HelloExperts – Meet Mayank, Pricing Specialist @ Helloprint
Mayank, from the small town of Neemuch in India, came to The Netherlands to pursue his masters at Erasmus University. He always wanted to gain some practical experience in an entrepreneurial environment, which is why he chose Helloprint. He likes to solve puzzles, part of the reason he chose his current job, playing with data is kind of like playing with puzzles for him.
He doesn’t see himself working in a predefined environment where decisions and choices are already made for him. At Helloprint he started as an intern, but he says he has never felt like one. In his free time, he likes to work out and try new sports. He says that travelling and health are always his priority.
So, before we go any further what does a Pricing Specialist’s role entail?
I think it’s a risky role if you don’t have proper knowledge of our Products and Customers. One wrong move and you can lose a lot of money in seconds. I always need to ensure we have the right margins on all of our products. We are currently live in 13 countries with more than 500 products in each country. I need to price them based on how they are doing in the market, but to price them individually is not feasible, so I use different macros on our Pricing tool to take care of our massive inventory of products and SKUs have the right prices. I also need to be aware of the season to decide our price strategies based on it, since we are already in the market for 6 years there is a huge amount of data which is used to determine our strategies.
A lot of validation is also performed based on our previous years’ data, it helps us to understand how our current price will behave. We have different types of customers as well, some are resellers ordering a lot from us and our current model gives them discounts based on the number of orders they have with us. Now to convert our first-time customers to our pro-customers, we need to give good incentives which I find really challenging because sometimes big discounts scare off our customers, so to find the right discount or optimal prices is difficult. I think the key to solving these issues is Experiments and dynamic pricing.
How important is having the right pricing for your product or service?
Firstly, Pricing is the most vital aspect for an e-commerce company because how you price products define your revenue and profit straight away. My job is to make sure we have the optimal prices. It sounds so easy, but when you have millions of SKUs to price and it goes out of hand sometimes. We have an Inhouse tool for Pricing called “Hellospider” to make life a bit easier for us. The tool is built with a smart algorithm to price products with different strategies, for example, if the product or group of products is not that popular in the market I will use a low margin strategy to price them.
Similarly, many other kinds of strategies are pre-defined on the tool. To give an overview of what kind of logic is there to ensure correct pricing we can use a simple example. We have different production for different quantities and turnarounds, which makes it tough to price smoothly. Our algorithm considers these hikes and irregularities in the cost price to give linear sales prices.
How do we ensure we keep our prices competitive at Helloprint?
We have the best tools and techniques specifically dedicated to taking care of this. We are always aware of our market. In order to provide the best prices for our customers, we need to be sensitive to our competitor’s price changes. Most of our top revenue bringing products are price-driven, a few pence up and down can draw changes in sales. We regularly compare our prices with our competitors and share the report with our supply team. This report consists of the SKU’s where we need to buy better.
Our prices will never be aligned with any competitor because of our calculation of market price, in the Netherlands only we have 9-10 big competitors and none of them are cheaper for all products. So in order to be cheap for all products we used an average market price, which makes sure we are the cheapest. We will always be thankful to our supply team which always finds the best deals for us. This makes our life a bit easier and takes us one step ahead of our competitors.
What is our biggest challenge at Helloprint?
Currently, my main goal is to build an ideal algorithm, which allows us to have optimal prices for all products in all countries by means of self-learning from different pricing experiments. It’s kind of an iterative process, you learn by implementing and trying something new. Also, our tool is not in-house and it’s challenging to make changes in the current process. The current layout of the tool is 4 years old and at that time our inventory was not as big, so it’s not feasible for our rapidly growing inventory. I remember a year ago I was lacking skills like multitasking and prioritizing efficiently but within this one year, they are topping my list.
One thing at Helloprint that just doesn’t exist is stability, you always have tides of challenges coming up. But if you don’t prioritise well, you will never move forward. Now, I always reserve time in my agenda to work on the new algorithm. There will always be some small stuff that looks important for that moment but in the long run, this algorithm will have a big impact on Helloprint. It also depends on other departments of the company but with every step of improvement, we can get there. With the help of my team, I already picked up a good pace and presented our first MVP but there is still a lot more to do.
What advice would you give to a start-up on how to get your pricing right?
I would really suggest structuring your algorithm or the system by considering the next 4-5 years of expected changes and growth of your company. It should have space to adapt easily. Otherwise, you will end up having to build it from scratch all the time. Most important advice: please keep it in-house, it becomes easier to connect with all departments of the company.
Another piece of advice would be to save the prices of the product, which for some reason you were not able to sell. Most of the times these prices are not saved and lost over time, but they are important too because they will allow you to understand why you were not able to sell those products. A good data warehouse, especially for pricing, is really important. There are so many factors that can influence your prices, but it takes time to unleash this information. So this data will be precious in the future.
What’s one thing you should never do in a pricing strategy?
The one thing, from my experience, one should never do is big price changes, lower or higher. Customers never appreciate it, which makes sense. I always try to ensure that personally, I find the changes acceptable before getting them live. A simple way to check is sampling, we use our top-SKU’s as a sample. This came as a hard lesson for me. Strategies must be more automatic and logic-driven if you start deriving strategies based on the current season and supply prices. You will then need to re-do it every time a small change is made, which is not efficient and smart. It would be smart to define your strategies in more logic (algorithm) based way and to have some options to control specific alterations manually. Otherwise, you will always be late to act on the opportunities, or worse, you won’t even discover them.