The encyclopedia · Product & Design · Operational decision · 2009–2015
Ingram Micro set every reseller price with a model, not a salesperson's gut
Distributor Ingram Micro automated pricing for millions of daily price calls and generated over $1.3B of incremental revenue.
Ingram Micro
the move
Ingram Micro is the world's largest distributor of technology products, operating in a high-volume, low-margin two-tier distribution business. Every deal is small, but there are millions of them, so a single-percentage pricing error compounds fast.
Starting in 2009 its analytics practice built a price-optimization engine, IMPRIME, that covers the $8 billion spot business, plus analytics applications to surface sales opportunities and a digital marketing platform for data-driven campaigns.
The price engine handles more than 450 million price calls a year, replacing the guesswork of a huge sales force with an optimized, defensible price at each product level.
why it works
- It moved pricing from individual sales judgement to a model applied uniformly across millions of deals.
- It handled the 'spot' business where pricing changes constantly and human negotiators can't keep up.
- Analytics apps and marketing built on the same data multiplied the effect beyond price alone.
- It worked in a two-tier chain, where the distributor's price must suit both manufacturer and reseller.
what transfers
In a business with millions of tiny transactions and razor margins, the leverage is in pricing every one of them with a model — not in hiring more sales negotiators.
what came after
Since 2011, the products and analytics programs generated $1.3 billion of incremental product revenue and $42 million of incremental gross profit. The work was named a finalist for the 2015 INFORMS Franz Edelman Award, and the company set out to extend the same practices beyond North America.
references
- End-to-End Predictive Analytics and Optimization in Ingram Micro's Two-Tier Distribution Business
- Ingram Micro: Named Finalist for Prestigious 2015 INFORMS Edelman Analytics Award
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