Escaping the Race to the Bottom: Strategic Pricing on Marketplaces #LTM148

For example, when the minimum price has already been reached, like Alexander says.

Yes.

This ensures the algorithm within the defined framework and avoids decision that could harm your business.

Let's Talk Marketplace.

The Marketplace podcast with Ingrid Lomar and Van Vridiste.

Hello and welcome back to let's Talk Marketplace.

I'm Ingrid, as always, happy to have you again for another episode.

And today we are tackling a topic that I'm sure if you're a marketplace person, has already made your palm sweat, because we are talking about pricing.

Yeah.

And in theory, it always sounds simple, you know, find the sweet spot where the customer clicks by and you actually make a profit.

And in reality, it's always a very chaotic race to the bottom, mostly driven by algorithms and competitors.

Yeah.

And we're told that automation is maybe a magic wand, but I don't know.

I know a few people who are not so happy with handing over the keys to an algorithm because who might know what it's doing in the night with your prices and your margins, to be more specific.

So today we are looking at the fine line between smart repricing and, yeah, let's say digital suicide.

Yeah.

So to help me navigate this, I've brought in two people, actually.

First we have Alexander Joffe from D Max International.

And I'm really happy that he's here because his brand, Koener and Sunen, I think it's called, deals in power equipment, generators, tillers, heavy duty gear and stuff like that.

And in contrast to other marketplace managers from brands, Alexander is actually ready to talk about his pricing decisions for the marketplace part.

Within reason, of course.

No worries.

But still, I'm really happy that you're here with us today to represent the brand part of this topic.

So.

Hi, Alex.

Thank you.

Hi.

It's good to have you.

Yeah.

And here to provide the technical backbone is Matthias Robel from base.

He can hopefully help us find out more about what modern pricing tools can do and where the technical development is going at the moment, and which part remains, at least for now, in the hands of the human marketplace managers.

So welcome to you as well, Matthias.

Great to have you.

Thank you, Ingrid.

I'm very happy to be with you.

You to go.

Yeah.

So, gentlemen, welcome to my show.

And let's talk about how we keep the robots from spending all our money.

So.

But first, before we dive into that, I'd like to know a little bit more about you.

So let's have a short round of introductions.

Mathius, why don't you start?

Why don't you tell me, who are you?

Where do you.

How did you come to this place that you're in now in your business?

And what do you do best when it comes to marketplaces?

Okay.

Hi.

Hi again.

I'm Matteo Uszo and I am technically from Dice.

I'm product manager with over 8 years of experience in the common pricing.

I specialize in product management, optimizing pricing strategies and implementation solutions that supports online sales.

I think combine a little bit of analytics approach with business thinking to delivery value to the clients and to my organization is for me the, the highest, the highest profits.

For me the biggest dream is when our clients sales more and have biggest profits from using our system.

And my solution.

Okay, right.

And Alex, what about you?

How you, how did you come into the marketplace business and what is your usp?

What are you doing best?

Hi Ingrid, my name is Alexandria Joffe, I'm head of E commerce at DMAX Group.

I have been working with Marketplace about 10 years at DMAX Group.

We own the brand Kilmer and Zonen and several others brand and my main goal to grow our online sales globally because we are present in usa, uk, all the Europe and it's.

My main goal is to keep strategy and to grow multi channel structure in the company.

Yeah, great.

Okay.

Right, thanks you.

Thanks to the both of you.

Then we know a bit more about who you are, where you stand and I guess then we can dive right into our conversation on pricing after a very short ad break.

Sometimes a missing centimeter can make the difference between profit and loss.

Especially in diy.

If you provide incorrect shipping dimensions on auto, you lose margin.

And if your technical data is wrong on Hornbach, your product product simply won't be found, especially in DIY and home marketplaces.

Don't forgive messy product data because here it's not about do I like it?

But whether a product actually fits, works or is correctly classified.

And that's exactly what you see in the day to day work of our partner Channable.

As an integrator, Channable works with product fees across multiple categories and marketplaces and sees very clearly where data doesn't match the platform system logic.

And what's interesting is the the problems are often not that complex.

Wrong units, technical specs hidden in text instead of attributes, or missing shipping data.

That's often enough for products to disappear from filters or simply stop converting.

So if you're currently struggling with visibility, conversion or margins, it's worth taking a closer look at your data.

And if you'd like to learn more about that, check out our LinkedIn post on the Topic or contact Channable.

They know the way.

As always, you'll find the link in the show notes.

Okay, right then I guess let's dive into it.

As always.

Here on let's Talk Marketplace, we like to start with the brand story first.

So it's first up to you.

Alex, why don't you tell me a bit more about, you know, Kona and Soon and your brand, who's that brand?

Which markets are you hitting and especially, especially what are the pricing hurdles in your niche?

Yeah, kernel Zonen is a manufacturer of power equipment.

But I will say we produce not just technique, it's solutions.

And yeah, if we talk about the kernel and zoning ecosystem, we look at from two sides.

It's product portfolio and multi channel distribution.

As a manufacturer of power equipment, we have different sales strategies.

B2B, B2C marketplaces and DIY chains, local presence.

Of course, on product side we grow significantly.

We are not just about generators anymore.

We have also garden tools.

Our tools in our portfolio now.

And on the distribution side, our ecosystem spans across more than 20 markets.

Primary it's West Europe, UK and US but with upcoming expansions this year in Dubai, in China, it means that we have a lot of job with pricing and with market analysis.

We have about 50 different sales channels across 20 countries.

It means that it's very hard to control our prices, prices of our partners and prices of our competitors.

So it's our core of our daily work.

Yeah, that sounds like a huge operation.

And across so many countries too.

And in a very specific niche.

It's always interesting to get into those tiny niches that you often don't have so much on the radar actually when you are mostly focused on B2C.

But what is your pricing setup?

Are you relying a lot on manual pricing or have you just reached a breaking point at some point where you said okay, with manual pricing we really can't compete anymore.

Ingrid, give me a second.

So as I said, we need to understand that we have a bright product portfolio.

Some products are not able to sell in our E commerce channels.

They are only for B2B sales channels.

That's why we are using price controlling tools from base, for example, to control pricing of our distributors.

Because the Kyzhona is not the open point price brand with the first price on the market.

And we, we don't want that our partners try to destroy our brand with the first price in the run with Chinese brand and other competitors.

But of course we have our own product palette which only for E Commerce, for our own E Commerce available and Then we have some gap where we can play with our prices.

Of course.

Okay, Right.

Maybe Matthias, over to you to get that pricing topic in a more general direction first.

When we're talking about repricing or smart repricing as it's called today.

What do you actually mean?

So how is that defined?

For me, intelligent pricing is the future.

Yes, it's necessary in this time.

You know, the intelligent pricings mean that price is driven by context, not a singular.

The system takes into account our margins, product availability, competitor behaviors, of course, competitor prices, the marketplace condition, the product condition and everything.

Your whole context?

Yes.

And the key points is that not overproducts has to be the cheapest.

Yes.

And each marketplace can have different pricing assumptions.

In practice, we use a portfolio approach.

Some products to responsibility for our visibility and traffic, while others drive to profitability.

This allows us to stay competitive when it matters and while protecting both premium brands.

Like Alexander says, as you know, our main strategy.

Strategy is not always be the cheapest in the marketplace.

Yes.

We need to looking for the all environments and all KPIs.

Yes.

And our system and our brand.

Yeah, absolutely.

What I find is interesting, Alexis, when you said that you are not only looking at the competitors, but also at other retailers in the market that have your brands and to have a just a good look at what they're doing with the prices of your brand.

So what other data points are you specifically at DMAX looking at?

Is that stock or apart from competitive behavior, as you already said?

Or what are you looking for?

Which data points are you looking for when you come to defining your pricing logic?

First of all, we are looking for our floor prices.

We need to make a business and we need to make money.

And first of all we need to know the point, the lowest point of our price.

And the second matrix is we try to understand how our competitors moving, why they have the possibility to set the price so low and which market share they take from us.

And after that we can take a business decision what we will do with exact this product.

Okay.

Matthias, would you add anything to that?

Anything else that marketplace managers should look at when they are looking to define the pricing logic?

For me, Alexander slays firstly the competitor price prices.

And of course we need to checking all marketplaces where we selling our products.

Yes, not only one, but the whole marketplaces.

You have the.

The.

The.

You know, the all.

All prices with all marketplaces.

We need to have a finding our world.

The big view.

Holistic.

Holistic view to our all ecosystem.

Secondly for me, of course inventory Levels, margins and sales.

Because only the combination of this KPIs and this keys give us the best sales.

And for me it's the best combination to grow.

Grow up in some sales our E commerce and host the buy box and looking for the promotion promotion of our promotion.

Our competition's promoters, of course, product life cycles.

Yes.

You know, we need to looking for how long the product stays in our stock.

On our stocks.

Yes.

And because this is always very important, very important KPI for us.

Yes.

If we have too long the product system I will share.

I think it's problem for us.

Yes.

We need to look of course for that.

Okay, so if I get that correctly, you're looking at like all the sales channels, all the products, all the prices, all the competitors.

Yes.

Length of stock, seasonality, like basically everything.

So that is a lot of KPIs to keep track of.

So Alex, can you walk me through how that looked like for a marketplace manager at your place before you were automating?

So how has daily life changed for you?

What did you monitor in the beginning and what are you able to monitor now that you have been automating?

Yeah, for marketplace managers I would say it's the full process was automated and the amount of manual work was dropped.

But the brain work has definitely increased because we receive a lot of data.

We need.

We need to check this data and we need to take business decision on this data.

It means that instead they actually analyze competitor behavior.

When the price changed, they look at the data to understand what happened, how.

How it.

How much market share the competitor is trying to take from us and why he do it.

In this at this time we're looking for the stock as you say for seasonality.

It means that for marketplace managers the amount of work the same but it's more brain work is manual work and of course it increase our results.

I like that one.

Yeah.

That you are dropping the manual work, but increasing the brain work in a way.

Matthias, can you go a bit more into detail about that?

So what is actually what what marketplace managers using their time that has been freed up by the optimization for now.

And how can they put that into their business?

Because if you not that Alexander says it's not so easy to be marketplace manager in this time.

You know, our system and our repricer really helps every everyday work.

It's in everyday work what marketplace manager needs to do.

You know, it's not so easy to have 3, 4, maybe 10,000 products.

Now I have client with 4 million products on Amazon.

It's not so easy to check the price every day.

It's impossible to check if you have 1,000 products.

Yes.

On four marketplaces it's impossible to check every day.

Competition price change it.

You know, if you change the price after 5 maybe 20 minutes your competitor, your competitors change the price again.

So manually work is impossible to do everything by your hand manually.

And it's not, you know, it's not profits profitable to hire someone for only the price checking.

Yes, absolutely.

I think now we can using the tools like Repricer and base and he do everything for.

Yes, he taking the.

Like I say, 4 million products every day.

Yes.

And you have of course always the best price that he can do for you.

Because you know our safety for us it's the floor price is our system never, never, never send you price below the minimum price that your floor price.

So you know you always be safe and have everything under control.

So you know it's Alexander everyday walking like normal work is much easier.

As if he using our repricer to.

To checking the competition price.

And after he taking the price he can, he can thinking and make a good decisions.

Yes.

With don't leave.

I can give you an example.

Yes, please.

Yeah.

For example, you have a competitor on Amazon and he goes out of stock and the system react instantly and trades out price to maximum profit.

But if the competitor have stock you need to decrease your profit with lower price.

It works automatically in the night, in the morning.

So you are able to make your money 24 hours, 7 days.

Nobody from your marketplace managers are able to do this work so fast and with so deep analysis on each product level.

That's.

Yeah, that's really interesting.

Especially as you said, like it's happening in the middle of the night.

So no human would be up to speed with whatever's happening and the automation is taking over.

But I'd like to come back to the keywords floor prices that you just mentioned, Mateusz because this is something that I often hear when people are thinking about automation with pricing is like yeah.

And is it really working and am I losing my margins?

So how is that floor price logic working?

And how do people actually define the floor price?

What is the flow price is that you know everything like the lowest margin where you're still profitable or how do you define that?

You know, if you're using our system or different system to smart pricing.

Yes.

And to repricing you always must and need to define the lower price, the lowest margin.

Yeah.

Because you see.

No, this is the safety guard as you Know this is your safety area.

The control is automated repricing.

You know, it's primarily based on the well defined boundaries for each product.

You need to define these boundaries and you should to have a minimum price to set to protect your margins and of course the maximum price to stay aligned with the market.

You know, you, you, you cannot to sell the products and you know if someone sells things right now for €100, you cannot do selling gig for €150.

Yes.

Because you never will sell, you will sell it.

So on the top there are rules determining when the system should react and when it should deliberate at hold the price.

Yes.

For example, when the minimum price has already been reached, like Alexander says.

Yes.

This ensures the algorithm within the defined framework and avoids decision that could harm your business.

Yes.

In practice it's not about giving the control, but it's structuring it.

Yes.

Everything is, everything's working automatically but with your own well defined boundaries.

Alex, can you tell us a bit about the flow prices and safeguards that you at DMAX are using?

So how do you maintain control?

How do you find these safeguards and flow prices?

So for us of course our brand is on the first place and as I said we are never try to be the cheapest on the market because we are not the cheapest.

We have but we have a lot of, a lot of examples on the market with the Chinese brand of course in our business I would say 99% of technique is manufactured in China and some Chinese manufacturers are selling in Europe directly without any sub brands or something like that.

And we can see how it works when you don't have the floor price and it's not our way.

I will say we have our margin, we keep our margin always.

Of course we have a gap, but we are never run to the lowest price.

Okay.

Right.

As you at Digimax are very international company, I'd like to turn the conversation to a bit more how you treat different international markets after another quite short break.

If you work with marketplaces, you probably know this situation.

Your Amazon team optimizes retail Media.

Your D2C team looks at CRM and lifetime value and your performance team focuses on roas.

But the customer doesn't experience your brand in separate channels.

From the customer's perspective, it's all one journey from discovery on social media to research on marketplaces and finally to purchase.

And that's exactly what the new connected commerce guide by Frontrow is about.

This guide explains how brands can connect Amazon D2C retail media and CRM into Just one system.

Instead of optimizing each channel individually.

It shows why focusing only on short term metrics like roas often hides the real impact marketplaces have on the overall customer lifetime value.

You'll also find practical frameworks and a quick self check to see how connected your own commerce setup already is and why you might still be operating in silos.

So if you're responsible for marketplaces, retail media or digital commerce in your company and want a clearer picture of how these channels influence each other, this guide is definitely worth a read.

You can download the connected commerce guide by front row for free.

Just check the link in the show notes.

Okay.

Yeah.

Let's now go a bit across the border.

Because you are active in a lot of countries, Alex, with DMAX and have to keep up.

Yeah.

Or have to keep track of pricing across all these different markets and different continents as well.

So how do you do that?

How do you treat different international markets when it comes to price?

Let's say elasticity.

The tool which we use is the same.

So we are using base for.

To control all prices.

But in Europe for example, we had centralized our price politics and we have the same price for all the countries.

But of course different distributors has different sales and we need to control not only price of this, these distributors on.

On the same market.

For example, Polish distributors can sell in Ukrainian market the goods but the pricing in Polish market in Ukrainian market is different.

So for us it's the main goal to control our partners different countries, different continents, as you said.

But.

But the tool is the same and the rules is also the same.

For us now it's not important.

It's will be 10 countries more and 20 sales channels more because we have automation.

So it's.

This is the main point of automation is to is growth possibility to grow with your system.

Absolutely.

Matthias, can you add up on this?

How is tech supporting internationalization when it comes to pricing?

No, it's very simple.

Because for each marketplace and each country you have different price sensitive levels of competitors.

And the operation cost, you know, the fee for the marketplace can be different.

Yes.

For example, Mazano Allegro in Poland.

Yes.

Different fees for each product or each categories.

So which means a one single strategy does not work globally.

In the practice is this require adapting pricing logic to the each country and for the each market, for example reacting different to the price changes.

In Germany that and then Poland must be different.

Yes, it should be different because you know the Poland we lost to searching there the lowest price.

Yes.

And checking into like for example and our sensitive for the price is different than in German.

So if you're planning to sailing like Alexander in the different countries and in different marketplaces, you should checking the price sensitive and using automation.

Yes.

From everything both of you told me so far, get the feeling that even with automation repricing pricing smart pricing is a whole strategy that is running behind and you can do.

You have to do a lot of brain work to quote Alex here.

But of course that means you could have different strategies for repricing and some might work and some might not.

And each of them is possible to build up with a tool like for example the Buybase Repricer.

But how do you in the end find out if the strategy you chose is really working?

So what metrics would you be looking at?

Matthyush maybe you first.

For me the most important metrics those related to profitability and stays efficiency primarily the margin and the sales and the buy box areas.

For example in Amazon it's the most important metrics and it's important to monitor the price position relief to our competition and the safe stability over time.

With the most important metrics.

Yes.

If you save more and have more margin more profitability is your.

Your E Commerce.

That's.

That's me that everything is working correctly.

Okay Alex, which metrics are you using to evaluate your repricing strategy?

Of course, it's margin of course and product performance.

We are looking for each product, how this product perform and the price as we know is one of the main key indicators for algorithms of marketplaces.

And that's why it's the main part of of performance of our sales and product performance.

That's why it's two main indicators that we are looking for.

Okay, right.

That just about closes our half hour on pricing today.

Just as a final question, I always like to get some quick wins into here and ask my next Monday question.

So if our listeners are maybe auditing their pricing setup next Monday, what would be like one high impact low hanging fruit that they should look for?

Mateusz, what would be your tip first?

Checking our top products, the best product, the best sellers and checking and you just need to look for your bestsellers for for example last three months.

Checking that everything now is of course have the buy the buy box or if you lose buy box checking why you lose buy boxes because maybe you need to change your price for example for 1% or maybe 3 or €4 cents and then you need have again win the buy book.

So checking the best sellers from the last three months for example.

Okay, so best sellers always a good low hanging fruit for next Monday.

That's true.

Alex, what would be your life hack for fellow Marketplace managers?

I'm fully agree with Mateos but I can give some advice.

It's what we are doing at dmax.

We are always recalculating our absolute minimum price.

So we try decreases price.

My advice is stop, stop blind race to the bottom.

So for the first price make sure that your automate automation works for your profit not just for your revenue.

So it's main goal in DMAX which will follow.

And yeah, I think it's the main part of repricing system to know your absolute minimum price where you can go with your price.

Yeah.

And then absolutely.

And hopefully avoid it as often as you can.

Right.

Thank you the two of you.

That was an interesting half hour on repricing.

Thanks for joining me.

Thank you, Ingrid.

Thank you very much.

And if I hope you all out there learned something today on repricing and if you did or if you have to add anything, let us know, send some comments over on LinkedIn or wherever you are listening to us.

And of course you could always make us very happy by following us and rating our podcast on Spotify, Apple Podcasts, YouTube, wherever.

You know how it goes.

Right.

So thanks for tuning in today and I hope you too hear that you'll be joining me again next week.

Bye bye.

You listen to let's Talk Marketplace, the Marketplace podcast with Ingrid Lommer and Vanari Dichtel.