A leading omnichannel electronics retailer Journey with Omnia Retail
One of the Netherlands’ largest electronics retailers has seen an improvement in their profits through the use of Omnia’s Dynamic Pricing software and insights, providing them with the ability to increase their e-commerce price changes by up to six times per day. Due to the ease and speed of automation, double-digit hours in work were saved across 11 category managers and more products were able to be managed. In addition, there was a significant uplift in profit margins per product sold across all categories and sales channels.
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What were their challenges?
In 2020, the organisation had already established themselves as a price-centred retailer with both a high-traffic online marketplace and physical stores where shoppers could view it as a one-stop-shop for all things electronic. They wanted to focus on finding solutions for three main challenges in regard to e-commerce pricing:
Decrease dependency on manual changes: Before the implementation of Dynamic Pricing, employees had to approve and implement pricing changes manually. Because of this, time management and efficiency were not prioritised. Taking time away from high-level tasks and decisions that needed to be made.
Increase price-change frequency: Data analyses facilitated by Omnia showed that they was considerably behind its electronics competitors in terms of price change frequency. The retailer realised that Dynamic Pricing could bring the value and solution they needed in order to keep up with the speed of price changes.
Escaping the race to the bottom: For the business to start thriving, it needed to break from its linear strategy of simply following the lowest price in the market. By already preparing the public through a shift in changing their slogan from a "cost savings approach" to the "best market price guaranteed", all they needed was a systematic and automated approach to building a healthier margin on products while still remaining competitive.
What was the solution
Having already experienced the value and high-quality data of pricing insights delivered by Omnia’s Pricewatch module, choosing the Dynamic Pricing solution from Omnia was a natural progression. They realised that they needed a diverse pricing strategy to stay competitive in pricing (based on price elasticity). At the same time, they wanted to play into an assortment of factors, such as product lifecycle stage and stock levels pricing, especially during the Covid-19 and the e-commerce demand surge.
Due to Omnia’s flexibility and customizability, they could implement all of the rules and intricacies they envisioned. The full implementation of an end-to-end automation solution was done per category, with the first products going live in April 2020, and the remaining few in the months following.
The electronics retailer was able to automate re-pricing across all of its categories, efficiently and within three months, all categories had an end-to-end automation strategy successfully implemented. With this big step, the electronics retailer gained control over pricing in a highly competitive online market. Double-digit hours were saved across 11 category managers, freeing up valuable time to invest in strategic insights and other operational efficiencies instead. By using Dynamic Pricing, they increased their average daily price mutations sixfold. Since the re-pricing factors were mostly market-related, it shows that they were much better at keeping abreast with their competitors.
The retailer was able to increase prices which increased profits. This was achieved through competitor information and general market trends collected through Omnia Retail’s unique product data mining capabilities. Where competitors ran out of stock, they could automatically adjust their own prices accordingly. While the exact effect on revenue and margin is hard to conclude due to the massive impact of Covid-19, it is clear that it resulted in an overall healthier price ratio compared to market average, and a significantly higher profit margin per product sold.
A sixfold increase in daily price changes. Significant uplift in Euro margin per product sold (Q4 2020 vs. Q4 2019, all categories, all sales channels).
Staying ahead of a constantly changing e-commerce environment
The recent pandemic and the ensuing worldwide surge in e-commerce demand took everybody by surprise. The rapidly changing conditions in the market showed how important automated decision-making is in today’s world and has provided a glimpse into the future. By timeously switching to Dynamic Pricing, the retailer was able to not only deal with the chaos but able to capitalise on opportunities that presented themselves, rather than succumbing to them.