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Developing its own market analysis tools has helped drive business growth at online electronics retailer Pixmania

Pixmania has established itself as one of Europe’s leading online electronics retailers since its launch in 2000. Nevertheless, as managing director Ulric Jérome concedes, one of its earliest IT decisions nearly proved fatal.

“For the first six months, we outsourced everything, including web design – we got into trouble,” he recalls. Development took too long and did not meet requirements. “Ever since then, we have done everything in-house,” says Jérome. This strategy has proved far more fruitful. The company has subsequently expanded its reach to include 26 European countries and become the market leader in France, Italy and Spain.

Last year, the company was acquired by British industrial group DSGi. The group’s ecommerce division includes both Pixmania and the Dixons.co.uk website and took revenues of £451 million in the last financial year. Pixmania now supports the ecommerce activities of the entire group, as well as some external clients including French telecoms provider Bouygues Telecom.

Central to the site’s success in growing its European coverage has been getting to know the various individual markets intimately. “For example, in Italy, credit card penetration is only 24%,” Jérome explains, “so if you do not have a cash payment system it is impossible to gain leadership. On the other hand, in the UK, cash on delivery is almost non-existent.”

As well as careful observation and experience, Pixmania has developed its own tools to ensure that each product is automatically and appropriately marketed and priced for each region.

The first of these tools automatically bids for product categories on Google AdWords – keywords that trigger paid-for advertisements alongside Google’s results. It assesses historical sales data to decide what price-per-click the company should pay for an appropriate balance of visibility and profit margin. If the cost of a certain keyword goes above 3% of the expected return or a product goes out of stock, the system immediately stops bidding.

The ‘sniper’

Another tool is called the ‘sniper’. This allows the company to benchmark its prices against local retailers it considers to be legitimate competition. The sniper will monitor the price of each of Pixmania’s 45,000 products on other ecommerce sites. The tool conducts “automated scenarios to find out what our margin would be if we matched each price – who is in front of us, who is behind us”, explains Jérome. “We are able to automatically control our margin on every product in every country, every second of the day.”

With this automation supporting its marketing effort, Pixmania has been able to reduce the time it takes to launch in a new country to one month. This has helped it to enter markets such as Romania and Slovenia. While these may not be very profitable today, Pixmania sees an opportunity to become a household name as their economies grow, and to get a head start on its great rival, Amazon.com.

Further reading

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