About
ZenSupply is an online store for commercial door hardware. Their catalogue includes virtually any part and every product from from almost all major brands, all within one e-commerce store.
The Challenge
Nick, Partner and Commercial Officer at ZenSupply, prides themselves on a vast catalogue of door products, where their catalogue contained Parent SKU's that had at least 2 planes of variations i.e. sizes, accessories mixed with availability of colours. This meant their catalogue contained over 500,000 SKU's.
Most stores revenues follow an 80-20 rule.
ZenSupply was no exception; except the 20% SKU's generating 80%+ revenues frequently changed. This was because they frequently would have single orders of $20-50K+ on a child SKU (i.e. specific brand with a specific colour with a specific tooling); these SKU's would often had no prior sales.
Nick understood pricing their long tail was important. He led a 5 FTE's team which would track competitor's pricing and frequently re-price based on any changes - made all the more difficult since almost none of the 500,000 SKU's had UPC/EAN numbers. This became manual.
Our Approach
Cartsmart’s AI software broke up the problem into two distinct parts –
1. Competitor Tracking: Utilizing an economics concept of "substitutes," we gauged where each SKU's price sat within the market based on each SKU's identifying keywords. This position was fed into Cartsmart's model
2. SKU Page Views: Given the lack of historical sales data on almost all SKU's, greater emphasis was placed on page view data (as opposed to outright sales)
3. Apply Business Logic: Cartsmart also applied unique business goals and constraints. In Nick's case, each brand had a minimum margin target.
3. Automatic Pricing Updates: Using CartSmart's bespoke integrations into ZenSupply, prices pushed into the store automatically - 10,000 SKU's at a time.
4. Reinforcement Learning: Now with further data, this enabled calculations for optimised pricing ranges based on sales and page views. These prices were automatically pushed into the store.
The Results
Quickly after the initial integration, we removed all the manual workload of price updating - saving over $75,000 to ZenSupply and Nick. This further allowed the 5 FTE's to focus on SEO and brand strategy.
If you’re interested in seeing what pricing strategy works the best on any channel you sell on, book a call with us to chat about how Cartsmart can help.
About the Author
Ben Marshall
Ben is the co-founder and CTO of CartSmart. Before building A/B pricing tests for e-commerce stores, he was solving similar problems for John Lewis and Just Eat.
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