Introduction
Eirini Athanasopoulou: Hello and welcome to the Retail Pricing Insights Podcast by 7Learnings. My name is Eirini Athanasopoulou and I will be your hostess for today.
Welcome to our fifth podcast episode. In the series, we aim to improve your pricing strategies by inviting experts to discuss industry trends and serve actionable strategies with you. We have access to these experts throughout our Dynamic Pricing Community, which we have been building for almost two years. We are organising and hosting events. We also have a LinkedIn group and there is a lot of networking around it. If this sounds interesting to you, go ahead and apply for our community today. You will find the link in the description of this episode. This community is completely free of charge, but you have to apply and we are strict with our membership rules.
Today, I have the honour to speak with Diana Zharovskikh, Head of Category Management and Pricing at Deliveroo. Deliveroo is an award winning delivery service founded in 2013. They bring together the best loved restaurants and grocery partners with riders in order to provide the best food delivery experience in the world. With their headquarters in London and offices around the globe, Deliveroo operates across 10 markets. Diana is a results-driven retail professional with expertise in strategy, innovation, and customer insight.
Today, we will talk about the key differences between traditional retailers and online marketplaces. If you are ready for an episode full of insights, let’s welcome Diana.
EA:Hello, Diana, and thank you so much for joining us today.
DZ: Thank you. Hi, Eirini.
EA: Let’s start our discussion today with an introduction to you and to your business path.
And basically, how did we start with pricing?
DZ: Yeah, I think it started, I never thought I would have a career with pricing. I think that’s what many pricing people would tell you. But I basically started off as a Business Analyst in pricing for categories. So I’ve originally applied for the role that was more kind of close to category management, but then I was basically proposed to go there and that kind of accepted us in a way I think, and at that time people would like to move a lot. So you would start as a Pricing Specialist, that you would go into merchandising and then you’ll do cash growth management at some point in time. So I thought that would be my path.
That wasn’t. So after that, we kind of took more of a project management role within the company and I was leading price optimization projects. So we were optimising the price and doing a very big price optimization project. It was a sprint rollout across all of our categories, pretty much. And at that time we had all the food categories, but also we were cooking food in the grocery stores. And yeah, we’ve managed to roll out all of it in 12 months. So that was like, when we completely moved away from cost based pricing to value based pricing. So that was like a huge success, a huge learning for me as well. Then I did various kinds of, I would say, program, project management roles within strategy, operations kind of, but stayed close to the catch convention and pricing. And then when I moved to the UK, I joined the consultancy company that effectively specialised in, on one hand, it worked with the retailers and helped them to take data driven decisions. On the other hand, part of the business was working with the subsidy companies and helping them to grow their business with ratings.
And so I did a bit of both. So I did the kind of consulting to FMCG, predominantly in the promotion space, and then moved into consulting to the retailers. And then after COVID, I found myself wondering for a new challenge and that’s where the quick commerce boomed. So basically I moved and joined Deliveroo as Head of Pricing originally. So I was building out the pricing function from scratch. And recently I’ve taken on the category management scope as well. So now I’m Head of Category Management and Pricing, and basically I am doing anything around the pricing, item promotions, we interact with marketing quite a bit and then category management and taxonomy as well. So we build our internal taxonomy that is independent from our partner’s taxonomies. So yeah, I never thought I would be where I am, but I enjoy every second of the journey.
EA: Wow, so many things and such a fascinating journey. And it’s very interesting to hear that most of the people I’m discussing in this podcast, you start with a vision and then you end up somewhere else, but at the end you find yourself in this environment, which is amazing, right?
DZ: Thank you. That’s so true. I think you have to stay open to the opportunities and the way I think about it, like our kids would probably don’t even know, we don’t even know the professions that we’re going to. So that’s, I think happened a bit to us as well.
EA: Yeah. And being flexible and open, as you said, is a very important skill.
So what are the key differences in how traditional retailers and online marketplaces approach pricing strategies for their products? I mean, you already told us your different experiences in different environments, and I think this is a very good starting point for our discussion today.
DZ: Yeah, sure. So retail is quite different. So retailers manage their costs and they have direct ownership of their pricing. So the art there is how to cope with huge data sets, how to make decisions across different categories, across huge ranges, across different channels. You know, even sites within one channel would have very different customers.
And as we learned from previous series, managing stock is another capability that is very important now for the retailers. Whereas if we think about the marketplace and rule, we are charging consumers, consumer fees. We also set minimal order values, but fundamentally when it comes to pricing, we can highlight best value partners to customers. But retailers themselves are responsible for setting their prices. We can only help and reward partners who offer good value to our consumers. And in practice, that happens through the insights, the conversation about commission, through various marketing levers that we can offer to them, and also through different product features that we are building to stimulate the discovery of the value.
For example, on the product feature is last year with build in store price match campaign, which effectively allows partners that decided to match their in store pricing or deliverable to kind of make it more obvious for customers that this is happening and it landed really well with the customers and got executed across pretty much majority of our European markets.
And yeah, on the restaurant side of business, actually, we’ve recently launched our value program. So that program also aims to reward banner value restaurants on the platform. And while we consider similar programs for the grocers, we need to understand that those businesses are fundamentally different than we are. At the moment debating exactly what form this program will take.
EA: Thanks for sharing that. And I think that is also a very helpful blueprint for the differences between retailers and marketplaces. If we continue in this pattern in the two polls, let’s say, what differences do you see now between the RX and grocers that are impacting your strategy?
DZ: Yeah, restaurants and grocers are quite different. Probably the most obvious fundamental difference is the range size. If you come to the restaurant, your menu would only be that long, right? Probably the longest menu would be the wine list, but let’s be honest, only a few positions are usually taken. And when it comes to groceries, we operate with huge ranges. Even on Deliveroo, we started with two and a half thousand ranges. And now our retailers can list up to 10,000 items. Fundamentally different from the restaurants also the cost to serve is quite different. So obviously we know that a lot of grocery retailers in particular, are quite constrained around the margin.
Whereas on the restaurant side, it might be different. I’m not saying it is for Iberian, but usually the grocery market is that much different. And then the level of sophistication also differs, right? So some of our partners are very mature in their pricing strategies. Some of them will only have one price point for all their estate, but some of them will differentiate their pricing quite a bit, depending on the site, depending on many different factors. And we need to reply to that complexity through the tag tooling that we offer to them. And then finally, we also host very different sets of partners on the platform. And we would like to equip all of them with means to pass value to customers. And that’s what’s shaping our strategies as well. So saying that we all have shared consumer objectives, both restaurant side of the business and we as a grocery, we want to make sure that we provide value to customers and that value is easily discoverable.
EA: Very nice. And again, very structured. Now that we have set the theoretical facts there, let’s discuss the challenges that you have faced. What was the biggest challenge that you faced working in the pricing of the retail sector and in the marketplace? Because of what I have heard so far. I think you would have very viable insights for us.
DZ: Yeah, that’s indeed very different. I think in the big retailers, I call it orchestration. So effectively multiple factors affect pricing and multiple stakeholders affect pricing. And all of this very often happens at a very large scale. That drives it to some complexity. So let me take an example. Very often retailers have old legacy systems, like that could be as easy as just Excel, and that’s probably the easiest case. But it also could be some of the legacy kind of more embedded systems, right? So to prove the case and to move from one to another, and then to overcome all the complexity of moving a lot of data from one place to another and boarding stakeholders.
That’s quite difficult. And when I’ve been recently to the EPP conference with SaaS and I was personally very inspired by SaaS stories, but also by failures, you know, it’s not easy and we equally can learn from both, but yes, a lot of things in the retail is when I moved to the marketplace, I actually took for granted.
So in terms of challenges, I would name three challenges, say data quality is the first one. Communication is the other one. And finally the pace. So if I take each of them separately, I think data quality is the main sort of issue. So when I started, we were displaying the same kind of goal across multiple partners. And I wouldn’t know that that’s the same kind of goal. So I couldn’t count the products that we are offering. I equally couldn’t say that, you know, what is my revenue in soft drinks because I didn’t have a common category of soft drinks across all of my partners. Say we had no competitor data in house, like basically in the retailer world, I took all of this for granted.
I had a five level taxonomy. I had a lot of history on price elasticity, and I know that if and if I went really, really hard, I would never get to individual product level elasticity in the marketplace. So we have to work differently. We have to obviously improve our data quality and kind of work to acquire new data sources. But fundamentally, we are talking about the different data quality in the first place, but also the granularity of the data. Then I think secondly, we’re talking about switching the mindset. So for me personally, I used to focus on the direct inputs, right? So I was controlling the price. Say it could be both the cost, but also just the price itself and how you manage that here, all the levers we can pull are indirect and that requires more skills. And that requires negotiation and that requires the ability to find win-win solutions. That could be both in the internal context when you’re speaking to commercial teams, but they could also be in engaging partners. And finally, the pace, our grocery business is phenomenal. Despite the inflation and macroeconomics, we simply haven’t existed a few years ago, so you can imagine at what pace we’re still growing and that also has the implications, resources are always scarce, but we still need to grow.
Probably these three would be the key ones, but they are also, that’s what makes it interesting.
EA: Absolutely. So we have pace, mindset, and communication, and data quality. And as you said, I don’t think there is any story that is just a success without having a failure on. And I also had heard very good feedback about this year’s EPP from my colleagues. And that’s very good to see also people being open for sharing their stories and their learnings. This is important. Earlier, we mentioned a bit about the skill of the flexibility that you need to have. How did you experience this transition personally and professionally, are there any other skills that you had to gain or adjust?
DZ: Yeah, I think so. I think originally it wasn’t like a big challenge. It was just like the mindset twist, you know, like you would think about something and then you’d think, oh, that’s out of my control. So I guess I’ll start with what I value. I value my new role that I work both across pricing and category management. Both are very interconnected. And sometimes I think we tend to focus on our own things, whereas it’s great to get the perspective from someone else. The example being, I don’t know, sometimes there is simply a gap in the range, right? There is simply, for example, no product at the entry price point, and you can benchmark yourself as much as you want towards the competition, but if you don’t have the right range in place, then it gets difficult, right?
So I think just operating on that strategic level definitely helps, but where it was difficult is because we’re a marketplace and we have three sides to our marketplace, we have the rider, we have the consumer and we have the partner, you need to be able to put yourself in the shoes on all of the three parties and basically find a solution that works for everyone.
If we only find a solution that works for customers, but doesn’t work for our partners, that’s not the win. We need to find those win-win solutions. And that brings your communication skills to the next level. And I’m still on the journey, I’d say. But yeah,I’m very grateful for this challenge and for my mentors and the opportunities I’ve been given throughout the career and delivery in particular to be able to develop in this area.
EA: That’s great. And now going into our last question for today, I always like to keep this question for something that is future oriented, because usually we start on how you started somewhere, your background, then about the current trends and challenges. And I really like to end these conversations that way. So how do you see the future of marketplace pricing and are there any emerging trends or technologies that you think that will impact pricing strategies in the marketplace sector?
DZ: Yeah, I think it’s very difficult to disentangle the future of marketplace pricing from the future of marketplaces themselves. So I’ll probably speak a bit broadly about the trends. I think first, retailers themselves are becoming marketplaces. We’ve recently heard some of those stories and that happens for various reasons. But basically the marketplace as a business model becomes more and more popular. Then I think we can expect increased competition in the quick comment space. We obviously already observed some consolidation and I think there is still some scope for a consolidation, then we, I think, in the wider context, there are some legislative trends that will obviously also affect marketplaces and will have a huge implication around. How we think about building the tooling for the retainers. Omnibus is probably one of the recent examples where retailers and we as a marketplace would need to provide transparency around the previous price for the promotion, but there could be even more rights. So we expect some kind of more legislation, helping consumers to make decisions and making the pricing much more transparent.
I think what we see in the pricing in particular, I would hope that we will see more intentional pricing strategies from our partners. So right now, often we like to see strategies from e-commerce or we have like a blank markup type strategy across all of the products, but I would say that slowly we are moving into direction where we’re basically retailers thinking about how they see Quick Commerce as a channel. And I think that will definitely be reflected in the pricing strategies. And then finally, I guess I see FMCG playing a much more active role, not just in advertising, but I think we would see that they will take more active shape. Like I’ve literally recently seen a lot of roles opening up and the FMCG companies looking in particular in Quick Commerce. So I think we can expect great insight that is always coming from SMCG space, but also the challenge, how do they grow? How do they get the data? And that will be an interesting combination, you know, the conversation that not only now with partners that are retailers, but also the partners that are SMCG companies.
EA: Thank you for this detailed and to the point briefing. I think this also shows your deep understanding of the environment of the marketplaces. Thank you so much, Diana, for being here with us today. It was a pleasure meeting you and talking to you.
DZ: Thank you so much. And yeah, good luck in your next series.I’ll be there watching and listening.
EA: This was the Retail Pricing Insights podcast. From now on, you will receive one podcast episode straight to your inbox if you subscribe to our newsletter. So go ahead, use the link in the description and subscribe to the newsletter. As well as mentioned in the beginning of the episode, I would love you to be part of our dynamic pricing community.
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Thank you very much for tuning in today for the fifth episode of the Retail Pricing Insights Podcast by 7Learnings. More pricing content is coming. See you soon.
