E-commerce Case Study

E-commerce Case Study

How Verbena boosted revenue and profits with catalan.ai

How Verbena boosted revenue and profits with catalan.ai

33%

Higher Profit

23%

Higher Revenue

17%

Higher Units Sold

About the company

Verbena is a D2C & Marketplace focused on delivering flowers, gifts and experiences at home in more than 20 cities with same-day delivery.


About the company

Verbena is a D2C & Marketplace focused on delivering flowers, gifts and experiences at home in more than 20 cities with same-day delivery.



"Catalan’s model thrives on a consistent stream of data, and the revenue impact correlates with sales volume. Recognizing this, I made the decision to allow catalan to price some of our best-selling SKUs, and that's when we truly witnessed the transformative potential of catalan at Verbena. I highly recommend that companies consider implementing catalan for at least some of their high-selling products right from the start”

Alejandro Zorrilla
Founder & CEO


The Problem


Blossoming challenges in the process of pricing flowers


At Verbena, pricing flowers was more of an art than a science. Alejandro Zorrilla, founder & CEO, described their manual pricing approach as a weekly trial-and-error process. They experimented with mark-up prices, closely monitoring weekly sales to gauge the immediate impact on revenue. "Sometimes, revenue remained stable or even increased, but occasionally it plummeted, revealing the elasticity of flower prices," Alejandro recalls. "Although this weekly process was done relatively quickly in spreadsheets, it carried risks for Verbena."


Challenges abounded in the floral business. Flowers don't have a fixed price; they demand dynamic pricing. Seasonal spikes during holidays like Mother's Day and Valentine's Day added complexity. Geographic factors mattered too; in warmer regions, flowers had shorter lifespans, necessitating higher prices. The type of flower and its longevity were also pricing factors. With so many variables, frequent price adjustments were necessary, making the world of flowers intricate. Alejandro explains, “Price changes correlate significantly with conversion rates on our website. This emphasizes the critical role of optimal pricing in driving top-line revenue.”


Alejandro believed that there was room for improvement in their weekly manual pricing process and heard about catalan through a close friend, who introduced him to one of catalan’s co-founders.



The Solution


Transitioning from a trial-and-error approach to an AI-powered technology


After a few meetings, catalan and Verbena scoped out a 60-day pilot covering 27 SKUs in Queretaro, one of Verbena’s main markets in Mexico. Using a dynamic split-testing method, Verbena switched between catalan-Priced Days and Verbena-Priced Days, each taking charge of pricing for specific periods. This strategy helped maintain stable prices and prevented wild swings by setting minimum and maximum price limits for each SKU. The selection of days for each pricing approach was random, ensuring fairness and avoiding any potential bias.


catalan executed a total of 540 price changes during the pilot. This involved reducing prices for 17 SKUs while increasing prices for 10 SKUs. catalan sought to maximize overall profit for the portfolio of 27 SKUs, increasing and decreasing prices, revenue and profits for different products.


Summary of price changes and profit impact by SKU



"At first, I took a cautious approach and initiated the pilot with some ordinary SKUs that had moderate sales and weren't very popular. However, we quickly realized that this approach wasn't yielding the desired results. Catalan’s model thrives on a consistent stream of data, and the revenue impact correlates with sales volume. Recognizing this, I made the decision to allow catalan to price some of our best-selling SKUs, and that's when we truly witnessed the transformative potential of catalan at Verbena. I highly recommend that companies consider implementing catalan for at least some of their high-selling products right from the start," Alejandro reflects.


The Results


Double-digit increase in profit and revenue while saving the team time


The pilot with catalan yielded remarkable results for Verbena. On days when catalan managed pricing, they witnessed a significant boost in their key metrics:


Revenue Lift: Verbena experienced a 22.9% higher revenue on catalan-Priced Days.

Profit Lift: Profits surged by an impressive 33.2% on catalan-Priced Days.

Units Sold Lift: The number of units sold saw a healthy increase of 5.7% on these days.


“The pilot also revealed interesting insights into price elasticity, shedding light on unexpected patterns. For instance, when we lowered the price of red roses by 20%, profits saw a substantial surge of nearly 300%. Similarly, lily bouquets, with a modest 2.5% price reduction, witnessed a significant 200% profit boost. These findings highlight the dynamic nature of flower pricing, where even minor adjustments can lead to substantial financial gains. catalan's ability to identify and respond to these nuances proved invaluable to our pricing strategy," Alejandro explains.


"The impact of catalan extended beyond the numbers," Alejandro adds. "It brought about a transformative shift in Verbena's operations. The weekly hours we spent analyzing sales and prices were significantly reduced. Our experimentation, once rudimentary, has evolved into a more sophisticated and data-driven process. We are constantly looking for ways to strengthen our partnership with catalan."



Summary of price changes and profit impact by SKU



"At first, I took a cautious approach and initiated the pilot with some ordinary SKUs that had moderate sales and weren't very popular. However, we quickly realized that this approach wasn't yielding the desired results. Catalan’s model thrives on a consistent stream of data, and the revenue impact correlates with sales volume. Recognizing this, I made the decision to allow catalan to price some of our best-selling SKUs, and that's when we truly witnessed the transformative potential of catalan at Verbena. I highly recommend that companies consider implementing catalan for at least some of their high-selling products right from the start," Alejandro reflects.


The Results


Double-digit increase in profit and revenue while saving the team time


The pilot with catalan yielded remarkable results for Verbena. On days when catalan managed pricing, they witnessed a significant boost in their key metrics:


Revenue Lift: Verbena experienced a 22.9% higher revenue on catalan-Priced Days.

Profit Lift: Profits surged by an impressive 33.2% on catalan-Priced Days.

Units Sold Lift: The number of units sold saw a healthy increase of 5.7% on these days.


“The pilot also revealed interesting insights into price elasticity, shedding light on unexpected patterns. For instance, when we lowered the price of red roses by 20%, profits saw a substantial surge of nearly 300%. Similarly, lily bouquets, with a modest 2.5% price reduction, witnessed a significant 200% profit boost. These findings highlight the dynamic nature of flower pricing, where even minor adjustments can lead to substantial financial gains. catalan's ability to identify and respond to these nuances proved invaluable to our pricing strategy," Alejandro explains.


"The impact of catalan extended beyond the numbers," Alejandro adds. "It brought about a transformative shift in Verbena's operations. The weekly hours we spent analyzing sales and prices were significantly reduced. Our experimentation, once rudimentary, has evolved into a more sophisticated and data-driven process. We are constantly looking for ways to strengthen our partnership with catalan."



Request a Demo

Set pricing on

auto-pilot with catalan

Set pricing on

auto-pilot

with catalan

Set pricing on

auto-pilot with catalan

"Catalan’s model thrives on a consistent stream of data, and the revenue impact correlates with sales volume. Recognizing this, I made the decision to allow catalan to price some of our best-selling SKUs, and that's when we truly witnessed the transformative potential of catalan at Verbena. I highly recommend that companies consider implementing catalan for at least some of their high-selling products right from the start”

Alejandro Zorrilla
Founder & CEO

"Catalan’s model thrives on a consistent stream of data, and the revenue impact correlates with sales volume. Recognizing this, I made the decision to allow catalan to price some of our best-selling SKUs, and that's when we truly witnessed the transformative potential of catalan at Verbena. I highly recommend that companies consider implementing catalan for at least some of their high-selling products right from the start”

Alejandro Zorrilla
Founder & CEO