Sharing knowledge on differential pricing

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#1

I’m starting this thread to follow-up the Slack discussion which happened here:https://openfoodnetwork.slack.com/archives/CG7NJ966B/p1611600286045900

The purpose is to share the cases of differential pricing we come accross and tips on how we deal with them on the OFN software.

In FR, several hubs are applying a differential pricing model (documentation in progress) the last one in particular gave me a set of constraints that is a bit more tough to deal with. Many thanks in advance to anyone helping me on this :heart:

In a nutshell:

  • They have around 200 orders / week - 3 delivery spots - 2 payment methods - only 1 shop
  • They want to start a new pricing model for people with low income
  • This lower prices model will basically be funded by a lower margin on their side
  • They won subsidies and a partnership with local authorities to do so
  • Each week they have 2 order cycles: the first one handles meat products and finishes earlier and the second one all the other products. First OC start on Mondays, deliveries (by bike and pick-up at their physical shop) are happening on Fridays
  • Even if a shopper orders twice : one order of meat, and one order of veggies e.g., they only get ONE delivery.

Because of these 2 OC / only one delivery system they already have a complex set of shipping and payment methods. Indeed, each customer ordering meat is tagged so that they can order on the second OC without added fees (example: if the shopper has chosen home delivery with a fee of 6 euros on his first order, then they can order on the second OC with a shipping method without fees - only displayed for tagged shoppers).

Same for payment methods, as they consider Stripe to be too expensive, they only allow shoppers who have chosen home delivery to pay by credit card on OFN (this is done with trusting the shopper as OFN does not allow any direct link between shipping and payment methods).

Alright, so now back to differential pricing:

  • people with low income will go to their physical shop to get listed as people allowed to checkout with lower prices
  • These shoppers are living in the neighborhood of the physical shop, so they will often come to the shop to order OR order by phone
  • They need to keep strict records of people ordering this way to report back to local authorities (including shoppers info)
  • Often these shoppers do not have an email address

So I have 2 blockers currently:

  1. How to deal with shoppers who don’t own an email address? Apparently thanks to the slack discussion I’m heading towards using an individual fake email address, that the hub will be able to reuse each week in order to load all shopper info (address etc)
  2. How to implement the pricing model other than using a negative fee in payment / shipping methods? Given how complex their shipping and payment method system is… Note that I’ve already suggested them to create several shops, but they are really afraid of that solution…
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#2

Amazing @Rachel - so - if you create a ‘fake’ email for each shopper that doesn’t have one, then the hub would pose as that shopper to place their order, or take their order over the phone. So then, could you tag these low income shoppers (their own email or their fake email) to a shop with at discounted enterprise fee? It means the hub has to know the identity of the shopper receiving the subsidized shop tag.

Not for exactly the same reason - but on my farm last year, I had a little food hub shop set up as a benefit for farm volunteers. I tagged them to a ‘volunteers’ order cycle that had a -20% enterprise fee.

But how to do it as a public subsidized/discounted shop where you don’t know the identity of the shopper? Can’t be tagging. It could be a second enterprise set up just for this group - and a separate url - kept invisible and only shared with these shoppers or the agents shopping on their behalf. If the shop is selling from supplier product lists (not a shop inventory) then this is a pooled stock between both enterprises. So stock still counts down in one place.

#3

(As an aside - more and more I’m advising setting up a separate enterprise for some complex arrangements.)

#4

Thank you @tschumilas :heart_eyes:

Yes that’s the idea.

Tagging OC! I forgot that this was an option as well!

As they have 2 OC it would however ask them to manage 4 OC a week. But that’s maybe better than duplicating payment / delivery methods. Will talk about it with them, thanks!

In this case, they have to keep the record of the identity of the shopper, so I’m not sure this would work :thinking: But yeah having a second enterprise in their case would help.

#5

Posting another use case that just came up here (maybe not quite as complex as the French case above).
A hub (yes - its that damned flower hub again :slight_smile: ) wants to do fundraising - as a community (buyers and sellers together) they are trying to help increase the number of black and indigenous designers - and want to start a fund to help with that.
So - they could simply add another enterprise fee - like 1% fundraising fee - to everything sold. But then it is only the buyers that take the ‘hit’ and pay the fee. They want something that gives the suppliers an opportunity to contribute too.

Of course, they could remove a percentage off of the supplier sales before they pay them out - but I was wondering if there is a solution in the app.

I haven’t tried this yet - but wondering… If each supplier who wants to be part of the fundraising adds a negative fee to their products in the OC - like a -1% - AND the hub adds on a 1% enterprise fee for fundraising… then the suppliers have discounted their product - and their 1% contribution will be isolated in reports (I think?) AND the buyers are paying more - and that contribution will also be isolated in reports. I’m not sure how a negative supplier fee shows in reports - so need to look at that.

But other ideas for a hub that wants to build a social fund of some sort?

#6

I don’t know if it works, but it sounds like the most easiest indeed. I assume the hub here is a producer hub right?

#7

its a producer-consumer wholesale cooperative. Farmers are the suppliers, designers are the wholesale buyers. Both ‘sides’ want to share fundraising. I have’t tried the negative fee yet - but its on my to do list.