
and actually they really don'tallocate their marketing budget
accordingly.
They'll actually allocate theirmarketing budget equally across
the whole assortment, so theyactually fail to maybe get
better return in investment.
So this is, I think, moretrickier than the first two, but
I think first two are reallybasic e-commerce 101 management
principles in my opinion.
Speaker 1 (10:16):
So one thing that you mentioned there was kind of you
know, being able to manageinventory and kind of that.
Normally within a business issometimes managed by different
departments, so who actuallyowns the pricing discussion
within a company, within ane-commerce operation.
Speaker 2 (10:30):
Well, I like to say that the pricing is a team sport
, honestly.
So it's not like tennis, it'snot like, you know, golf or
anything, so it's mostly like ateam sport.
So, in that case, if you'relucky enough, if you're actually
a sizable company where you can, you know, set up a pricing
team, even a pricing employeewell, you should do.
But even if you don't reallyhave one and if you really don't
(10:52):
have the budget for it, let'sat least make it a shared
responsibility across marketing,sales, advertising, etc.
Because unless you do so,people will just manage their
own KPIs in silos, so marketingwill just focus on getting you
know demand, without theprofitability in mind.
You know the purchasing teamwill always try to actually get
the best deals possible withoutreally also thinking the pricing
(11:14):
side of things, so they onlythink about buying but not
selling.
But when you actually take thisinto consideration as a funnel
where you would just sourceproducts, list products you know
, bidon products and theneventually sell those products,
it actually makes a lot of sense.
So, like my, my actually advicewould be to see this like a
shared responsibility across theteam, even if you already have
(11:36):
maybe a department or apersonnel for that.
For example, I think, like,like I said earlier, the big,
the biggest opportunity missedto me in today's inflationary
environment, especially where,you know, consumers are terribly
like price sensitive.
Unfortunately, marketing teamsare missing the cruciality of
price competitiveness, pricing,so they can really use pricing
(11:58):
as a marketing weapon in today'senvironment, but they are not
necessarily doing so.
So if you, for example, hadkind of like a pricing board,
pricing team, pricing projectteam, I don't know that meets, I
don't know, regularly, once inevery week, once in every month
or so, I think that could really, you know, generate some new
ideas for your growthinitiatives.
So a short answer I think it's ateam sport.
(12:19):
It should be sharedresponsibilities, even if you
have a responsible or not.
But I think it shouldn'tdefinitely be just a financing,
really like that you calculatein a bitters, in Excel files,
etc.
It should really be a livingorganism.
So it shouldn't be just anExcel cell that's static, that
leaves there for maybe likemonths or years In today's again
inflationary environment.
(12:39):
No, pricing really leaves formonths, but people still are
used to that, so they don'treally ever think of changing
those prices more often thanbefore, using those changes as a
marketing weapon or something.
So, yeah, I think it should bea shared responsibility again.
Speaker 1 (12:57):
We'll get on to how pricing can help.
Merchant pricing can helpmerchants shortly.
But a question for you, kind ofin.
So the cost of acquisition forthe customers acquire new
customers is quite high at themoment and I think one of the
tactics that some brands can usepredominantly, I guess the ones
that have a bit more of astronger relationship between
brand and customer you know wewill discount to get new
(13:20):
customers Because once we getcustomers it's a way of kind of
bring customers in, we canincrease the lifetime value.
So and I'm not a fan ofdiscounting at all, because I
think if you're competing orprice, you've got nothing else
to compete on.
Speaker 2 (13:33):
Really you can't you know, you've got no unfair
advantage.
Speaker 1 (13:35):
You've got no unique selling proposition, Unless
that's.
All you do is pricing, andanybody can, can you know, lose
money on a product.
So from that perspective, youknow what are your thoughts
around using campaigns such asBlack Friday, Sub Monday as a
customer acquisition channel.
Speaker 2 (13:52):
Well it's, I think, only makes sense if you have a
further plan.
So if you only just see thislike in a dummy way, where you
just generate the demand andthen you just repeat the same
thing with discounts etc.
At what lifetime of yourconsumers, well the numbers
won't really add up.
But, for example, one one veryspecific tactic that we
occasionally apply with also ourmerchants is called loss
(14:14):
leadership.
So if you, for example, have aQVL item in your assortment,
let's say you're a supermarketand you're selling eggs and
milks right, so people arereally anchored towards the
pricing of your milks and eggs.
And if you really discount them, people buy those products very
frequently.
So they will visit yoursupermarket and if it's actually
a physical visit, it makes alot of sense because you have
(14:35):
the right, we have the actuallyright, maybe moment right
opportunity to upsell them, tocross sell them because they're
already in the store.
The same might also apply inthe context of e-commerce.
So you say, have a certainamount of stock that can be kind
of like eliminated, that can beactually sold at a acceptable
like loss margin With only withan hypothesis of also
(15:00):
cross-selling higher marginproducts to that assortment, to
that actually demand mighteventually make sense.
For example, one use case we hadwith one of our consumer
electronics retailer wasactually where they had, for
example, some discounts withiPhones like an iPhone's, really
discounts, right.
So like they did, maybe a smalla German retailer they actually
(15:20):
made, with permission fromApple, I think, made a small
discount and when people sawthat apples are discounted, they
rushed into that website.
I think this was onlyapplicable to 5,000 or 50,000
Apple iPhones.
But when they had all thosesales made, they also had the
chance to sell accessories,cables like very, very cheap
China imported I don't know fewpence items at 10 euros, 20
(15:45):
euros.
So they actually recovered thatloss leadership from iPhones
via cables, et cetera.
So what I'm saying is that ifyou really tie this down to an
upsell strategy, a bundlingstrategy or something that would
eventually improve your bottomline, it makes a lot of sense.
But if you really do this asjust like a spraying and praying
(16:05):
I mean you just will make adiscount, people will just come
and buy and then you don'treally have another plan and you
will just do the same thingrepeatedly it eventually won't
really make sense and that'sreally a very common reason why
some companies have beenactually going bankrupt this
year and in the previous years.
So, like especially some D2Cbrands, for example, that have
been growing on pay debts thatwere maybe like fueled by free
(16:29):
cash that we had during COVID,like 2020, 2021, there were no
interest rates, so the cash wasalmost free, so they really
doubled down on discounting paydebts et cetera, so they
actually grew their audiences,grew their actually top lines,
but when the cash became kind ofexpensive in today's
environment, they had no chanceto actually offer those
discounts to their addicted,let's say, consumer base.
(16:51):
So the demand really dried offand they are keep now going
bankrupt.
All those D2C stars of thatperiod, for example, are having
this fate, but also not only D2Cbrands but also some
multi-brand retailers are alsogoing through this.
So I am not against discountsas you do, as you are, but again
, I am against discounts whereit's not really tied to a bigger
(17:14):
plan.
Speaker 1 (17:18):
I've read kind of about a couple of D2C brands in
North America that either kindof go into bankruptcy protection
or have felt for thatparticular reason.
And just on your point aroundthe iPhone, the conundrum that
people have, the challenge, Iguess, is if you said to
somebody, apple iPhone 900 eurosand you get $50 of free
(17:41):
accessories, that's not alwaysas attractive as you said as
like an $850 euro iPhone, maybeit's got a 50.
Because people know thatiPhones and Apple products
aren't normally discounted.
And to your point aroundconditioning customers, apple
have been very careful tocondition their customers to
(18:03):
know that those products cannotbe discounted.
So if they ever are discounted,you know that it's an exception
and it's not gonna happen allthe time.
Whereas if you've got saleafter sale and discount after
discount, then your customersare just gonna become
conditioned, like you say, toexpect the next discount and
actually you know, anchoring theprice becomes in some respects,
(18:26):
you know, futile, because yourcustomers are just gonna wait
for the next email to comethrough or the next coupon code.
Speaker 2 (18:32):
But the only legit way, maybe potentially a legit
way to really maintain thatcustomer like discounted to
consumer base, is to reallylimit those discounts to maybe
very specific product of likegroups of products, for example,
one product out of thousands ofinstruments, I don't know,
maybe just a specific brand perone month.
(18:52):
I mean, if you really do thatyou can at least, you know, make
sure that you will maybepotentially make less margin
from that brand, less marginmaybe occasionally lost from
that brand that month, but maybe, like, if the numbers really
add up, you might just get someadditional revenue from those,
you know, maybe newly acquiredor maybe newly re-engaged buyers
(19:13):
that can also buy other stufffrom your store.
But you should really need to,you know, prove that hypothesis.
You shouldn't really, just,like I say, spray and pray.
I mean everybody can, you know,assume this to happen.
It doesn't happen all the time.
So you know, you should reallycome up with such an hypothesis
of like upselling, cross-sellingyour customer base where you
also make discounts.
You should really measure yourlifetime values if it really
(19:34):
works.
If it doesn't, yeah, it's justreally a race to the bottom and
race to bankruptcy nowadays.
Speaker 1 (19:41):
One of the fundamentals of marketing is is
understanding your customer andthen tailoring the marketing to
your customer.
So on that basis, you know agood business should be
segmenting its customer base,understanding what each segment
wants, what it's.
You know the drivers are forthat, for that customer segment.
(20:02):
How important is it to do thesame with kind of your products,
because we've said that youknow it's, you can.
You know you shouldn't do ablanket discount.
You know 20% off Shareds or 25%off BrandX.
It is, I guess, getting tounderstand your customer, the
customer behaviors, how, whatproducts they're likely to buy
or what combination.
(20:23):
And then, really, for themerchandising team, go back to
your point at the beginning,around kind of it being a team
effort, the merchandising andbuying department coming
together and saying, right, howcan we segment our product
portfolio so that you know thissegment of products are
attractive to this by customerprofile and this one to this
customer profile, and then youcan tailor your promotions
(20:43):
around that.
So, like you say, you know,maybe with the same brand you've
got three or four differentdiscount levels because actually
you're bundling them together,whether that's as a loss leader
or actually as part of saying,yeah, we know that 80% of sales
with this product in it comewith these two or three
ancillary products.
Speaker 2 (21:02):
Yeah, yeah, well, I, like I said in the video, like
beginning in the opening,product segmentation on pricing
is, I think, vital and is alsonecessary and useful.
So one way to, for example, seethis is that when you also
combine that with, for example,customer segmentation because
that's what we also did in thepast for a few of our clients
together with some merchandisingautomation solutions, for
(21:23):
example, depending, like if youhave the data that we can
collect, which is thecompetitiveness of your products
let's say, out of 100, say, oneof your products is 10% cheaper
than the market average, butthe other one is 10% higher than
the market average.
So imagine that you cancalculate this index value for
all your maybe thousands ofproducts and if you combine that
(21:46):
maybe value per product withyour consumer's purchase
behavior, you might somehow spotgroups who are preferably
buying products that have anindex value below 90%.
So you can really spot a groupwhich buys from you only if it's
very competitive versus themarket, but whereas you might
(22:07):
also, for example, spot someother buyers who don't really
care about that value and theyactually also buy from you, even
if the product is, for example,more expensive.
So the best way to, for example, use.
That insight is, for example,maybe using coupon codes, let's
say, instead of discounts, forthat very specific segment of
buyers who only buy from youwhen you make a discount.
(22:28):
Because if you make a discount,let's say, you actually
decreased a product's price from110 to 100 and if you market
that to all your customersinstead of to a segment of your
customers, some people who wouldstill buy the product from you
at 110 will then buy the productfrom you at 100, so you will
actually leave 10 dollars on thetable.
(22:48):
But instead, if you group thatfor example, customers who buy
from you only if you are reallycompetitive and if you just,
let's say, send an emailmarketing a campaign to that
group by saying that, well, ifyou, you know, use this coupon
code for that product group, youcan buy this at maybe 100
instead of 100 times, by doingthat, you can really somehow
achieve the same number of maybeproduct sold by only making the
(23:12):
discounts where necessary.
So this is just a one veryspecific and real life example
of product and customersegmentation and another,
another smart way to do this.
Segmentation on product level isalso maybe.
We discuss this in the earlierpodcast, but let me repeat that
because I I I have been seeingthe strength of this strategy
(23:33):
more and more this year.
So, for example, on googleshopping.
So people are just looking forproducts and they typically
compare prices right.
So they actually search for aproduct.
They mostly not always, butmostly pick the best price
available there and convert fromthat.
You know merchant.
So if you have 5000 products andif you are not really the best
price merchant for all those5000 but say only for 1000 where
(23:56):
you're also profitable, itmakes a lot of sense to really
double down on those 1000products instead of the full
5000, so that you would knowthat you would eventually like
technically shout to yourconsumers that you have the best
price for those items.
So you would just agree, reallytry to convince them to convert
from you.
But if you do the same forthose remaining 4000 products
(24:19):
where you don't necessarily thebest price, it will mean that
like, imagine this like peoplewill just still market those
products.
Your consumer will just clickto your cpc listing so you will
just bid for those clicks.
That will just appear on thechrome browser of your consumers
as just as a tap to be closedbecause you will have another,
you know, tap next to yours froma merchant that's more
(24:42):
competitively priced than you.
So if you really use thatsegmentation insight and if you
really manage your google adcampaigns depending on your
product price, competitivenessand profitability, well it's,
it's it's actually proven returnon investment improvement and
this is actually what we havebeen experimenting with a lot of
ppc agencies across the worldright now.
(25:02):
So they are actually using thisinsight, like competitiveness,
profitability, in their googleshopping campaigns.
So, like these are just maybejust two specific segmentation
ideas around product pricing.
Speaker 1 (25:15):
I'm really glad that you mentioned, kind of you know,
when you're talking aboutGoogle Shopping and
pay-per-click, because pricingat the end of the day also
affects, like you said, amarketing strategy, how the
product is perceived, how themerchants perceive and, like you
said, talking about those tabs,how do you make sure that your
tab is the one that isn't closed?
And that comes down tomarketing, because it's the
(25:37):
marketing department'sresponsibility for getting those
points across and making surethat their customer converts.
So how can pricing affect amerchant's marketing strategy,
specifically around this time ofthe year?
Speaker 2 (25:49):
Well, like I said, I think the pricing should be
profitable at first hand.
So I think they should reallytry to find that sweet spot.
I mean, and since we talk aboutprofitability, it also is tied
down to cost, and I think thisis not just something that can
be applied during holiday season, but I think pricing even
starts with purchasing, andpurchasing really should be
(26:12):
about assortment planning aswell.
So you shouldn't really kind ofassume your assortment right.
So I mean no consumer websiteis actually just, you know.
I mean those products aredeliberately sourced by us.
So we actually make a, you know, a relationship with a certain
brand.
We like their look, we liketheir I don't know assortment.
We buy from them, but nobodyforces us to do that, right.
(26:34):
So if, for example, a certainbrand is no longer profitable to
sell, we can eliminate thatbrand and we can really try to
scout for you know, different,less competitive but maybe high
demand brands.
So by firstly, you know,questioning that part is also
important, I think.
I think no, not no, but I thinkthis is really a low hanging
(26:56):
fruit.
In my opinion, before reallytaking your assortment granted
is taking your assortment as anassumption you should really
also plan for your assortmentwith pricing in mind, with
profitability in mind.
And let's assume that youactually did that and now you
actually already stockedproducts where you can set
(27:16):
prices that will be profitableand competitive at the same time
.
If you really cannot do that,what I'm saying is that you
should just leave those productswhere you cannot match the
market price because there isjust maybe one specific merchant
who are like, let's say,brothers with that brand, so
they are suppliers, so they kindof technically have a black
hole.
You know just source theproducts at a very, very
(27:37):
competitive cost, so you cannotreally compete against those
guys.
So leave that assortment, maybefor organic demand, get rid of
that stock and don't source fromthem anymore, and then double
down on paid promotions forthose products, for those brands
, where you can really makedecent profits while being also
competitive.
So I think this is really anice fly view in some way.
(27:58):
So double down on products thatyou can source at a competitive
price.
So this is actually our firstthing procurement operation and
then promote products where youare both competitive and
profitable and repeat thiscontinuously.
Speaker 1 (28:14):
That's quite a lot for a merchant to take in, so
they're going to be busy thistime of year.
They hopefully have learned oneor two things about pricing.
So how can pricing help themwith that?
Because someone's going to sayI haven't got the bandwidth to
be able to do all these things,and I think this is really where
something like pricing notnecessarily it won't solve,
obviously, all the problemsaround this time of year, but I
(28:36):
think the insights that pricingwill give your product, will
give the merchants will reallyhelp them to not necessarily not
just stand out from thecompetition, but I think
certainly have some data pointsand some insights that will add
to compete effectively.
Speaker 2 (28:54):
Yeah, I think that the most basic thing that I can
say here is that if they areever doing this manually, like
we can at first hand automate it.
So if they are, for example,collecting competitor prices for
I don't know thousands ofproducts for their tons of
competitors on a weekly basis ora monthly basis, in some cases,
like dramatically, on a dailybasis, I mean I would really
(29:16):
recommend them stop doing thatand just automate that without
maybe with one of ourcompetitors, really, because
there's already an affordableautomation around that
competitor price benchmarkingthing.
And after that, when youalready compile this amount of
data, reacting to the market isthe, I think, crucial bit.
So we, for example, can helpthem maintain those sweet spots,
(29:37):
like competitive and profitableprice forms, automatically.
So they can set up repricingrules depending on their
branding strategies, marketingstrategies.
They can say stuff like, forexample, they don't necessarily
need to be the cheapest if theyreally think that they have the
branding power.
So they can say I would like tobe 10% higher than the market
average as long as I have Idon't know 50 pounds, 50 dollars
(29:58):
, 50 euros profit margin.
So they can technicallyautomate all those decisions
that they would otherwise do onExcel formulas as far as I can
see in the market.
And the next bit really is tomanage their marketing, as we
discussed.
So after automating all that,they can see which of their
products are really cheapest inthe market and also profitable.
They can use that insight intheir marketing campaigns.
(30:20):
But really I think the easiestthing that I can tell here is to
automate the very essence of acompetitive price tracking thing
.
If they are doing this manuallyI mean, it's 2023.
And it's not too expensivereally, considering all the
other expenses they have intheir business, it makes a lot
of sense to automate that bit atleast.
Speaker 1 (30:41):
And if you think about it, you know.
One of the difficulties I thinka lot of people struggle with
is quantifying time.
You know how long does it taketo manage that Excel spreadsheet
if you make a mistake, so addup those hours and put a cost to
it.
It's actually.
You know we're spending Xamounts of money each month
doing this work when actually,if we invested in the system
(31:01):
like pricing, not only do we getthis automation, but we also
get some additional data pointsto can help us make more
informed decisions.
Speaker 2 (31:11):
Yeah, yeah, well, that's all our marketing say
honestly.
So that's all the stuff that wesay.
But I really, you know, I'm notsure that I can really explain
a caricature in a verbal way,but there is this actually
cartoon where people areactually trying to push a square
wheel and someone who just hasthis you know rounded wheel
(31:32):
approaching them and saying that, well, you shouldn't really do
that.
But this guy who is pushing thesquare wheel saying that I'm
too busy.
Sorry, I cannot listen to you.
Speaker 1 (31:39):
Yeah.
Speaker 2 (31:39):
It's pretty much the same.
People really are having hardtime to get rid of their habits,
even if they are reallyridiculous.
But yeah, like thankfully some,you know a few hundred
merchants already listened tothis and using our software, and
so that it will becomethousands in a couple of months
or years.
Speaker 1 (31:56):
Well, I'm a big fan of your product.
I mentioned it to a lot of ourmerchants.
We've got mutual merchants aswell, and I think there's
different types of merchants.
It's not necessarily that it'spigeonholed in a particular type
of business, but if people wantto learn more about pricing, so
I think it's not necessarilytoo late to make the most of
(32:19):
Cyber 5.
So what should they do?
Speaker 2 (32:23):
Well, we, obviously they can visit our website and
we have a free trial.
So I openly invite people toabuse this free trial if they
like during the holiday seasonso they can really come and just
use the 14 day free trial andjust leave and don't pay.
I mean, I'm totally okay toopenly invite people to do so.
So because in minutes reallythey can come at their products
(32:45):
and they can get the very firstcompetitive Intel from the
software.
So they don't need to wait forweeks, months to actually deploy
the mechanism.
It's not an enterprise play, soit's really self-serve and
automated way to actuallygenerate those insights.
So I believe if they actuallyconvince themselves to use this
during the 14 days during theholiday season, probably they
(33:07):
will stick with it for the restof the rest of the year and
maybe in the coming year.
So they can firstly do that Ifthey like it.
They can obviously also find meon LinkedIn, twitter.
Probably you might also sharethem on the podcast.
Speaker 1 (33:18):
Yeah, we'll link to those in the show.
Speaker 2 (33:21):
I'm quite active on LinkedIn, as we discussed in the
beginning, so people can reachout to me either on LinkedIn or
Twitter.
Really, Cool.
Speaker 1 (33:29):
Now you know that at the end of the podcast, we like
to ask our guests if they listento a particular podcast or book
, and I know that you are moreof a fiction reader just to try
and get some distraction fromyour very busy life.
Speaker 2 (33:43):
I know you do a lot of traveling like I do.
Speaker 1 (33:46):
So what are you reading at the moment?
Speaker 2 (33:48):
Well, interestingly, I start this actually re-reading
period of my life, so I'm kindof trying to read books that I
read during my university years,the books that kind of shaped
my character, shaped mymentality, etc.
And now I'm on Saul BellowsDengligman, which is, I think, a
Nobel Prize winner author whois a Nobel Prize winner, so it's
(34:10):
only about like existentialismreally, characters that are
drifting away from the regularlife, etc.
I think I am in a very, veryorganized life, very disciplined
, etc.
So I really enjoy readingpeople that are quite the
opposite of that.
So that's one book that I canunder the Dengligman Literally,
the guy is Denglig throughoutthe book.
Speaker 1 (34:32):
Do you know what?
I'm not a fiction reader, but Imight have to give that one a
try, yeah, give it a try,especially that whole
existentialism.
Speaker 2 (34:39):
You know, books like Sartre, saul Bellows, all those
guys from France, us, etc.
Like I can tell you later, likenice, 5-10 books that could
really put you into that mindset.
Speaker 1 (34:50):
Maybe we'll have to do an episode just for that.
Speaker 2 (34:54):
Oh, I said before.
Speaker 1 (34:55):
Well, thank you very much for your time.
I appreciate that you're anextremely busy individual and
you're very insightful,especially around pricing.
I hope listeners found a lot ofvalue in how they can really, I
guess, stand out for thecompetition and compete
effectively.
We'll put all the links in theshow notes.
You should definitely followBuldt.
If you're on Twitter or X isit's now known or on LinkedIn
(35:17):
for sure, try out the product.
As Buldt said, there's no harmin a 14-day free trial, maybe
some time just to set it up, butI think it's worth pursuing.
And yeah, buldt, I look forwardto speaking to you again soon.
Speaker 2 (35:34):
Yes, same year, thank you.
Thank you for inviting me.
Take care, all the best Cheers.
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