How to increase profit in retail by 5%

Kömpf Onlineshops GmbH (www.koempf24.de) is a private company that has been around for over 12 years now. It has become one of the leading DIY stores in Germany long before online sales took off.

With the uprise of big online marketplaces that contributed into shaping new consumer behaviour, and wide-spread practice of checking prices online before making a purchase Kömpf's management started feeling uneasy. They did not appreciate being dragged into price wars with their competitors who were eager to go far just to win their place in the market. In 2020 it became clear: now it's time to choose if the company would go down this road or focus on profitability and building more sustainable business.

The pandemic and lockdowns proved that they have come to the right decision when they had chosen Aimondo Pricing Advisory & Platform as a partner to build pricing strategy with.

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Case study set up

Kömpf's management was planning to use new tailor-made pricing strategies as a tool to improve sales numbers, profit margin, inventory turnover velocity and out-of-stocks score.

Goals and expectations. Challenges we addressed

Before contracting Aimondo, Kömpf had made several efforts to achieve more consistent results in data-driven pricing. They had tried to leverage the skills of experienced developers who were a part of the eCommerce Engineering team.

Several tailor-made price monitoring and repricing solutions had been deployed. But company's management was unhappy with the results. Home-made solutions did not work fast enough. At least, not as fast as solutions Kömpf's competitors had been using. The company started to look elsewhere.

Timeline

Kömpf was looking for a partner on a pricing strategy project for months. In January 2021 Aimondo was chosen, and the work began.

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KPIs and Workflows

Kömpf's management was planning to use new tailor-made pricing strategies as a tool to improve sales numbers, profit margin, inventory turnover velocity and out-of-stocks score.

They needed a completely new framework and the solution that would support its implementation.

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Case study results

In 12 months  Kömpf's profit margin went 5% up despite economic volatility

New strategy allowed Kömpf to become more flexible and finally connect pricing to the business goals.

Seasonal variations in prices could also be implemented without Aimondo.

Since using Aimondo, Kömpf was able to determine their sales figures and margins much better. In strong months, they can be more defensive in their strategies and increase profit/sales. In weaker months, they can be a little more aggressive in the market to increase sales themselves. It also made it much easier to carry out sales and stock clearances.

Result 1:

+ 5% profit margin combined with higher control over inventory

Result 2:

Less out-of-stocks combined with flexible pricing strategy and better market intelligence

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— We were surprised that after initial analysis of our data Aimondo team suggested us to increase our prices instead of decreasing them. — says one of Kömpf's top managers.

— We told them: are you certain we can do that? We want to improve our new customer acquisition numbers not go out of business. But the Aimondo Data Analysts showed Aimondo Platform data that indicated quite clearly in what direction we should move if we want to remain profitable and grow sales numbers at the same time. —

Based on Aimondo Platform data a new tailor-made pricing strategy was built.

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From an Idea to The Result

Based on Kömpf's business goals and expectations Aimondo team created a pricing strategy that was deployed using Aimondo Pricing Solution. Please find below one of the scenarios of how this solution works....

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Step 1. Market Intelligence. Aimondo Platform monitors not only existing competitors but also potential ones (if someone pops up with similar products) across all platforms (Amazon, Google, eBay) and websites.

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