In a recent interview, Felix Hoffmann from 7Learnings shared valuable insights with Alexander Brunst from ECOMMERCE ONE about price strategies and the role of Artificial Intelligence (AI) in the e-commerce industry. Watch the video using the link below [in German], or read on for the key takeaways from their conversation.
Introduction
Felix Hoffmann introduced himself and discussed his experience in the pricing department at Zalando before moving to 7Learnings and working to develop leading AI solutions for retail optimization. He emphasized the increasing importance of effective pricing strategies in e-commerce, especially as competition intensifies.
Importance of pricing in 2024
- Pricing has always been crucial in e-commerce and will continue to grow in importance.
- Traditional competitive pricing strategies are not sustainable, particularly against low-cost competitors from China.
Innovative pricing strategies
- Businesses should look beyond the lowest price strategy. For instance, effective stock management using predictive methods can prevent early sell-outs and maintain profitability.
- Advertising and pricing need to be balanced. It’s not feasible to be the cheapest while also investing heavily in ads. Competitive pricing combined with strategic advertising can still position products prominently.
Targeted pricing
While theoretically possible to differentiate pricing across platforms (e.g., Zalando vs. own shop) or between user groups (iOS vs. Android), this is often not practical. Current strategies can already yield significant profit increases without these complexities.
Role of AI in pricing
- AI can significantly enhance pricing strategies, but it relies heavily on clean, well-organized data.
- Most companies need to improve their data infrastructure, ensuring all relevant data is cloud-based and easily accessible for AI tools.
- AI can automate and optimize many tasks, making it a cost-effective solution compared to maintaining large in-house teams.
Data utilization
- Leveraging internal data is crucial for better pricing and marketing decisions.
- Comprehensive use of marketing data can improve campaign efficiency, while sales data can refine pricing strategies.
The insights provided in this interview underscore the transformative potential of AI in e-commerce pricing and the importance of robust data management. By focusing on these areas, e-commerce businesses can better navigate the competitive landscape and achieve sustainable growth.
