Ever since users got used to airline tickets fluctuating in price, and then Amazon disrupted the e-commerce space putting out its own version of dynamic pricing, this has been a topic. How to adjust the prices of your products timely and reach potential customers before the competition does?
A Bulgarian startup called Dynamic Pricing AI, has an answer to this question. The company has found a way to automate the repricing process of online stores by constantly monitoring demand competition, and inventory, and to then push online ads to relevant customers. “This way we increase the revenue of our clients with 10-30% and reduce the operational costs by 70%,” tells us founder Simeon Lukov.
The company is now entering Startup Collider, the acceleration program of PwC in Warsaw, that aims to promote Central and Eastern European startups, and help them scale up through mentorship and network opportunities.
Catch me if you can
“The idea is to help medium-sized and large online retailers with smart pricing strategies based on their inventory, the way users interact with items in their store, also the way competition reprices,” explains the founder. Once Dynamic Pricing’s clients enter their data and rules into the system, it can automate the process itself. This saves time for manual work, optimized inventory and increases revenue. “We are an active part of the e-retailers business repricing around 15% of a stores portfolio every day,” Lukov elaborates.
And there’s another twist – once the system reprices, it measures how items perform and creates advertising campaigns in Google. “If the system detects that a product can be found at a more affordable price somewhere else, it pauses the ad so it doesn’t waste budget,” he elaborates. The product itself is a SaaS platform that allows clients to actively participate in the process or just observe it, and the pricing is based on the count of competitors that need to be monitored.
A year after its official start the company already works with clients in Bulgaria, Romania, Croatia, Hungary, and Slovenia from different segments. Automotive, toys, cosmetics, sports, DIY and consumer electronics, are the most common cases. Lukov is targeted at online retailers with revenues of average €5М-€500M. On the client portfolio, we see companies like Mr. Bricolage and Sport Depot. With a team of four, the company managed to launch a product and generate €45K within the first six months of operations and is now looking for further development and market expansion entering the PwC Startup Collider in Poland.
Not more than $20M
For the mathematician Simeon Lukov, this is another venture, where he can experiment, build algorithms and solve problems. Before this, together with Nikolay Nedev he co-founded an online consumer electronics store called laptop.bg, and then in 2012 with the same partner he started the pricing intelligence startup Browswave . With Browswave, he and Nedev entered the global entrepreneurial network Endeavor in 2017. “After we built the product I saw another niche аnd created Dynamic Pricing,” tells us Lukov, who is currently not part of Browswave anymore, but still involved with the first venture – laptop.bg. Dynamic Pricing is a completely bootstrapped project that is now looking for a small investment to grow its sales and marketing team.
What Lukov is not looking for is to become a unicorn. What would perfectly suit his plan, in the long run, is the scenario in which a large online retailer acquires the company. Part of the reason is the fact that the data science project the mathematician in him is attracted to, will soon be a rather ready product. The other part of the equation, according to him, is the market ”The retail optimization market is not huge yet. In Europe, there are around 110K online stores with revenues of or above €500M, and competition too, so I can imagine we could be a $20M company but not more than that,” Lukov shares his estimations. Within the niche, there’s of course competition. The most serious competitor is a Dutch company that raised a solid VC round of €3.6M last year. “Our unique selling proposition, however, lies within the combination of repricing and marketing,” he explains.
How far Dynamic Pricing AI can go, especially after graduating the PwC accelerator and will this be enough of a mathematical challenge for founder Simeon Lukov, remains to be seen.