Russian eCommerce Giant OZON.ruDrives Rapid Market Share Growthwith Optimized Dynamic PricingFast-Growing Online Store Uses Revionics Price Optimizationto Drive 50% Revenue Increase within Months

“Our strategy is to win market share in the growing ecommerce market in

Russia. We are ready to invest, but we want to make sure we invest in a

targeted way. Thanks to Revionics, we have enjoyed a solid double digit

like-for-like sales growth in the past rolling 6 months, and – what is even

more important to us – more than 30% increase in the number of net

new buying customers!”

Danny Perekalsky, CEO

A fast-growing online retailer with more than 4,500,000 products in its assortment, OZON.ru is focused on driving revenue growth through superior customer service, low prices, unmatched assortment and rapid delivery – including next-day delivery to 40% of the Russian population. To support its goal of rapid revenue scaling, more targeted competitive pricing and more automated business processes, OZON.ru created a dedicated pricing team and implemented Revionics Price Optimization under Digital Marketing and Pricing Director Konstantin Bayandin. As a result, OZON.ru has seen a dramatic increase in the number of new customers, who in turn increase their spend-ing on the site more rapidly than existing customers, fueling OZON.ru’s path to aggres-sive revenue growth.

HIGHLIGHTS

While the Russian market lagged behind some of its North American and Western European counterparts in terms of embracing on-line commerce, consumer acceptance is beginning to grow rapidly and the growth opportunity is significant. With a history dating to 1998, OZON.ru has a first mover advantage and wants to ensure that it has the scale to support continued robust growth. The company, which has invested very heavily in brand awareness and customer education nationwide, is placing a strategic priority

GOALSon driving top-line revenue growth. The company seeks to drive rapid sales growth to continue to increase its market share while meeting target margins.

Overall OZON.ru had very good brand awareness and a strong commitment to corporate communications. As Russia’s online markets began to pick up pacein adoption, OZON wanted to take acommanding leadership position in the very beginning as online market beginsto take off – build a strong foundation for the future.

Traditionally the company had looked to category managers to set prices. OZON.ru tended to rely heavily on discounting and on company-wide promotional events. While these strategies drew incremental purchasing from existing customers, they were less successful in meeting OZON.ru’s goal of achieving an aggressive price image on the market and attracting significant numbers of first-time buyers.

CHALLENGES OZON.ru had three different systems managing prices for various different categories, which required manual processes and created throughputbottlenecks and price inconsistencies. Additionally the in-house solutions didnot support sophisticated analytics and predictive capabilities.

With its huge and growing assortment, OZON has more than 100 competitors, primarily from specialty e-tailers and omni-channel merchants but also from a few general-merchandise competitors. In order to respond effectively and price competitively across a vast and varied landscape, OZON.ru wanted effective targeted pricing to win new customers and drive aggressive growth. As Konstantin notes, “Over the last couple of years, OZON.ru has created a well-designed, state-of-the art infrastructure for delivery and customer service, giving us a reputation for reliability and quality that is important to our customers. We were now ready plug in the final major cornerstone for sustained market share growth: a sophisti-cated price team utilizing science-based price optimization.”

The company wanted a price optimization approach that would support everyday low pricing, which in turn would attract the new customers in large numbers to meet growth targets. “We want to drive 5-10x

OBJECTIVES revenue growth in the next few years to optimize our market footprint and reach a scale that enables significant purchasing power with key suppliers,” said Konstantin. “And with our extremely fragmented competitive landscape, we wanted to know that we were offering competitive prices on the items that truly matter to customers.”OZON.ru sought price optimization that would give it intelligent insight.

“After evaluating several companies, we chose Revionics due to their clear exper-tise in online and multi-channel retail and the solution’s cutting-edge predictive analytics and pricing simulation capabilities that give us the most effective price plan-ning and management capabilities,” said Danny Perekalsky, CEO of OZON.ru. “As an online retailer, it’s vital that we offer the most precise shopper-centric pricing that is truly responsive to what is happeningin our competitive landscape and withour customers’ ever-evolving onlineshopping needs.”

RESULTS

“After we systematically adjusted our prices earlier this year using Revionics, we saw an increase of more than 30% in new buyers. And because they generally shop more than existing customers, that has driven revenue growth of 50% in just the last few months. With Revionics’ extensive analytics, we can continually measure results to understand where we can drive additional growth with less margin investment to meet our business goals.”

Initially OZON.ru rolled out Revionics Price Optimization in five pilot categories responsible for the majority of OZON.ru sales, and then phased in additional categories in the ensuing months. “As we implemented each category, we migrated those pricing responsibilities from the category managers to the centralized

respect to matching or beating competi-tive prices. At the same time the science-based optimization leverages price elasticity to maximize margin where possible, in order to achieve market share growth at the minimal investment levels. The processes for accepting price recom-mendations within the defined parameters

The team’s strong confidence in Revionics’ price recommen-dations has driven a very high adoption rate of more than 86%. In fact, notes Konstantin, “The only time we don’t accept prices is if we are doing planned promotional activities.”

As the market has taken notice of OZON.ru price advantages, new customers have flocked to the site. “After we systemati-cally adjusted our prices earlier this year using Revionics, we saw an increase of more than 30% in new buyers. And because they generally shop more than existing customers, that has driven revenue growth of 50% in just the last few months. With Revionics’ extensive analytics, we can contin-ually measure results to understand where we can drive additional growth with less margin investment to meet our business goals.”

Today OZON.ru is consistently committed to pricing practic-es that either meet or beat competition, particularly in very active segments such as electronics, and to a business structure that supports rapid growth while delivering a superior customer experience. Konstantin says, “Revionics is a very easy-to-use solution. We have already switched to an almost fully automatic price execution as the team gained confidence in the recommendations. As our next step we are considering Competitive Response Analysis, which we believe will make our competitive strategy even more targeted. Since we generate daily data on 100 com-petitors, we have an incredibly rich data set on which to apply Competitive Response Analysis.”

OZON.ru plans to continue with an even more targeted and therefore more effective investment strategy to meet its revenue and market share goals. “With a centralized system leveraging automation for scale, and with powerful analytics that give us insights into exactly where we can be most high-impact with our pricing, we are well-positioned to execute our business strategy successfully,” says Konstantin.

pricing team,” Konstantin notes. “Thepricing team now manages prices forall the assortment as well as managing discounts.”

Today Revionics generates some 700,000-1,200,000 price recommenda-tions daily for the OZON.ru pricing team. The prices recommendations conform to business rules set by OZON.ru, many with

are increasingly automated, enabling the OZON.ru team to keep up with growing volumes and achieve the key pillars of dynamic pricing: science-based price recommendations, frequency of price changes that meets business and market needs (in this case, daily), and automated acceptance workflows.

RESULTS

About ozon.ru

Founded in 1998, OZON.ru is the

leading online store in Russia.

With more than 750,000 unique

visitors to the site daily and a

customer base of 18 million,

OZON.ru offers Russian retail’s

largest assortment of goods

with more than 4,5 million

items available to shoppers and

delivery across 9 time zones.

Sales are divided between 23

different product categories

including books and media,

software, games and music,

mums and kids products, sports,

health and beauty, home and

deco, antiques, and many others.

Initially OZON.ru rolled out Revionics Price Optimization in five pilot categories responsible for the majority of OZON.ru sales, and then phased in additional categories in the ensuing months. “As we implemented each category, we migrated those pricing responsibilities from the category managers to the centralized

respect to matching or beating competi-tive prices. At the same time the science-based optimization leverages price elasticity to maximize margin where possible, in order to achieve market share growth at the minimal investment levels. The processes for accepting price recom-mendations within the defined parameters

The team’s strong confidence in Revionics’ price recommen-dations has driven a very high adoption rate of more than 86%. In fact, notes Konstantin, “The only time we don’t accept prices is if we are doing planned promotional activities.”

As the market has taken notice of OZON.ru price advantages, new customers have flocked to the site. “After we systemati-cally adjusted our prices earlier this year using Revionics, we saw an increase of more than 30% in new buyers. And because they generally shop more than existing customers, that has driven revenue growth of 50% in just the last few months. With Revionics’ extensive analytics, we can contin-ually measure results to understand where we can drive additional growth with less margin investment to meet our business goals.”

Today OZON.ru is consistently committed to pricing practic-es that either meet or beat competition, particularly in very active segments such as electronics, and to a business structure that supports rapid growth while delivering a superior customer experience. Konstantin says, “Revionics is a very easy-to-use solution. We have already switched to an almost fully automatic price execution as the team gained confidence in the recommendations. As our next step we are considering Competitive Response Analysis, which we believe will make our competitive strategy even more targeted. Since we generate daily data on 100 com-petitors, we have an incredibly rich data set on which to apply Competitive Response Analysis.”

OZON.ru plans to continue with an even more targeted and therefore more effective investment strategy to meet its revenue and market share goals. “With a centralized system leveraging automation for scale, and with powerful analytics that give us insights into exactly where we can be most high-impact with our pricing, we are well-positioned to execute our business strategy successfully,” says Konstantin.

pricing team,” Konstantin notes. “Thepricing team now manages prices forall the assortment as well as managing discounts.”

Today Revionics generates some 700,000-1,200,000 price recommenda-tions daily for the OZON.ru pricing team. The prices recommendations conform to business rules set by OZON.ru, many with

are increasingly automated, enabling the OZON.ru team to keep up with growing volumes and achieve the key pillars of dynamic pricing: science-based price recommendations, frequency of price changes that meets business and market needs (in this case, daily), and automated acceptance workflows.

Revionics is a global leader in profit optimization services and solutions. Our unparalleled analytics and science serve as the backbone of omni-channel retailing to help performance-driven retailers execute profitable pricing, promotion, markdown, and space decisions with predictable business outcomes. The result: achieve speed to value and ROI, improve margins, drive top-line sales and respond faster with precision.

Revionics’ SaaS-based model integrates analytics, technology and services to deliver an unmatched advantage for retailers – Competitive Insights, Price Suite, Promotion Suite, Markdown Suite, and Space and Assortment Suite – all from a predictive platform to drive long-term growth.

Trusted by some of the most profitable retail brands, Revionics optimizes across 18+ million products and more than 2.6 billion item/store combinations are modeled weekly.

Learn more at www.revionics.com