SNIFFIE SECURED A 2.5M€ FUNDING FOR ECOMMERCE PRICING AUTOMATION
Price became a silent megatrend in ecommerce. The ability for consumers to compare prices, the amount of brand owners selling their products online, and the abilities big ecommerce companies have to use data and machine learning is something we’ve never seen before. Profitable pricing has become a burning problem for small & mid-sized ecommerce businesses. The vision of Sniffie, a startup from Helsinki, Finland is to democratize ecommerce by enabling the equal use of machine learning in pricing for small and mid-sized ecommerce businesses. To reach this goal, Sniffie secured a total of 2.5M€ seed funding.
The funding consists of a 1.26M€ equity investment made by Superhero Capital, investments by key personnel, a development loan of 419 000€ from Business Finland, and a possible loan provided by the stage 3 of Young Innovative Companies (NIY) program totalling at most at 750 000€.
With the funding, Sniffie aims to develop a leading pricing platform focused on machine learning within the next five years. To achieve this goal, the company has decided to focus on developing their product on Shopify’s ecosystem which is one of the most popular ecommerce platforms in the world having nearly two million online retailers.
Data-driven pricing increases the profits based on demand
The price of a product has a major impact on consumers purchasing decisions in ecommerce. Fast growth of mobile shopping, same day deliveries, comparative advertisement, and the price competition between big ecommerce companies have shaped pricing to be one of the key factors in today’s ecommerce. To ensure profitable pricing for their products while avoiding price wars merchants have to be able to use their own internal data. Sniffie’s machine learning serves as a solution for the problem at hand by optimizing a merchant's product pricing based on the actual demand on their shop.
A global market for automating profitable pricing has emerged. The software market focused on pricing can already be valued at $1.42 billion and it is expected growth by 15.5% annually, according to Gartner. (Gartner.com) With a wider spectrum, Sniffie estimates that the entire global market could already reach a valuation between $2-$3 billion.
Shopify, the most promising e-commerce ecosystem selected as the base for the strategy
Shopify, an ecommerce platform used by nearly 2 million online merchants was chosen to be the first core for the strategy. “To develop our service to be global and scalable we chose Shopify as a base for our product because of Shopify’s comprehensible technology and functioning marketplace for applications”, Joonas Sirén, CTO explains.
The software Sniffie has developed in cooperation with their customers has proved to be effective. “Taking advantage of machine learning is one of the big trends in ecommerce as internal data can be used to improve one’s way of doing business” says Sniffie’s Head of Data, Aleksi Kukkonen, developer of Sniffie’s machine learning. A study conducted in 2021 reveals that 38 % of e-commerce decision makers believe in the use of AI in their pricing. (Statista).
Minna Kätevä, the COO of Sniffie’s customer LiveHelfi.com, a Dutch ecommerce store focused on selling supplements to biohackers and to other health conscious people describes the challenges of ecommerce pricing as follows “When the market is big and you sell goods to nearly 30 different countries it is simply impossible to make correct pricing decisions without the help of AI. When your product portfolio is growing you must learn how to handle data in an effective manner.” Tomi Kottonen from Hyvinvoinnin Tavaratalo, another customer of Sniffie’s taking part in the AI development, sells health products states that “The competition in the health products market is extremely tough and price plays a key role in consumers’ purchasing decisions. Anyone can find the market price from Google in a hearbeat. When you have thousands of products and dozens of competitors it is no longer possible to drive profitable pricing without the use of automated dynamic pricing that maximizes your profits.”
Sniffie Software Ltd as a company
Sniffie Software Ltd is a startup focused on making pricing automation easy for e-commerce companies. The company is located in Helsinki, Finland and has been operational since 2017. Currently the company employs 15 people at Pitäjänmäki, Helsinki.
Additional information
Sniffie Software, CEO & Co-Founder, Tomi Grönfors, 0503657169 or tomi@sniffie.fi
Additional materials: https://www.sniffie.io/news/
Images and videos https://www.sniffie.io/news/images
Website: https://www.sniffie.io
Sited sources: Gartner - Gartner Magic Quadrant for Configure, Price and Quote
Application Suites (https://www.gartner.com/en/documents/3991043/magic-quadrant-for-configure-price-and-quote-application), cited on 27.1.2022
Statista - Future areas in which AI will help e-commerce businesses according to decision makers in North America and Europe in 2021(https://www.statista.com/statistics/1175063/ai-help-business-ecommerce-companies-worldwide/), cited on 27.1.2022
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