May 18, 2006, 12:00 AM

How uses web analytics to set retail prices with suppliers

Suppliers want to pay higher prices; the retailer uses web analytics to show how lower prices on some items will help overall sales.

Approaching its first anniversary of the use of web analytics, reveals that the technology has not just helped with fulfilling shoppers’ desires but also, and perhaps more important to the bottom line, with improving negotiations and relations with its product suppliers.

“We approach vendors and share our analytics findings with them,” says Daniel Cotlar, chief marketing officer. “We produce a product conversion rate report and compare a supplier’s results with those for other products on our site. And we ask, ‘What do you want to do to raise this?’ Then we propose a promotion.”

A promotion, for example, will include significantly reducing the price on one product from a supplier to in turn increase brand awareness and future sales, Cotlar says. “The analytics that help us devise promotions gives us more credibility with our vendors so we can manage a promotion and then show how they’ve increased sales on the promoted product at the lower margin and at the same time increased sales on other products at higher margins. And we can show them these findings quicker and better than they can produce their own internal reports.”, No. 186 in the Internet Retailer Top 500 Guide to Retail Web Sites, started working with suppliers in this manner in December. Company executives say they were “flying blind for a long time” until they started last July using web analytics. They chose technology from Omniture Inc. “Before that it was just intuition,” says Jay Steinfeld, CEO.

“Many of our vendors now tell us we’re the only ones who are really trying to do upgrades and higher margins,” Steinfeld says. “One of our core values as a company is open communication with employees and vendors.”

Sales in 2005 at, operated by Global Custom Commerce, jumped 153.3% to $38 million compared with $15 million in 2004.

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