Overview

Competera is an AI-powered platform helping retailers to set optimal prices. It uses the cutting-edge ML technology combined with the best econometric practices. With Competera, businesses can boost bottom-line metrics and sustain the right price perception through optimal price recommendations. These recommendations are based on 20 pricing and non-pricing factors as well as own price elasticity and cross-product sales dependencies.

Supernova Award Category

AI and Augmented Humanity

The Problem

Balsam Brands is a US-based online retailer of luxury artificial Christmas trees and seasonal holiday décor that generates over $200M of annual revenue.

The Balsam Brands team addressed Competera with the challenge of running regular markdown optimization campaigns while protecting gross margin and growing revenue.  The team also lacked an intelligent solution that could satisfy the team’s request for a unified tool to manage prices based on market trends.

The Solution

The retailer used Competera’s markdown optimization solution for regular markdown optimization campaigns, inventory sellout management during the holiday season as well as increasing its gross profit.

The results

+3.5% of gross margin

+3.7% of revenue

Metrics

Gross Margin 

Revenue

Sell-through rate

The Technology

Competera’s markdown optimization software used the power of thoroughly trained AI models to design optimal markdown prices during the holiday and clearance seasons. The algorithm designed markdown price recommendations basing its decision on the client’s weekly sell-through rate target and items sold, inventory availability, internal pricing structure and formations, intelligent price roundings, the discount depth in print catalogs and smart business constraints.

Disruptive Factor

At this phase, the project was marked with building backcasting models that allowed the rapid presentation of the solution’s sustainability. With the help of the models, Competera managed to perform the accuracy of its algorithms on the client’s business results of the past year. The value of such an approach lies in the cost-effectiveness for the retailer and forecast precision.

Shining Moment

An innovative approach to solution's feasibility demonstration: for a highly seasonal retailer like Balsam Brands, conducting a traditional A/B test meant scaling the new approach to price management in the next year, so we checked the accuracy of the algorithms by backcasting or “a planning method that involves the prediction of the unknown values of the independent variables that might have existed, in order to explain the known values of the dependent variable”.