Pricing

Pricing had grown organically.

Different brands had different structures, much of it maintained in Excel. Billing took longer than it should have, and it was difficult to tell whether the prices we had agreed to actually worked for us.

We started rebuilding it around cost and volume, with brands falling into a few standard brackets.

The idea was simple enough. Storage needed to cover the fixed cost of the warehouse, while fulfilment needed to cover the cost of actually running it.

Then we found a problem with storage.

We used to charge based on the stock a brand had at the end of the month. Brands figured it out before we did. They could keep inventory low around month-end and replenish immediately afterwards.

So we changed the calculation to the highest stock held during the month.

The warehouse hadn’t changed. The way we measured it had.

We did something similar with same-day delivery. A minimum of 20 orders a day wasn’t particularly difficult for the brands, but it gave us a more predictable base of volume and revenue.

There was another part of pricing I would change in hindsight.

We paid delivery partners throughout the month and billed brands afterwards. The brands eventually paid, so we weren’t losing money. But our money was stuck for at least another month.

I should have pushed for prepaid delivery credits earlier.

At the time, letting brands pay later was also a competitive advantage. We were young and it removed friction when we were trying to win business. But once a customer gets used to paying later, changing that behaviour becomes much harder.