11teamsports, the largest online shop for soccer and team sports in the German-speaking area, automates its prices using the prudsys Realtime Decisioning Engine (prudsys RDE for short). The company has been able to increase revenue, margins and sales at the same time.
prudsys is a specialist in AI applications for retail. In an A/B test at the end of 2017 they convinced 11teamsports to place their trust over the long term in the AI-based prudsys RDE to intelligently control prices.
The prudsys RDE automatically adapts the prices for over 400,000 size variants of 24,000 items to any relevant contextual condition. In real time the AI solution incorporates things like demand, clearance, brand and clicks per size in the online shop. In addition, the prudsys RDE also takes into account the different phases of the product life cycle by using different pricing methods. Compared to manual pricing, 11teamsports has been able to increase margins and sales while simultaneously raising the order rate by 3 %. Thanks to automatic pricing, category management is now left with more time to devote to strategic product range decisions and price management tasks.
The pricing solution calculates the prices of the product range strategically: At the beginning of the life cycle the AI solution optimizes the prices for all items, primarily when it comes to margin and revenue. As it nears the end of the life cycle, the sell-off method takes effect, focussing on gross profit absorption.
The particular challenge: Some products are only part of the range for a few months, other items up to three years. The combination of the two pricing methods allows prudsys to manage the balancing act between targeted sales and attaining the KPIs set by 11teamsports.
Category management specifies which different parameters are incorporated into price calculation. It decides, for example, the range in which the prudsys RDE can calculate prices by setting variable price limits according to product age. The company sees intelligent price control as an important way to keep improving on financial results, remain competitive and solidify its market leadership.
With over 1.5 million customers, 11teamsports is the largest retailer for sporting goods, lifestyle products and team gear in the German-speaking area. The company was founded in 2007 and grows by approximately 20 % every year. The sporting goods retailer sells its products in its online shop as well as in 17 bricks and mortar shops in Germany, Austria and Switzerland.