Price optimization

Price is one of the most vulnerable parts of any online venture. Every store is trying hard to find that sweet spot where the price is both profitable and emphasizes the value of the product. Instead of going the hard way, Frisco, the Polish market e-grocery giant, decided to approach this in a smart way by leveraging the power of machine learning.

Our goal was to increase sales without margin decrease for some categories and to increase margin without sales decrease of specified products in other categories, according to Frisco’s strategy. We met this goal by adapting two concepts: price elasticity and market basket penetration. To investigate the relationship between the price change and market basket penetration for each product, we used a probabilistic approach. It allowed us to use different levels of price sensitivity, introduce expert knowledge into the equation, and gave the distribution of likely values. During the whole process, we gain a deeper understanding of the e-grocery industry, which we can transfer to other companies.


Industry: E-grocery
Technologies: Python

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22 Nov 2022