Learn from Fast Growing 7-8 Figure Online Retailers and eCommerce Experts

EPISODE 436 62 mins

How to Make Better Pricing Decisions as an eCommerce Operator → Aaron Cowper

About the guests

Aaron Cowper

Kunle Campbell

Aaron Cowper is the visionary founder of ShopGrok, a firm that specializes in pioneering pricing strategy solutions for the retail sector. With an extensive background in strategy consulting, including significant roles at PwC and McKinsey, Aaron has deep expertise in pricing dynamics and market analysis. Through ShopGrok, he leverages this knowledge to empower eCommerce businesses with sophisticated pricing strategies, fostering growth and competitive advantage in a rapidly evolving digital marketplace.

In today’s episode of the 2X eCommerce Podcast, we dive into the nuanced world of eCommerce pricing strategies with Aaron Cowper, the mastermind behind ShopGrok. Host Kunle Campbell engages Aaron in a deep discussion on his evolution from a strategy consultant for global giants like PwC and McKinsey to founding ShopGrok, a pivotal force in shaping retail pricing strategies. Aaron’s journey from consulting to entrepreneurship showcases a dedicated pursuit of optimizing pricing strategies to bolster eCommerce growth and market presence.

Aaron delves into his initial forays into the pricing arena, highlighting his strategic moves and the insights gained from managing pricing at Woolworths, Australia’s retail behemoth, during its crucial turnaround phase. This conversation unravels the complexity of pricing in the retail sector, emphasizing the dynamic interplay between online flexibility and brick-and-mortar challenges.

A key moment unfolds as Aaron discusses ShopGrok’s mission to democratize advanced pricing strategies for eCommerce businesses, spotlighting the critical role of data-driven decision-making in today’s competitive landscape. Through detailed examples and personal anecdotes, Aaron illustrates the transformative impact of effective pricing strategies on customer perception, market positioning, and long-term business viability.

Listeners are invited to journey with Aaron through the intricacies of eCommerce pricing, uncovering the strategic frameworks that empower businesses to navigate market complexities, optimize profitability, and enhance customer engagement. This episode is an essential listen for eCommerce entrepreneurs, marketing professionals, and anyone interested in the art and science of pricing strategy.

Covered Topics:

  • Founding ShopGrok: Aaron shares the inspiration behind creating ShopGrok and his transition from a high-profile consulting career to entrepreneurship.
  • Pricing Strategy Evolution: Discussion on how eCommerce has transformed traditional pricing strategies and the unique advantages online platforms offer.
  • Dynamic Pricing and Market Adaptability: Insights into the adoption of dynamic pricing models and how they can drive eCommerce success.
  • Framework for Effective Pricing: Aaron outlines strategic frameworks that eCommerce businesses can utilize to establish competitive pricing models.
  • Leveraging Data for Pricing Decisions: The importance of data analytics in understanding market trends, consumer behavior, and competitive landscapes for pricing optimization.
  • Personalization and Customer Loyalty: Exploration of how personalized pricing and loyalty programs can enhance customer retention and value.
  • ShopGrok’s Impact on Retailers: Aaron reflects on ShopGrok’s role in helping retailers, from startups to giants, refine their pricing strategies for the digital age.


  • The transition from traditional to digital has necessitated a more agile and data-driven approach to pricing.
  • Dynamic pricing strategies are crucial for eCommerce businesses to remain competitive and responsive to market changes.
  • Effective pricing is not just about adjusting costs but understanding customer value and market positioning.
  • Data analytics and customer insights are indispensable tools for developing personalized pricing models that drive loyalty and sales.

Useful Links


🔔 Book Announcement:

📈 ‘E-Commerce Growth Strategy’ by Kunle Campbell

Exciting news for our listeners! Kunle Campbell, your host and e-commerce expert, has just released his new book: ‘E-Commercer Growth Strategy.’ This essential guide is packed with strategies for attracting shoppers, building community, and retaining customers in the e-comerce space. Drawing on insights from the 2X eCommerce podcast and Kunle’s extensive experience, this book is a must-read for anyone in the e-commerce industry. Elevate your e-commerce game today!

Available now on Amazon.

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Kunle Campbell (00:01.038)
Aaron, a warm welcome to the 2x E -Commerce podcast.

Aaron Cowper (ShopGrok) (00:05.486)
Thanks. Thanks, good night. Great to be here.

Kunle Campbell (00:08.045)
Fantastic. For everybody really excited to have this conversation with you and let’s start off with you, your back story. You currently run and operate ShopGrok. Where did it and how did it all start?

Aaron Cowper (ShopGrok) (00:26.798)
Yeah, sure. So yeah, ShopClock’s been around for almost six years now. But prior to that, I’ve been working in pricing and in strategy consulting. So I started my career at PwC in Sydney and spent a few years there, then went and did an MBA in Spain. And from there, went to work for McKinsey & Company in Singapore. And that’s probably where I started really delving into the pricing space. I was working in

in pricing across retail, but also it’s a non -retail segments at the time. But retail is kind of where I built up some expertise and decided to start to push my career in that direction. And so then my wife and I had our first child in Singapore and we eventually moved back. And I started with Australia’s largest retailer, which is called Woolworths, the supermarket. I was the head of price strategy and price analytics there for a few years. And that was interesting.

time as well because it was 2015 to 2017. It was a turnaround phase for that company at the time we were losing share to our largest competitor at the time and price was a really big factor in kind of trying to kind of get that turnaround happening. So it was a really interesting learning ground at the time. It was a big change over in management, new CEO, new management team, quite a big company. So it was interesting to be a part of that.

But after the MBA, I decided I wanted to do something entrepreneurial and finally took the plunge early 2018 and started ShopCroc. And essentially I’m doing similar things to what I was doing in my prior kind of roles, but for other retailers and other brands. So we’re bootstrapped to date and we have been very much focused on the Australia and New Zealand markets.

But I’m calling in today from Madrid, Spain. So I’m here in Europe. I’ve been here for a couple of weeks now. And the idea is to start to expand our presence here in Europe and then potentially in the US later this year. So I’m really excited to do that while I’m here.

Kunle Campbell (02:34.734)
We’re excited to have you in Europe. So warm welcome again. Warm welcome again. Someone asked me this question a few months ago and the question was, who’s in charge of pricing? Is it marketing or is it finance?

Aaron Cowper (ShopGrok) (02:51.534)
Yeah, it’s one of those questions where if you talk to 10 different people in retail, even in similar verticals within retail, you’ll get a different answer. So, and, you know, we thought within all of our clients, our customers, you know, our stakeholders are different and there’s not a way to same roles. And so I think it’s interesting. Like it depends on the culture of the organization, obviously the size of the organization and sort of how, how they differentiate if, you know, some retailers prices.

really part of their core strategy. There might be a price leader in the market. Other times, you know, that they’re a brand -driven organization or they’re very, they have, you know, other strong elements and price might be less of a top priority. So just tends to differ. But the larger retailers, you know, they might have a pricing function and that own, in inverted commas, own pricing. But even then, you know, that when I was in my role at Woolworths,

I was the head of price strategy, but you certainly wouldn’t say that I owned pricing. The buying team, the category managers are really the ones who tend to own, you know, they set the prices and they know the category. And so if there is a pricing function that they tend to provide support, you know, as far as analysis and data and insights. And it usually does come down to the buyer, whoever’s managing the category to really kind of drive, use price as a lever to drive.

sales growth and profitability at the end of the day.

Kunle Campbell (04:22.766)
Yes. Majority of our listeners run DTC operations or Amazon stores. So they’re, they’re in the SMB space and yeah, it’s, it’s, it’s quite interesting. They set the price initially, you know, the founder was set the price initially, and then it could be a market in play, particularly if they’ve built out, you know, brand, you know, equity.

And then if finance is not happy about it in terms of profitability, it’s an issue. So it’s very, very interesting nonetheless.

Aaron Cowper (ShopGrok) (04:56.046)
Yeah, we find that there often tends to be a bit of healthy tension in businesses where there is, especially businesses that have an offline and an online presence. There might be a traditional brick and mortar part of the business that are trying to drive profitability, but then the e -comm team are trying to drive visitation and click through and sales online. And they want to be really price competitive because it’s a lot more transparent than customers online. So…

We often find this tension between the team, the performance marketing team or the Ecom team are really trying to drive price competitiveness and volume. And perhaps the category managers or maybe the store teams are wanting to drive margins. So there often tends to be internal conflict as to where exactly sets the price at the end of the day.

Kunle Campbell (05:50.798)
Speaking of brick and mortar and digital spaces, where is there more price agility in e -commerce, you know, in general, given the fact that the cost to swap, you know, or to check alternatives is much, the barriers rather, is much lower in comparison to, hey, I’m in a B &Q today and I’m not even going to bother to go to the home base in the other side of town.

to compare prices for you know toolbox I want to buy or I could just pick my phone I guess and check prices against Amazon. What how’s how’s it playing house pricing playing out to the consumer that’s either in an aisle or you know a home.

Aaron Cowper (ShopGrok) (06:33.998)

Aaron Cowper (ShopGrok) (06:39.214)
Yeah, so it’s very interesting, definitely a very interesting part of strategy. If you’ve got an offline presence, it does limit you in some ways because these days you can’t really run, you know, there’s ways to do it, but it’s hard to run different pricing online to in -store unless you’re kind of running online only deals and things like that. Because a lot of, I would say, you know, I think the latest research that at least 70, 80 % of…

Kunle Campbell (06:39.598)
trying to make a decision.

Aaron Cowper (ShopGrok) (07:06.83)
in -store purchases begin with some sort of online discovery. So people are checking price online then going into store. And if the price isn’t the same, then you’re going to have an issue with trust. So yeah, I definitely think that, you know, field play e -com retailers have a lot more flexibility as far as driving, you know, changes in price multiple times a day, for example, or just really being able to quickly change prices and in -store brick and mortar traditional retailers.

there’s actually a significant cost to being able to change the price tickets, physical price tickets that are in stores. We’re seeing a lot of electronic shelving, shelf tickets happening these days. So it’s getting a little bit lower cost to be able to change prices in store, but it definitely is a substantial cost if you’re wanting to change price in store. So it makes the strategy a little different. And then, yeah, we are seeing like,

Kunle Campbell (08:02.158)

Aaron Cowper (ShopGrok) (08:05.23)
different strategies employed to try to combat that. So, you know, a retailer with an in -store presence that’s trying to compete with the likes of Amazon or other pure play e -com retailers, they may have, you know, some sort of online only range, for example, or they might have just online only discounts that you might see sort of below the line marketing happening. So, you know, if you’ve got a reasonably good personalization or rewards.

scheme, they might be able to drive some rewards or discounts below the line through EDMs or other marketing. Or in some cases, we’re seeing retailers maybe split off and have an entirely separate, sort of what would seem to the customer to be an entirely separate company operate really online as part of the same business, same group of businesses. So, yeah.

Kunle Campbell (09:00.27)
So spin off. Okay. So on this show, yeah. So on this show, we’re onside e -commerce, as you can imagine, pure play e -commerce, you know, businesses. So what tips would you, what frameworks really, we speak frameworks in this pod also. What frameworks, what pricing frameworks would you give pure play e -commerce, you know, businesses?

Aaron Cowper (ShopGrok) (09:04.494)
So it’s definitely an interesting space.

Kunle Campbell (09:28.302)
to thrive in marketplaces in which they operate.

Aaron Cowper (ShopGrok) (09:35.502)
Yeah, I’d say you definitely have the advantage of, as I said, being more flexible around pricing and being able to make quick moves and adjust in a quicker way. So I would say that the starting point generally for any kind of price strategy work is to give yourself some transparency. So typically you would sort of benchmark your range and your pricing to the market and just see where you are. So you might find out that…

you know, half your range is really uncompetitive and you need to do something about price. You might find that you’re actually under pricing in some cases and leaving some money on the table. So the first step is usually just to benchmark yourself and see where you are, how often that you’re competitive, how often your competitors are cheaper than you and just give yourself some sort of starting point. And then the next step is usually to figure out, you know, what differentiates your brand or your business and also,

what role each product or each group of products within your range plays within your overall strategy. So you might have a set of products that drive a lot of traffic to your site. So brands that are sought out by customers, the Apple iPhone as an example, that…

you know, we’ll drive traffic to your site, but they aren’t necessarily going to drive much margin. In fact, they may even be a loss leader in some cases, but you need some of those products in your range potentially to drive the traffic to the site. But then you’ll have other products that perhaps it’s your own brand, perhaps it’s an exclusive product that you have that will drive margin because it’s the only place, you know, your store is the only place that customers can get that product. So you want to be able to drive enough.

customers to your store and then hopefully have them fill their basket with items that will eventually drive a reasonable margin across the entire basket. So making sure you know what the role is of each product in your range and then setting up a strategy around pricing and promotion to try to take advantage of that role. So, and then there’s different ways to do that, different types of approaches, whether it’s, you know, a newer EDLP strategy.

Aaron Cowper (ShopGrok) (11:53.294)
which doesn’t work so much in most categories online versus a very high low strategy where you’re kind of, you’re starting at a higher price, you’re doing really deep discounts and usually something in the middle tends to work best where your everyday price is sort of fairly competitive and then you’re using targeted promotions to try to drive traffic in ways that sort of give you an overall uplift in volume.

Kunle Campbell (12:21.262)
Absolutely, absolutely. So there’s the the external benchmarking starts with external benchmarking, which which can be tough in terms of like matching where you’re at against, you know, competitors, essentially, and then differentiating your brand and product line, knowing your point of differentiation. So from product line standpoint, what are your loss leaders? What are your high margin products?

And then once you’ve identified that, that information sort of equips you towards setting a prize and promotion strategy for each of the SKUs, which, yeah, okay. So in order for you to set the strategy, you need to benchmark and then different. Sorry, go for it.

Aaron Cowper (ShopGrok) (12:57.998)
Yeah, so you.

Aaron Cowper (ShopGrok) (13:02.222)
Yeah, absolutely. So what we often do is set up some tiers for the product range at each of our customers. And so you might have, it’s usually only, you know, it might be 50 or a hundred SKUs that really drive, you know, 70, 80 % of your traffic and all sales. And so it tends to be those small number of really high value products where you do need to be really sharp on price and really have a strategy around those.

And then you might have a second tier or third tier of products where price is actually less, you know, either it’s less transparent to the customer or less important. So it might be products that a customer needs to buy and they’ll just put it in their basket because they’ve come to your site for something else. So trying to understand, you know, which tier each product sits in and then set price accordingly. So those tier one products, you probably need to be tracking the market and being price competitive and kind of managing price.

very tactically, whereas the second and third tier products, you’re probably optimizing for margin and trying to remain within a band of competitiveness from the price point of view, but not necessarily chasing the market on every single price move.

Kunle Campbell (14:16.27)
Interesting, very very interesting. What is the, where is the place space for personalization and dynamic pricing in particularly for e -commerce, you know, businesses?

Aaron Cowper (ShopGrok) (14:33.39)
Yeah, I think it’s the holy grail really being able to personalise pricing according to individual customers. There are lots of steps to get there. I think the first step is really having some sort of reward type program that allows you to collect some information about your customers to be able to know a bit about them and to be able to tailor their experience accordingly.

And obviously you need to create incentives for them to really want to sign up to that type of program, whether it’s discounts or gifts or rewards or cashbacks, et cetera, lots of different ways to do it. But at the end of the day, if you can develop a program where more than half your sales is sold by two customers who are in your rewards program, then…

From there, you have a lot more information to then be able to tailor pricing promotions and other marketing to them on an ongoing basis. So, yeah, and price is probably just one part of that. But if you can get there, then, yeah, you can definitely sort of figure out based on spend patterns, you know, who are your most valuable customers, you know, reward them accordingly. Who are the customers that perhaps…

you are buying one category and you want to expand into other categories. There’s lots of different kind of ways you can then segment that customer base and kind of drive different pricing or different promotions according to their plans of purchase in the past.

Kunle Campbell (16:10.062)
I agree with you. I think it’s actually more impactful to get a really high performing loyalty program first, before you start to think about dynamic real time dynamic pricing. It just yeah, it…

Aaron Cowper (ShopGrok) (16:26.734)
Absolutely, yeah, I think these days it’s almost, you know, part of the course you really need to have, you need to know more about your customers, you know, to be able to build a strong retail offer these days. Gone are the days where you can sort of just place customers on a site and expect customers to come and buy them, you know, or if you do that, you know, you’re not going to be very profitable long term, you know, if the only lever you have is price, then it’s not going to work unless…

Kunle Campbell (16:35.086)

Yeah, yeah.

Aaron Cowper (ShopGrok) (16:55.886)
are the price leader, which is unlikely if you’re in SMB trying to break into a competitive market. So yeah, I think a really strong rewards program is a fantastic way to drive loyalty and lock in, especially these days customers with cost of living prices still on the mines. Inflation has peaked around the world, but customers still have cost of living top of mind.

price is still a very big factor at the moment and customers are willing to shop around perhaps more than they would at other parts of the cycle. So, the more you can incentivize customers to buy more of their basket with you, the better your workout.

Kunle Campbell (17:40.046)
The better. You’re right. Right. Right. And then Google shopping in my opinion is the biggest shopping comparison website or platform rather marketplace platform on earth as in forget AdWords just due to the fact that you fulfill by yourself. It’s seller fulfilled rather than you know marketplace fulfilled.

How are you seeing pricing play out in Google shopping, particularly if you see the same products from different retailers but at different prices in real time in a search result?

Aaron Cowper (ShopGrok) (18:18.158)
Yeah, I think it’s really one of those parts of the strategy that need to be looked at for that, especially that top tier of products I talked about. You know, the first protocol for most customers these days, type the product into Google, go to pick the shopping button and then see what’s there and then click compare. So, you know, that, you know, I know that’s the way I shop a lot of the time and I’m sure, you know, there’s a majority of customers that now do that. So, but if you can, you know, be at the top of the list or close to the top of the list.

a lot of the time, you know, you’re more likely to start to drive brand awareness and customers will come to your site. Either they’ll go straight to your site if they have a great experience or they might click to your site to buy the KBI product, the known value item. And then they’ll follow there, they’ll buy other products. So it definitely, you know, I think is a must have these days to at least have a presence on Google Merchant Feed.

but also to optimize your spend on that channel. And so we do that a little bit with some of our customers, that the easiest way to do it, well, probably the highest ROI for the least effort is simply to make sure you, if you have say a daily spend, for example, if you’re a small retailer, you have maybe a daily quota of spend that you want to spend on Google Merchant Feed, you can optimize to.

exclude things that might be uncompetitive price -wise on a particular day and you might want to up -weight some products that are cheaper than your competition on a particular day. So that’s a starting point, an easy way for you to peek out some ROI on your spend through that channel. It’s just to make sure that the products that customers do see that do pop up, you’re competitive on those because that’ll help drive price perception over time. If the customer sees your name,

and you’re always second, third, fourth on the list, then over time, they’re going to start to get this perception that you’re not price competitive. So you kind of want to be able to drive that price perception on some of the core products to kind of have customers have that perception across your whole range.

Kunle Campbell (20:27.566)
Yeah, and for a digital first brand, you’re more nimble to change prices in real time to be more competitive in comparison to a brick and mortar or a nominee channel retailer that needs to sort of cascade those prices down to stores, right?

Aaron Cowper (ShopGrok) (20:44.59)
Absolutely, yeah, yeah. So yeah, it’s definitely, you know, a big, big part of an e -commerce market is kind of arsenal these days, I suppose.

Kunle Campbell (20:57.774)
Interesting, interesting. Are you a fan of site wide sales? Or yeah, site wide sales, like 20 % off the entire, you know, store range.

Aaron Cowper (ShopGrok) (21:04.334)

Yeah, I think anything that’s really broad -based like that, unless it’s really well marketed and drives a lot of traffic to like, you know, incremental traffic to the store that wouldn’t already have come to the store through, you know, through individual discounts and promotions, then it will always, you know, it won’t be an efficient promotion, I guess. So you might get a lift, you know, usually we’ll get some sort of lift.

But is that lift really incremental, you know, when you take into account the loss in margin from doing that discount and you’d be losing margin on products that customers would afford anyway, perhaps at a lesser discount. So, you know, it can be useful if you really want to drive short -term gains. But I think you generally will find that segmenting your or planning your promotions,

in a more nuanced way and being more targeted and more thoughtful about exactly what you’re trying to, who you’re trying to target with the promotion and what kind of uplift you’re expecting, then you’ll generally see more long -term benefit. So whether that’s doing brand -based promotions that perhaps you can have your brand partners, your suppliers contribute to, or whether that’s actually going product by product and being able to…

promote the products that actually matter to customers and drive incremental uplift that way tends to have a better uplift. I think the kind of broad brush promotion that sometimes does work a little better is like a spend stretch type promotion where, you know, whether it’s an individual product, you know, buy two get one free, but, or it’s spend a hundred dollars and get $20 extra.

Aaron Cowper (ShopGrok) (23:05.774)
That type of promotion, you know, does have, you know, often does have the effect of expanding your basket and kind of customers putting extra things in there that they may not have already done so. So, you know, if you are, you know, looking to use, you know, a broad brush tactic that is easy to implement, sometimes a spend stretch is a better way to go.

Kunle Campbell (23:30.222)
How would you describe Apple’s pricing strategy?

Aaron Cowper (ShopGrok) (23:35.598)
I think Apple is one of those companies where it’s a relatively easy strategy to implement because it’s similar to being the price leader in the opposite end of the spectrum. You’re a really big retailer and you have really strong buying power. You can be the price leader. In Apple’s case, they have such a strong brand that they can almost set the price to be whatever they like and I’m sure that they do.

some analysis, ill -ethicity analysis on, if we set the price here, what’s the impact of sales? If we set the price there, what’s the impact of sales? And because they are the benchmark, they don’t really need to, I assume that they don’t really need to look too much at the competition. They probably do benchmark themselves to the Samsung’s of the world, but I would assume that they’re more interested in trying to optimize for the volume and…

and try to set the price as high as they can. But, you know, it’s still trying to get customers to upgrade from the last version of the product, which they seem to do pretty well at. But it’s interesting though that, you know, the improvements, I suppose, from version to version of the iPhone and now the products used to be, you know, a lot bigger. And so the incremental benefit of…

of the next version versus the prior one, there seems to be some sort of diminishing return there. So I don’t know if that will have an impact and play out over the next couple of years, but they certainly seem to be able to come up with ways to still drive customers to want to buy the next version every time.

Kunle Campbell (25:24.974)
You mentioned testing elasticity, like price elasticity, economics 101. How would you suggest e -commerce, you know, retailers or e -commerce businesses test that elasticity of pricing before they sort of settle down on a price that really works for both profitability and volume, volume targets?

Aaron Cowper (ShopGrok) (25:51.15)
Yeah, so it’s not always easy to measure for every type of product. So I would suggest first trying on products that you have a reasonably consistent baseline on. So a product that you maybe sell enough units per week that you have a fairly consistent baseline. If you look at the average over time, if you exclude promotional periods, the baseline looks relatively consistent or at least in line with your overall growth of your business.

And so from there, you’ve got a baseline and average sales per week, volume per week sold of that product. And then what you could do is do some A -B testing of promotions. So the next time you’re running a promotion, if you’re running a 20 % off or a 10 % off, obviously your price goes down and you expect to see an incremental uplift in volume. For a lot of products, you’ll see it’ll be…

very obvious price goes down, volume goes up. And in those cases, it’s relatively easy to measure the elasticity and then to predict in the future, if you run a deeper discount, you should get an incrementally bigger uplift and therefore you can use that information going forward. For other products, it’s a lot more gray. There’s obviously usually a lot of noise in there. So, and…

usually products with a higher into purchase interval that you don’t have, you might not have a lot of sales every week or they’re a bit patchy or there’s other factors at play, seasonal factors, then it becomes a little bit harder to really derive a good elasticity number. But it does tend to be products that are highly competitive, sought after, they’re the ones that do tend to have strong elasticity.

provide a discount to a customer, they will buy more of that product. So just knowing, you know, if you do some tests on specific products, then you might just have an idea of generally for each of your categories, how elastic they are and how they react to promotions. Certain categories will drive a lot of uplift during a promotional period and others not so much. But you also want to make sure that, you know, if customers are…

Kunle Campbell (28:03.214)

Aaron Cowper (ShopGrok) (28:06.926)
depends on the type of the products. If it’s a product that customers do buy consistently, you know, supermarket example is different to, you know, a piece of clothing that they might buy once a year. So if it’s something like, you know, something they buy all the time, then they can stockpile that product during a promotional period. So we generally call that forward buying. And so essentially you’re just stealing sales from a future period if you run a promotion. And so when you’re measuring your elasticity, you want to also…

account for the effect of forward buying or cannibalization as well. So you might have also stolen sales from another product that the customer may have already bought as well. So a few elements to consider there, but having a good idea of how reactive your sales are to promotions is a good thing to know.

Kunle Campbell (29:00.014)
Now pricing is very, very, very dicey. If you Yeah, the the buying, bringing your future forward is is is a big I’ve you know, I’ve experienced it’s an experience in number of times in number of times. I want to speak to retention. So we tend to reward.

customers who subscribe with discounts. So it could be a 10 % or a 15 % discount longer term. On the flip side, cell phone operators or mobile phone providers tend to give cheaper prices to new customers. So they’re kind of like completely polar opposite strategies. What are your thoughts on?

maximizing customer lifetime value for retailers, particularly retailers that have that subscription edge or have the ability to generate repeat customers over time, how does pricing really get into that CLV equation long term?

Aaron Cowper (ShopGrok) (30:09.87)
Yeah, I think you definitely need some acquisition strategies, but you also definitely need some retention strategies. So, you know, the acquisition strategy tends to be, yeah, discount off the first order, you know, sign up to our newsletter, you’ll get a coupon code for 10 % off your first order, that kind of thing. And that’s a great way to, as we mentioned before, to drive your rewards program, you know, have more customers kind of sign up and be part of your community and be able to then market to them.

as long as you keep providing them incentives. And there comes the retention piece. If your existing customers are seeing you reward new customers, usually these offers are sort of new customers only type thing, then you’re going to create some trust issues there. So you also want to definitely have ways to incentivize and reward existing customers, whether that’s through some sort of club or member pricing program. We’re seeing a lot of…

e -commerce retailers these days have separate member pricing online to their normal pricing, which can work in some cases. It can get a bit kind of, I think from a UX point of view, it sometimes looks a little clunky depending on the implementation, but definitely again, another way for you to drive membership to your reward program. If you’ve got member pricing or like an either a percentage off discount or specific pricing per product, if you remember.

That’s also a good way to drive retention. We’re also seeing a lot of subscription type pricing. We work with a couple of retailers in the pet space and if you strive to have your pet’s food delivered once a month or once a fortnight, you’ll get a discount off of that as well. So that type of repeat purchase subscription.

discount is also starting to become a lot more common for retention of customers too.

Kunle Campbell (32:09.038)
Okay, so with shop grok, I want to talk about shop grok, you know, you’ve walked with the likes of Aldi, Aldi is huge. When it comes to pricing, you know, it can’t get any in the UK, at least there’s Aldi and there’s Lidl. They’re hugely price competitive, you walked with the likes of Warwolf, which is equivalent of the Tesco. It’s huge again in Australia, and KFC.

what are the learnings we can take, you know, in the SMB space from this huge retailers pricing, you know, takeaways, particularly how shopgrock has, you know, essentially help them execute on on their pricing strategies.

Aaron Cowper (ShopGrok) (32:53.294)
Yeah, I think as we mentioned before, you know, we work with a lot of large retailers and lots of smaller retailers. I think the advantage of being smaller is being nimble and being able to react quickly. And you also don’t have that cost of doing business that a lot of these larger retailers have. So, you know, if you’re competing against retailers that have a store -court print, they have a much larger picket cost. And…

and they’ll need to be making an argument on that to continue to operate. So I think that actually it’s, you know, assuming that you can build a brand and bring customers to your site and you’ve got some way of differentiating using one of the levers that we mentioned earlier, you definitely can compete in this market. It is competitive and there is consolidation happening. The bigger retailers are getting bigger. They’re getting…

more sophisticated, that their digital presence is growing. And so, you know, it is a difficult environment, but I do think that, you know, if you can build a brand, particularly if you can build, you know, have exclusive products or ways in which to drive customers, whether it’s through your service or your delivery or other ways to kind of differentiate yourself.

there definitely are ways that you can build a strong business and grow rapidly and compete against the likes of the big supermarkets.

Kunle Campbell (34:28.654)
Okay. What do you want to describe Aldi’s present strategy?

Aaron Cowper (ShopGrok) (34:38.382)
Um, so yeah, I don’t, um, I haven’t worked with them recently, but I certainly from a, um, uh, from a, um, customer point of view, I mean, they’re one of these retailers that has a fewer edlp strategy. So they do almost no promotion and they’re simply driving, you know, they have a small range. So they’d have a smaller range than a typical Tesco, for example, um, maybe only a couple of thousand products.

Kunle Campbell (35:03.374)
Mm -hmm.

Aaron Cowper (ShopGrok) (35:05.55)
But because they have such a narrow range, it means they can negotiate very hard on that product to get a really good cost price from the supplier and therefore pass on a really low cost to the consumer. So they work very hard, I think, from an outsider’s point of view, on making sure that every single product in that range is of use to the customer.

keeping the range as narrow as possible. So only offering usually just one choice in a particular category, maybe two. Whereas the bigger, you know, test goes to the world will have several brands competing in the one category. Whereas the others of the world will just, you know, their own on brand that they’re very cost efficient on. They may have one or two years of products and a good and a better.

not necessarily a best. So they’re definitely competing at that entry price point level. And they don’t try, they don’t necessarily try and do things that are not part of their value proposition. So, you know, they don’t really have an e -comm presence. They don’t really do a lot of e -comm related marketing, etc. I’ve read that they are trying to build that, but certainly their bread and butter is, you know, customers going in store.

and getting better prices for what they buy in the supermarket. So it is an interesting strategy. It’s not really something that can be, there’s not a lot I think that can be derived from it as an SMB e -com retailer, other than just to be wary that that competition does exist out there. It’d be hard for a startup to come in and really compete in that kind of.

environment without the scale that they have to really get really good costs from the suppliers. So it’s kind of one of those ones where it’s good to know that it’s out there, but I don’t think it’s something that necessarily should be replicated for a pure play e -com player that’s trying to start out and make an impact.

Kunle Campbell (37:19.118)
makes sense, makes sense, makes sense. Why would KFC need a pricing strategy that there’s no other sort of chicken fast food chicken retailer who are they benchmarking against?

Aaron Cowper (ShopGrok) (37:31.406)
Yeah, we do a bit of work in the in the QSR quick service retail fast food type space and also in other quick delivery spaces so that, you know, the last couple of years, we’ve had some consolidation, but the sort of guerrillas fast delivery, milk run fast delivery was one that was in Australia that recently collapsed. So, you know, these types of companies these days, if I go to the KFC example,

they’re probably competing, you know, not just with other thicken food outlets, I suppose, but they’re competing with just fast food in general, I guess, you know, the consumer that’s wanting to spend 15 to $20, 15 to 20 pounds on a meal, I guess. And so for them, they’d be looking at, you know, the likes of McDonald’s and other fast food providers and trying to set their prices accordingly.

But these days, because of the way fast food is going and the way customers’ demands are increasing, it’s not necessarily just about the price, which is important, but also how do you do bundling? How do you kind of do your combo, your meal sizes, small, medium, large, your six nuggets, 12 nuggets, 18 nuggets, how does that price architecture work? And then how do you optimize your pricing across your different channels, whether it’s pick up in -store,

delivery by your app, delivery by Uber, delivery by DoorDash and all the service charges that go with that. Do you have a high order service charge and then a lower percentage uplift on your Uber price? Most companies these days will have some sort of increase in price if you buy it by Uber than in -store. But you can optimize maybe to have…

Kunle Campbell (39:02.862)

Aaron Cowper (ShopGrok) (39:27.342)
a larger percentage increase on your Uber price, but a lower per order price. So there’s lots of different ways that the quick service retailers will optimize to try to drive consumers to buy their product. So it’s a far more dynamic market than you might think in that space.

Kunle Campbell (39:45.902)

Kunle Campbell (39:50.254)
I find this super fascinating and I could go on and on and on. On a final note with with with shop grok, how can you be of service to pure play digital, you know, e commerce, you know, players or, you know, just e copy, essentially e commerce businesses, how you have service to us.

Aaron Cowper (ShopGrok) (40:14.254)
Yeah, so we’ve helped lots of different FuelPlay e -com retailers scale up as they grow and we offer services for retailers of all sizes. So, you know, if there’s retailers that are just starting out, often the starting point is simply to take those, we help them find out what are those 50 or 100 products that really matter to the customer. Let’s benchmark you to the market and provide you with some useful analytics to help you.

set and derive your pricing strategy and your promotion strategy and some reporting to help you determine if you’re meeting the objectives that you’ve set and are you remaining price competitive over time. And then as you grow, there might be more room for you to delve deeper into.

things like price elasticity, as we mentioned, promotional effectiveness, understanding how effective your promotions are, are they really driving the uplift that you want them to? And then probably the next area would be then product range. So, you know, understanding what products do you currently have in your range? What does the competition have in their range in terms of brands and pricing peers and that kind of thing? And where might there be some gaps that you may want to fill over time, whether it’s through…

new product development or bringing new brands on board or other options. So, yeah, definitely, you know, lots of ways we can help small and medium sized econ players get started and remain competitive in the competitive market at the time.

Kunle Campbell (41:55.95)
Super exciting, super exciting. I want to geek out here a little bit. I’m just theorizing here whereby there must be a way you can measure your brand equity from insights you get from your pricing elasticity.

And if your price elasticity is less inelastic over time, like an Apple, you know you have good brand equity. Does that make sense? And is there a way to benchmark that over time, your price elasticity over time to understand, OK, how people are essentially valuing our brand through pricing?

Aaron Cowper (ShopGrok) (42:37.934)
Yeah, I think there’s the ways in which I mean, I would say measuring the effectiveness of your brand is not necessarily something we do specifically, but then there definitely are services out there that we’ve worked alongside that can help you do that specifically, for example, you know, what reach do you have? How many customers, you know, know of your brand and how is that growing over time? And what do people think about your brand? And a lot of that tends to be a bit more qualitative as far as research goes.

you know, getting panels of customers and collecting bits of research as to what they think of your brand. But then what we often find is, you know, either if we do that alongside what we’re doing, or if you already have some of that internally, we often can correlate the actual price performance of your company, which we do measure against some of these qualitative insights. So one thing that we often help do is

correlate your actual price index over time. So do your price index versus the competition versus the perception of your prices. So if you might have a qualitative piece of research or a panel that every once in a while you go to this panel once a month and you ask them some key questions, does my brand, brand X have low prices or do they have great promotions?

and it might be a scale type questionnaire. And then over time, you usually can see the qualitative measures correlate to the quantitative measures. And so we definitely help some of our retail customers set this kind of performance measurement up so that over time they can see how much does price drive overall perception of the brand. And then we also usually will have an input into…

If there’s a performance marketing team or an e -comm team that’s looking at traffic and visitation against SEMrush or similar web or other services that are looking at their website traffic, we can usually put our data alongside that to see, okay, if traffic is down or up in a certain week, is that related to price? How much does that correlate to how your prices were, how the market’s prices were in that week or that month? Or is it something else? It could be that…

Aaron Cowper (ShopGrok) (44:58.798)
there’s something wrong with UX, there’s something wrong with the creative, there’s something wrong with the marketing. So we tend to be a part of the overall picture, but definitely an important one.

Kunle Campbell (45:08.046)
Yeah, you can superimpose and see that there are any correlations, you know, at least, you know, from from that perspective, especially if there’s been any major, you know, price updates.

Aaron, it’s been a pleasure, you know, having you. I’ve left this conversation smarter, just knowing more about pricing. So I’m sure everybody who’s made it to this point would say the same. For people who want to find out more, you know, about Shopgrock, it’s S -H -O -P -G -R -O -K .com. I will link to it in the show notes. You’re active on LinkedIn. I think we’re connected on LinkedIn now. We’ll also link to your LinkedIn. Are you active on any other social platforms?

Aaron Cowper (ShopGrok) (45:48.334)
I think LinkedIn is the main one at the moment. I’m trying to increase my presence. It’s not my natural kind of mode is to kind of be open on social media, but these days I’m trying to be more active on LinkedIn. So that’s probably the best place to start.

Kunle Campbell (46:04.558)
Brilliant, brilliant, brilliant. Thank you again for coming on the show. Enjoy Madrid and yeah, we’ll catch up sometime soon.

Aaron Cowper (ShopGrok) (46:12.046)
Thanks very much. Really enjoyed the chat. Cheers.

About the host:

Kunle Campbell

An ecommerce advisor to ambitious, agile online retailers and funded ecommerce startups seeking exponentially sales growth through scalable customer acquisition, retention, conversion optimisation, product/market fit optimisation and customer referrals.

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