price gravity · price gravity defying. pricing is at the sole discretion of the retailer. but you...

price gravityDEFYING

pricingis at the sole discretion of

the retailer.

butyou are NOT powerless against

price gravity.

the following presentationis for information purposes only.

how you act on this informationis at your sole discretion.

what is price gravity?

the “natural” force of competition at retail that causes prices to fall in the marketplace

most common manufacturer responses

We’re actively implementing the strategies to counter

Price Gravity.

Yes, Price Gravity has become an increasing issue, and we

need to do something about it. What are the best practices?

No, we don’t have any price problems.

Yeah…this doesn’t apply to our category.

ACTIVE AWARE UNAWARE** DELUSIONAL**

**scenarios with stronger immunity to price gravity

• You only sell direct via 1 Retailer

• You only sell direct via your own D2C site

• You only sell via one or a few select 3rd Party sellers

• Your retailers are not on anyone’s radar

• Your products are very slow sellers and not being competitively tracked or benchmarked

• Your retailers sell your products behind gated site platforms

• Your retailers don’t promote on price

• Your product category is just emerging online

• You’ve never sold your products to closeout or on clearance

• You’re already implementing all of the industry’s best practices to prevent and resolve pricing issues in the marketplace

No Competition No Visibility No Activity No Tolerance

LUCK

so how big an issue is

price gravity?

price transparency is crystal clear to the industry

100 100

104.5

110.8

103

110.3

104.3

117.4

106.3104.6

90

95

100

105

110

115

120

Retailer Price Index to Amazon Average21,000 SKUs across Beauty, Grocery & Household Supplies

AVERAGE AVERAGE

source: Profitero Online Price Survey Sept 1, 2017 – Nov 30, 2017

price transparency is crystalizing to consumers

source: Basket | Data from Feb. 21-28. Groceries are name brand except for 365

$50.63 $52.27

$57.80

$60.31$62.03

$67.77

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

Cost for Basket of 15 Common ItemsAvg Price for 6 Metro Areas: Chicago, Dallas, New York, San Francisco, Seattle and D.C.

REGIONAL GROCERS

price gravity is happening to every category!

84%of SKUs dropped price

during L12 months

Icon Usage Credit: Soda by b farias; Pretzel by Baboon designs; HAIR DOOdles by LSE Designs; Diaper by Baboon designs; Pet food by Yazmin Alanis; Capsule by andriwidodo, Toilet Paper by parkjisun; Toothbrush by Delwar Hossain; Razor by iconoci; Detergent by Luis Prado



during L12 months

46%of SKUs remain at a lower price



PET FOOD

BABY CARE

HEALTH SUPPLEMENTS

BEVERAGES

SNACKS

ORALCARE

LAUNDRY

PAPER

SHAVING

-11% -19%

-17%-19%

-16%-16%

-19% -17%

-18%-19%-17%

Average Price Drop


during L12 months

46%of SKUs remain at a lower price

HAIRCARE

-7%Category $ Impact


Your Margin is Our Opportunity.

- Jeff Bezos

Your Unmanaged Margin is Our Ultimatum.

- Spirit of Jeff Bezos

what drivesprice gravity?

the smile of MORDOR

jeff’s vision

GROWTH

Selection

CustomerExperience

Traffic

Sellers

Lower Cost Structure

LowerPrices

price is critical to their unstoppable

flywheel model

of eCommerce market share dominated by Amazon.com40%+

of eCommerce growth over next 3 years generated by Amazon.com

53%+

Source: Planet Retail RNG

what drives price gravity?

1Competition and

online marketplace price transparency

2 Retailers’

competitive & auto price-matching policies

3 Tactless retailer

and manufacturer promotional offers

4Retailer and manufacturerclearance/closeout selling

and retail arbitrage

5Absence of manufacturer

MRP/MAP policies

6Weakness of manufacturer

MRP/MAP policies

7Inability to enforce MRP/MAP policies

8Absence of manufacturer channel/brand strategy

9Absence of manufacturer

brand/channel differentiation

10

TIME

how doesprice gravity

happen?

$4.99

how does price gravity happen?

$4.99

$2.99

the trigger

$4.99

$2.99

the follow

$2.99

$2.99

the domino effect

$2.99 $2.99

$4.99

the dreaded back-follow

$2.99 $2.99

x 1000’s of SKUs=

#HoustonWeHaveAProblem

how do you

DEFYprice gravity?

how do you defy price gravity?

Channel Management

Strategy & Support Rationale

Brand and/or Product Differentiation

Exclusive/Right Price Pack Architecture

Supply Chain Management

Gross Pricing & Trade Funding Strategy

portfolio differentiation example: Bai

portfolio differentiation example: Warehouse Skateboards (3P Seller)


MSRP vs. MRP Gap

Strategic Deal Structures

Internal & External Education

Program Participation

3rd Party Selling

Channel Management Pricing & Promotion






strategic deal structures that don’t trigger price-matching (yet)dollar threshold deals

quantity threshold deals

Amazon VPCs & Hidden VPCs

first-time order offers

cause offers

strategic program exclusions…

from first mover… to full adoption…


MSRP vs. MRP Gap




3rd Party Selling

MRP vs. MAP

Channel Management PolicyPricing & Promotion

Policy Scope

Tracking Systems

Enforcement

iMRP






why is a policy so critical?

In US and Canada, your MAP/MRP Policy is your only legally-approved authority to protect your in-market pricing.

Without one, you are at the mercy of the free marketplace with no resolutions available and will suffer the unfortunate consequences over time.

MRP vs. MAP

Policy

Policy Scope

Tracking Systems

Enforcement

iMRP

why is MRP stronger than MAP?

MRP vs. MAP

Policy

Policy Scope

Tracking Systems

Enforcement

iMRP

PRICE-MATCHED IN-CART

ADVERTISED PRICE = OK

how are policies typically enforced?

MRP vs. MAP

Policy

Policy Scope

Tracking Systems

Enforcement

iMRP

1. delist products Only strategic in certain scenarios, otherwise tends to be more

detrimental to your business than helpful Effective in sending a strong message about dedication to

online MAP adherence or cutting of sources of goods that end up in the grey market

2. withhold trade spend Connecting online MAP adherence to trade spend represents

most effective strategy for implementing and enforcing MAP policies online

Best-in-class MAP policies explicitly state withheld trade funds

resolution servicestracking services


MSRP vs. MRP Gap




3rd Party Selling

MRP vs. MAP

Channel Management PolicyPricing & Promotion

Policy Scope

Tracking Systems

Enforcement

iMRP



Exclusive SKUs, Sizes and/or Packs



if you want toDEFY price gravity,

you have the power

thank you!

you’re GRRREAT!

select retailers:

select brands:

Chris PerryThe GENERATOR empowering brands to catalyze eCommerce as their #1 competitive advantage to grow, win and lead in today's omni-channel marketplace.

From Reckitt Benckiser to WellPet over 7+ years, he has generated $350MM+ in profitable eCommercerevenue growth, 1000's of bps in sustainable online share leadership and collaborative joint partnerships with 25+ eRetailers. Now at Kellogg’s, he heads up eCommerce for North America to help the Kellogg’s brand family successfully navigate this evolving marketplace.

let’s connect:

[email protected]

thank you!

mailto:[email protected]

price gravity · price gravity defying. pricing is at the sole discretion of the retailer. but you...

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