360pi’s Black Friday splash put Ottawa firm on map

An Ottawa retail-price-intelligence company got a deluge of media attention in the shopping frenzy surrounding the annual U.S. Thanksgiving and Black Friday retail bacchanalia.

360pi popped up in major TV networks’ stories, local newscasts, trade publications and titles such as Forbes as it revealed how Amazon, the online retail giant, manages price changes for hot products.

The news that Amazon leads the price wars for toys, video games and coffee-maker pricing was expected.

The news that it charges more for big-screen televisions, tablets and other electronics than up to 50 per cent of traditional competitors was a surprise.

The attention that 360pi won marks a remarkable turnaround for an outfit that just a few years ago was losing out in the battle for the attention of consumers.

It had market-leading technology to compare retail price changes on the web pages of 22 big and small chains.

But few consumers were willing to pay for things like personalized shopping flyers.

To survive, 360pi had to turn on a dime and is now discovering that retailers are willing to pay for the critical data.

Customers include Sears Canada and Best Buy Canada and many smaller chains such as Overstock and Ace Hardware.

It hasn’t been easy reshaping the company over the past three years.

Funding was scarce and except for about $1.25 million in provincial and federal grants and loans, the outfit previously known as Gazaro turned into 360pi mostly by driving sales.

An experienced team of executives with finance and marketing expertise at Ottawa companies such as Protus, Energate and TechInsights helped.

Sales doubled this year because bricks-and-mortar retailers are fighting an online onslaught.

The data gathered by 360pi on pricing moves, sometimes as frequently as every few hours, can be the difference.

And as my colleague, Vito Pilieci, showed in Tuesday’s paper, prices can also rise in anticipation of the big sales days when sales hit $2 billion.

Alexander Rink, the 360pi chief executive, said effective pricing strategies are critical “to avoid a race to the bottom.”

That means that prices should be competitive across a range of products so that when customers venture into stores they buy what they came in for and perhaps some other things that jump out with eye-catching prices.

And that means having a competitive “right price” 98 per cent of the time rather than just 40 per cent, Rink said.

The challenge is “showrooming.” That’s when savvy shoppers find and test the product they want in a store, scan the data on smartphones for cheaper prices and then buy online.

The much-quoted 360pi research showed that Amazon usually has the best price on toys compared to 88 per cent of competitors and 70 per cent on video games. But it was behind the field, with an edge over just 48 per cent of competitors, when it came to many electronics.

Using the 360pi info and mountains of other data emerging from the cloud computing world, big retailers fought back.

Many put tablets in the hands of sales staff and gave them the ability and authority to check and match competing prices rather than lose sales.

Many staged deep price discounts on hot products with short offering periods to get consumers into the stores.

Then the advantages of store maps to the hot deals, expert sales staff, warranties and no waits for the courier helped get customers to the cash registers.

They also sharpened operations of their online portals to compete, peppering customers with pop-up offers. IBM said there were 37 per cent more alerts clogging smartphones than in the preceding two months.

Amazon was still the big winner of the recent shopping rush, as overall online sales on the big weekend rose more than 20 per cent to almost $3 billion and as much as $150 million an hour.

But research by IBM and Adobe showed the traditional retailers such as Walmart weren’t far behind Amazon in the online wars and did well capturing the big-ticket product. Department stores outsold competing outlets as daily sales during the busy week surged almost 700 per cent over a typical shopping day.

With the full Christmas sales season in full swing, it marks a remarkable year in which 360pi attracted $6 million in venture capital, doubled sales and increased its workforce by 50 per cent to 48 employees. It is aggressively recruiting for more software experts.

The company was singled out by Deloitte as a company to watch in its annual rating of top startups. Rink said sales are now north of $1 million but wouldn’t reveal specifics.

He said sales should double again in 2014 and that the company will break-even on the bottom line.

That could make it an attractive takeover target for some of the giants of the data analytics world. Rink said there have been several takeovers of rival players by eBay, IBM and other players.

An estimated $50-million deal for BlackLocus of Austin, Texas, by Home Depot a year ago paved the wave for a big injection of capital by Silverton Partners. The Texas investment group wanted to stay in the price-intelligence business and the BlackLocus managers pointed to 360pi as their closest competitor.

Shares of Nuance Communications plunged 18 per cent after it reported flat sales of $490 million in the latest quarter and a loss of $32 million compared to profits of $117 million. Investors were upset by modest guidance for the coming quarter, which reflects soft revenues from Apple, a major customer that uses Nuance software to support the Siri voice application.

Nuance bought Accentus of Ottawa earlier this year to get the Canadian leader in transcription of voice hospital medical information.

Fortinet shares fell sharply after the California company, which has big Ottawa and Vancouver operations, disclosed that a chief financial officer is leaving after just seven months for personal reasons. CEO Ken Xie said the company is confident about forecasts for this quarter. His brother Michael, who worked for one-time Ottawa startup Milkyway, recently took over president duties.

Shareholders were much more forgiving after Magal, an Israeli security giant with a big Ottawa operation, reported sales were almost cut in half in the September quarter and it fell into the red. Magal said big security deals to protect the operations of clients around the world and big border project in Israel will lead to better results.

Zim Software, the flagging flagship of Corel founder Michael Cowpland, said sales fell more than 25 per cent to just $296,024 on weak demand from business customers in Brazil. Losses jumped to $112,239

C-Tech, a 44-year-old Cornwall company that provides underwater acoustics services to the Canadian and other navies, has been bought by Nautel Capital Corp. of Hackett’s Cove, N.S. Terms of the deal for a company with 30 employees were not disclosed.