Open Pricer, a provider of pricing software for the delivery industry, has teamed up with logistics tech firm Kardinal, to offer new functionalities dedicated to optimising pricing and costs for their common customers in the last mile.
By combining Kardinal’s operational costs with Open Pricer’s recommended prices, delivery service providers can achieve optimal margins for each customer and territory, the firms noted. This partnership marks a shift from a model where cost and revenue optimization are decoupled to a more relevant approach of margin optimization where they are linked.
Pricing decisions
In today’s highly competitive last mile market, pricing decisions are complex and have a critical impact on business performance. However, due to a lack of time, data and tools, only a fraction of these decisions are thoroughly examined by analysts, according to Kardinal.
The Open Pricer price optimization platform, based on machine learning algorithms, calculates the optimal rates for parcels based on different parameters, such as shipping profile (origin, destination, weight, etc.), price history, customer segmentation attributes and network cost model.
However, the costs associated with the last mile, which represent more than 50% of total costs for parcel carriers, are generally based on averages. They fail to consider crucial elements such as postal code, route, day of the week, delivery type, insourcing or outsourcing, which often have a significant impact on margin.
The partnership with Kardinal will enable Open Pricer to integrate last-mile costs more granularly into its platform. Kardinal’s dispatch intelligence technology, already used by 70 DPD France depots, will enable customers of both companies to benefit from a more accurate cost model.
“Optimizing pricing and costs in the last mile is a major challenge for parcel delivery networks. With our expertise and technology in pricing intelligence and Kardinal’s operations optimization know-how, we are confident in our ability to help our customers increase margins and network efficiency,” said Daniel Rueda, CEO of Open Pricer.
Profitability thresholds
By leveraging the pricing data provided by Open Pricer, Kardinal will enable its customers to identify the profitability thresholds of different service areas covered by a delivery depot and ensure that no area is operated at a loss.
“The partnership with Open Pricer will enable our mutual users to extract even more value from their data,” added Jonathan Bouaziz, Co-Founder and CEO of Kardinal.
Customer portfolios
The two companies also plan to offer an optional feature to their customers, enabling optimization of their customer portfolios by calculating the financial and organizational impacts of gaining or losing a new contract.
“In recent months, and in response to the new macroeconomic conditions, we have seen a shift in market priorities. While revenue was the main focus, industry players are now concentrating on margin improvement. In this context, the complementarity of our solutions becomes even more evident,” added Bouaziz.
For data protection reasons and in accordance with the agreements both companies have with their clients, data will only be shared upon explicit request from their respective customers.
