Otto­ – Dynamic pricing in the competitive e-commerce market

OTTO Group is founded in 1949 and with an e-commerce revenue of almost 7 billion a year, one of the biggest e-commerce companies in the world. Their activities are mainly focused on Germany and France, however they operate in more than 20 countries world-wide. Over the last years Otto Group has launched numerous technological and customer-oriented initiatives to become increasingly customer-centric in their operations.

project & goal

Competition in the consumer goods market is fierce and primarily focused on price promotions. All year-round discounts and price fluctuations intensify competition. Especially in times when the volume of consumer shopping increases, for example on Black Friday and during the Christmas Holidays. OTTO wants to outsmart their competition by offering their consumers the best deal while  increasing conversions and revenue. The Dynamic Pricing solution enables OTTO to quickly react to market changes and adapt their offers in a competitive but profitable way! By doing this they make sure that they are offering the best price to their customers, and at the same time optimize their revenue.  

Business results

  • 100% increase in turnover­ on the selected products that were dynamically repriced
  • 18% more traffic­ on website
  • 28% more revenue­ via comparison websites
  • 38% increase in website visits­ via comparison websites

Consumer results

  • *Lower* and %more competitive prices%  Lower­ and more competitive prices 

Solution

The first step in this project was predicting the prices of their competitors and adjusting OTTOs pricing in a competitive way. However, consumers are not solely looking at prices, they take other factors into account as well when making their buying decisions. So, the goal is not as simple as just reaching the top position at comparison websites. Therefore, our Dynamic Pricing solution takes other factors that influence consumers decisions into account as well such as delivery times and availability of products. It also predicts the price elasticity for every product and takes this in consideration when deciding if it is necessary to claim the number one position. OTTOs prices are now adjusted on a regular base in such a way that the conversion chances are the highest and revenue is maximized given a positive margin. All of this by making the consumer happy with the best offers possible!

the blocks

market position

Predicts future prices of OTTO's competitors
foto van NAAM

PHILIPP BÖSSEM­ - MANAGER MARKETING & SALES

Building Blocks has a great hands-on mentality and is capable to deliver output that adds true value to their clients' business. Their open and supportive approach makes their statistical analysis understandable to everyone within the organization. In only two weeks the first results were delivered: Brilliant! Nothing is better that exceeding expectations and being positively surprised!