Addressing Pricing Fundamentals in B2B Online Distribution

The company was a mid-market B2B online distributor of automotive parts. They were on a niche, albeit very competitive market, with about a dozen of similar-size direct competitors.

Industries: B2B E-Commerce, Distribution, Automotive, Private Equity

Services: Pricing for Tactical Decisions, Pricing Dispersion, Leakage Analysis

Data: Size: < 1GB, 10 Tables; Cleanliness: 3 out of 10

Business Challenge

The company was facing severe data challenges, which had prevented it from analyzing its pricing up to that point. While their sales data were of good quality, the business had a hard time tracking their costs down to each transaction.

Shipping costs were particularly challenging to measure for items that could either be drop-shipped or delivered from their distribution centers. We helped the client overcome these challenges by undertaking a data cleaning exercise and encouraging them to use business assumptions where applicable.

What We Did

Solution Development

It was the company’s first pricing analytics initiative, so the engagement focused on improving their Pricing Fundamentals via an in-depth exploration of their transactions over a 12-months period.

Among others, the company needed a way to quickly identify its pricing opportunities, without getting overwhelmed by the complexity of its own business.

Solution Implementation

The solution revolved around the development of detailed Pricing Dashboards, to be given to each Category Lead. The dashboards were tracking all the elements of the price waterfall, from item list price all the way down to pocket margin, by product and by customer.

Results

Once the dashboards were operational, the business acted immediately. Logically, they started with the customers and products with negative pocket margins and worked their way up to eventually reprice all the deals falling below their floor margins.

The company had solid foundations thanks to our project and was ready for the next steps: implementing customer pricing segmentation to develop a value-based discounting schedule.

Real Results. Proven Success.

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