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
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
price gravity is happening to every category!
84%of SKUs dropped price
during L12 months
46%of SKUs remain at a lower price
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
price gravity is happening to every category!
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
84%of SKUs dropped price
during L12 months
46%of SKUs remain at a lower price
HAIRCARE
-7%Category $ Impact
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
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 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
how do you defy price gravity?
MSRP vs. MRP Gap
Strategic Deal Structures
Internal & External Education
Program Participation
3rd Party Selling
Channel Management Pricing & Promotion
Strategy & Support Rationale
Brand and/or Product Differentiation
Exclusive/Right Price Pack Architecture
Supply Chain Management
Gross Pricing & Trade Funding Strategy
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
how do you defy price gravity?
MSRP vs. MRP Gap
Strategic Deal Structures
Internal & External Education
Program Participation
3rd Party Selling
MRP vs. MAP
Channel Management PolicyPricing & Promotion
Policy Scope
Tracking Systems
Enforcement
iMRP
Strategy & Support Rationale
Brand and/or Product Differentiation
Exclusive/Right Price Pack Architecture
Supply Chain Management
Gross Pricing & Trade Funding Strategy
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
how do you defy price gravity?
MSRP vs. MRP Gap
Strategic Deal Structures
Internal & External Education
Program Participation
3rd Party Selling
MRP vs. MAP
Channel Management PolicyPricing & Promotion
Policy Scope
Tracking Systems
Enforcement
iMRP
Strategy & Support Rationale
Brand and/or Product Differentiation
Exclusive SKUs, Sizes and/or Packs
Supply Chain Management
Gross Pricing & Trade Funding Strategy
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:
thank you!