This Israeli company introduces machine learning to dynamic prices, helping sellers maximize profits
In many ways, the online retail marketplace is still in its early stages as businesses try to stay competitive and turn a profit. This mission becomes increasingly more difficult when merchants are selling the same products on the same platforms like Amazon or eBay.
In this type of market, consumers make decisions based on factors such as price, ease of working with the seller, and other factors that have very little to do with the product they are buying.
This is especially true when it comes to smaller companies that are facing off against much bigger competitors that have better resources for analyzing the market and adjusting prices to bring in the best possible profits.
Feedvisor has decided to enter this gap by offering retailers the tools they need to apply a scientific approach to their pricing. They use machine learning to produce algorithms that analyze the market by watching competitors and taking in other important factors to optimize prices.
CEO Victor Rosenman founded this Tel Aviv-based company in 2011. At their start, they succeeded in raising a $4 million seed round from angel investors like the well known Levinberg brothers Amiram and Joshua of Gilat Satellites. Then in August of 2014, they closed their Series A with $6 million led by Square Peg Capital out of Australia, who recently invested in Fiverr.
Feedvisor currently has a team of 70, managing an impressive $1-2 billion in customer transactions for their roughly 1,000 clients, who are based primarily in the U.S. and Europe.
Standing out in a crowded marketplace
Running a successful retail operation, whether a brick and mortar or online shop, requires managing a wide range of moving parts and making far reaching decisions. Topping that list are the tactical calls on meeting market conditions in real-time with dynamic price management. Then there are the key inventory decisions over which products to buy, replenish, or liquidate that fall into the more strategic category.
While Feedvisor has solutions for both of these challenges, it is their answer to price optimization that is really interesting. Their flagship product is called Algorithmic Repricing. It serves as a tactical tool for managing both the monitoring and assessment of prices, and finally repricing of the items on sale.
According to the company, their algorithm is able to learn what works across different marketplace platforms. This means inputting not only the listed prices but also the other buying experience elements to offer a more accurate price.
“If you think about the online marketplace, there are a number of places where you can buy the same product. The difference is the buying experience,” Rosenman explains to Geektime. “Their return policy, customer service, etc are all taken into account. Part of the science that we have developed is to help retailers match the price to the level of customer experience that they provide. A better experience is worth more and vice versa.”
Some of these other parameters include things like ratings, shipping speeds, customer reviews, rate of returns, and refunds. When combined and processed through, it is able to assess the overall experience level better and what the appropriate price point is for that seller.
They also have their strategic revenue intelligence product, which gives data analytic overviews to help companies understand where their business is heading and how to plan their future.
How do they stack up to the competition?
Feedvisor seems to have started a new field of services. Taking dynamic pricing to the next level with smarter automation, they are starting to face off against some steep competition. The Silicon Valley-based Boomerang Commerce is another company that seems to provide a similar set of services and brings with it a team of ex-Amazon experts and others that understand the need for better pricing solutions.
The other set of competitors are those like ChannelAdvisor that work in developing additional sales channels for their clients, hoping to increase revenues by making more streams. There are others who focus more on providing better inventory management, which is an area that Feedvisor also has a foot in. While there is some crossover between the latter on the content of their services, Feedvisor is competing with both of these types of companies for business.
Feedvisor comes to the table with a holistic solution that I find very interesting. While other companies are already offering price monitoring and reporting, this team has developed an automated solution that can help smaller retailers level the playing field against some of the giants.
In particular, I like that they directly acknowledge that not all marketplaces are equal, especially when they are selling the same product. Standing out in a crowded place like Amazon while staying profitable is exceedingly difficult. Offering an honest price — what am I really going to pay based on my experience with this seller and their service — is refreshing. This might be premature, but I would love to see this force out some of the bad actors who will see profits fall when they are beat out by companies that can make better margins while attracting more business. That’s the dream at least.
In the meantime, this is a good start. As more companies become proficient at integrating machine learning into the e-commerce sector, they will likely face increased competition, but hey, I’m sure they’re already have an algorithm working on how to stay on top.