Balancing Profit and Efficiency
Jorge Gil, Ecommerce Senior Manager at Convy, described their pricing process as a complex, manual dance before integrating catalan into their operations. Convy manages a vast inventory of approximately 1000 SKUs, including both Convy products and items from third-party suppliers. "Our pricing strategy revolved around benchmarking prices from competitors' platforms and using these benchmarks as a basis to manually set our own prices. This very manual task was performed using Excel spreadsheets, requiring human judgment to determine the 'correct' prices," Jorge explained.
Challenges in the dynamic world of pricing were abundant for Convy. With constantly shifting raw material costs and competitive promotions, pricing was a moving target. The absence of a dedicated technological platform to manage pricing compounded the complexity, resulting in a significant amount of manual work that translated to increased costs for Convy. Price changes were infrequent, driven solely by competitor benchmarking, leaving no room for experimentation. The catalyst for change came when one of the executives from Convy's parent company, Sigma Alimentos, discovered catalan during a visit to Boston.
From manual processes to automated dynamic pricing
To address these challenges, Convy embarked on a journey with catalan, utilizing the platform's dynamic pricing capabilities during a four-month pilot phase for four selected SKUs. The primary goal was to enhance profitability. Throughout the pilot, catalan implemented approximately 240 dynamic price changes, strategically raising prices on average for three SKUs (ground beef, tuna, and pork), and reducing the price on average of one SKU, tilapia.
"The more time we used Catalan for pricing during those first four months, the better results we achieved in profit optimization because the model continues to learn and become better with more time and data," shared Jorge.
Saving time while increasing profits and sales
The results of the pilot spoke volumes about the potential of catalan's dynamic pricing. For tuna, Convy experienced a 6% increase in profit per day and a remarkable 19% boost in units sold per day. Similarly, tilapia saw a substantial 12% profit increase per day and a 21% rise in units sold per day. Ground beef witnessed an impressive 35% growth in profit per day and a 37% increase in units sold per day. Perhaps the most remarkable transformation was observed with pork, which recorded a staggering 266% profit increase per day and a 360% spike in units sold per day.
Jorge emphasized how catalan had streamlined Convy's pricing process, reducing reliance on human and emotional judgment. He summarized the platform's impact, explaining, "If you want to improve profitability, you have to either increase prices or reduce costs. Catalan has allowed us to see the direct impact on profitability of price increases and price decreases, together with how they affect volume." He added, "I believe that AI will disrupt how humans price today. AI will turn into a co-pilot for revenue leaders at large companies to make better pricing decisions and an auto-pilot for smaller companies that want to have a more automated solution. Catalan is pioneering this nascent category and I can't wait to see what they do."