David vs Goliath: E-commerce company Boomerang takes on Amazon in pricing battle

BENGALURU: In a war, the real winners are almost always the arms dealers. In e-commerce, a small, three-year-old startup is emerging as a sought after ‘arms dealer’. Boomerang Commerce, founded by former executives of eBay and Amazon, is helping retailers stand up to e-commerce giant Amazon as it can enable them to manage prices dynamically.

“We are beating Amazon at its own game on pricing,” said Boomerang CEO Guru Hariharan, 35, who worked for over half a decade with the online retail giant, where he got a front-seat view of the revolution afoot in the industry. “It was very clear that there was a large analytical divide building up between Amazon and others.”

Sunnyvale, California-based Boomerang, which has a development team in Bengaluru, offers a platform that helps retailers match their competitor’s discounts without hurting its profit. It has found takers in five of the top 10 US retailers, including Staples, Sears and Groupon Goods. “Boomerang’s cutting edge platform is a win-win solution, helping us set competitive prices, while realising strong bottom line growth by testing multiple pricing strategies,” Anthony Chvala, executive executive vice president at the SWI Group: Swiss Watch International, a Boomerang client, said by e-mail.
Walmart’s core categories – auto, pets, beauty products and household essentials were more competitively priced than Amazon. 

While there are many price comparison players, what differentiates Boomerang is its price perception index, which conveys whether a retailer is perceived as cheap or expensive by customers. It advises price changes for popular products depending on customer perception of the client and the pricing offered by rivals. On January 5, Boomerang examined almost 40,000 products on Walmart.com and Amazon and found that 63% of the items were priced the same in both stores.

Walmart’s core categories – auto, pets, beauty products and household essentials were more competitively priced than Amazon, which had lower rates in categories such as home audio, video games, phones and electronics. “Pricing is important only when a particular well-known brand is in the mix,” said Arvind Singhal, chairman and managing director of research firm Technopak Advisors.

And Boomerang agrees. “The key is not just a low price. It’s about setting the right price,” said Hariharan, who has an MBA degree from The Wharton School. Hariharan illustrates the case of customer perception with the pricing of a TV: Set a low price for a TV that everyone wants to buy and perhaps increase rates and earn higher margins on an associated product, such as a connecting cable.

Few customers will fret about this because they’ve bought the TV, the more expensive item, at a good discount. No company does price optimisation on the scale that Boomerang does, Hariharan said by phone from Sunnyvale.

Source : ET

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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