Today, the coronavirus outbreak pushes retailers to even faster adoption of digital channels and innovation. E-commerce is booming and will continue winning the hearts of consumers, although, before the crisis, it used to account for 10–15% of the retailer’s turnover. Following the COVID-19 outbreak, consumers are expected to become more price-sensitive and used to online shopping, which means that retailers will need to pay even more attention to pricing as a primary driver of their profitability
As part of our series about the future of retail, I had the pleasure of interviewing Alexander Galkin, co-founder and CEO at Competera, a retailtech company offering a comprehensive pricing platform for enterprise retailers across 26 countries.
A serial entrepreneur, a Forbes contributor and a speaker at IRX, e-Commerce and RBTE conferences, Alex has 12+ years in auditing and consulting retail enterprises globally.
Thank you for joining us Alex! Can you tell us a story about what brought you to this specific career path?
While majoring in Computer Science, I also worked as part of a MedTech project. We developed a neural network to power an “electronic nose” to distinguish scents. It was back in 2004–2005, so the network was pretty simple. But I already knew that this technology has a great future. Then my life took a turn: after graduating from the university, I found myself working for a company from the Big Four. There, I was responsible for providing consulting and auditing services to retailers. Simultaneously, I got trained in auditing and IT implementation systems.
By the time I got 24 years old, I had earned good money after selling an outsourcing company and continuing to work for the consulting firm. The consultancy was a financially rewarding job, but I wasn’t getting what I needed. I helped others develop successful products, but I was craving to create something myself.
In 2012, I decided it was time to move on. I told a friend of mine: “I have money. Let’s build a product.” I didn’t have a precise idea of what it would be — we just wanted to start something of our own. That’s how we launched a copycat of American Woot, a website offering daily product discounts (Woot was acquired by Amazon several years ago).
We invested the equivalent of two Lexuses into the project, but it didn’t work out for several reasons. The local market was not ready for this type of offering. We also spent too much time just developing the platform instead of deploying it right away and upgrading it in real-time. Besides, I realized that I had no passion for building a non-product business. Meanwhile, here our main focus was buying and selling traffic.
Back then, I noticed that retailers rarely made data-driven pricing decisions and set optimal prices. Most of very advanced retailers would collaborate with the Big Four to get long, 200-page reports with the market forecast and recommendations on what pricing strategies to apply based on econometric models, in other words, long Excel formulas.
This status quo was flawed in several ways. First, only extremely established retailers could afford cooperation with the Big Four. Secondly, as a rule, only up to 20% of the recommendations were applied. The reason for this was quite simple: all the strategies were rather high-level, which meant that pricing analysts had yet to turn them into precise steps — and they simply did not have tools to do that.
That’s how the idea of Competera was born. We wanted to “hire” machine learning algorithms to make all the necessary calculations to recommend the most efficient pricing strategies. But back in 2014, we had no infrastructure to execute such a project, while the technology itself was not advanced enough. But at the same time, we also knew that any product would start with data. That’s how we started Competera as a competitive data provider for retailers.
Since then we have come a long way to become a comprehensive pricing platform which allows retailers to combine several pricing approaches — from market-driven to demand-based pricing — to make every product in the assortment help the retailer reach their goals, be it grab a market share, cut expenses or maintain the profit margin.
Can you share the most interesting story that happened to you since you started your career?
It would be an observation rather than a story. Since launching Competera, I’ve worn several hats — from a matcher (a person responsible for finding identical products offered by the retailer’s competitors) to a courier to a marketer to a developer. I used to be the interim Head of Sales when we were entering three markets at once. I didn’t sleep for several weeks back then. I had to handle calls from Australia and the US. Both of these countries are actually in different time zones to mine. In the daytime, I had a team to manage. I used to get up at 4 am and go to bed at 2 am. Living like this for several weeks is hell, trust me.
As a CEO, I need and can gather an outstanding team that can share your vision and help scale it. It’s not about the battle of ideas; it is about the synergy and the ability “to row” in the same direction with the same rhythm. That’s beyond exciting!
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that?
Some time ago I came up with a genius idea of a report dubbed “Price Index” we could provide to retailers. I was entirely sure that our clients would be on cloud nine as soon as they could use it. Developing the report took three months and cost us several thousand dollars. Once it was deployed — wait for it! — only 2% of our customers actually used it.
My main takeaway was: no matter how genius your idea sounds, test it first. That’s why I’ve asked our product team to test my ideas and not to follow them blindly.
Are you working on any new exciting projects now? How do you think that might help people?
I love it when our product team engages me in discussing our platform — they show me new features and explain their necessity, expect my feedback. I genuinely appreciate it. What drives me is that our platform is getting even closer to being a single workplace for category managers that can use it not only to set prices, but to track their performance, create strategies and monitor their effectiveness, and course-correct, if necessary. By automating calculations, providing all the necessary insights at any level — from an SKU to the whole assortment — and suggesting optimal data-driven strategies, we aim to free up to 4 working hours per category manager per day.
Our biggest goal is to help retailers optimize their operations, cut expenses, and stay competitive while helping category (or pricing) managers build the best careers in the industry.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Professional “burnout” is a serious issue — and you need to know how to deal with it, or better, how to prevent it. I suggest taking a ten-day vacation twice a year. From my experience, seven days are not enough as you will still be dealing with business tasks for the first three days. Then I would also add three days per quarter to take a break.
Another piece of advice would be to take up sports that leave you no time to get distracted. Martial arts can be a good example. In this regard, the gym is not the best option as it still gives you plenty of time to think of something else other than doing pull-ups. Once I read that our brain takes a break when we concentrate on something which does not require engaging our intellect. So, weaving or drawing can be an option, too.
If you are going through hard times, try to find something to encourage you. In my case, customers’ feedback helps a lot. Knowing that you are doing the right thing that truly changes the lives of retailers is a huge booster.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I think it’s too early to say that I have found THE mentor. Indeed, I regularly talk to a group of entrepreneurs whose opinions I appreciate. I particularly value the experience of people that have failed at something, because failure is a better teacher than success.
But if you still want to narrow it down to one person, I’d say it’s my father. As a student, I co-developed a program that had some success. This fact made me think of quitting the university. My dad, who used to be in the military, told me that he would shoot me in the leg if I did it. So, I stayed. Needless to say that he was right — our project would fail two years later. What’s more, my dad taught me some basic, but pretty crucial things — to be honest and straightforward.
How have you used your success to bring goodness to the world?
I’d be careful when using the word “success.” It’s still a long way to go. But anyway 🙂 As I see it, I can bring goodness to the world by creating highly paid jobs and “growing” true professionals at the company I run — which will also help to create even more companies like this run by people that started their careers with us. I’d really want to build a true unicorn and do for Ukraine what Skype has managed to do for Estonia — bring investment and expertise to the country.
Also, I dedicate some time to sharing my business experience as a speaker at 5–6 conferences annually and as a columnist. For example, I’ve been a member of the Forbes Technology Council for almost two years now. I believe that my talking about mistakes I’ve made can help other entrepreneurs avoid them in the future.
Ok super. Now let’s jump to the main question of our interview. Can you share 5 examples of how retail companies will be adjusting over the next five years to the new ways that consumers like to shop?
I’d like to start by emphasizing the following: retail is the oldest industry in the world that has survived all the good and bad things there’ve been to survive. However, today the required speed of changes is so high that retailers have trouble putting up with it.
Among these changes are the shopping behavior and purchasing power of younger generations. Although millennials spend almost as much time shopping like their parents, they are less financially rewarded compared to previous generations that tend to leave big cities, taking along their spending habits and abilities. Younger generations expect shopping to become a kind of emotional experience rather than a simple act of making a purchase. Thus, retail is leaning towards being more experiential than ever before. It’s becoming a space where shopping meets entertainment and technology.
Today, the coronavirus outbreak pushes retailers to even faster adoption of digital channels and innovation. E-commerce is booming and will continue winning the hearts of consumers, although, before the crisis, it used to account for 10–15% of the retailer’s turnover. Following the COVID-19 outbreak, consumers are expected to become more price-sensitive and used to online shopping, which means that retailers will need to pay even more attention to pricing as a primary driver of their profitability (as you know, according to PwC and Deloitte, the price of a product is the main factor for shoppers when making a purchase). In the short- and mid-term, most companies are likely to use a market-based pricing approach which will allow them to react to competitors’ price changes in a smart way, offer competitive prices while speeding up the pricing process and cutting expenses to survive the time of uncertainty.
As the power of the current crisis will be fading, retailers will go back to long-term strategies which include creating the most personalized retail experience possible — in terms of the product, selling channel, timing, price and delivery options. Here AI comes into play as it is projected to optimize various areas of retail operations — from pricing to interaction with customers to managing warehouses and delivery — and decision making in the increasingly complex environment. In pricing, AI-powered tools will help retail managers switch to demand-based pricing, make the right pricing decisions for all the products in the assortment, separately and combined, based on the data regarding their demand elasticity at any given moment and create the right price perception (just like Amazon).
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I’d start two movements: “Saving the Earth” and “Better education.” I’m all for a more fair distribution of resources and a healthier planet being home to more educated people. I believe we need this.
Alexander Galkin of Competera: The Future Of Retail Over The Next Five Years was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.