Marketplace Subsidies

Objective

To offer a subsidy program designed to encourages suppliers to increase the output of a particular product.

  • This is done by partially offsetting the production costs or losses.

The objective of subsidies is to expand a particular product’s production so that the market will promote it but the final price to consumers won’t be raised.

In order to use this functionality, please create a TMLSD ticket to activate the feature. The parameter that needs to be changed is subsidies/enabled.

Subsidies work with the Recommended Prices feature. Both features need to be activated before use. Please make sure you upload recommended prices before creating a subsidy plan.

Setup of Subsidy Plan

Step Description Image
1 Subsidy Plan Overview
Go to Administrator > Manage Subsidies
2 Plan Creation
Decide the name, the budget you will spend, and the time period during which the plan will run. 		Screen Shot 2016-05-27 at 11.43.40
3

“Draft” 

Status Explanation
As a draft:

  • Plan is not enabled.
  • Plan running dates do not include the current date.
  • There are no products included in the subsidy program.
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4 Import List of SKUs to be subsidized

  • Only the actions available in the respective plan states can be clicked.
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5 SKUs Imported and Error Report

  • The list of Shop SKUs to be subsidized to marketplace Sellers will be decided by admin.
    Validation checks whether or not:
  • Shop SKU is valid
  • Products are already assigned to a different plan
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6 “Active” Status Explanation

  • When the current date reaches the start date, the plan will automatically become active and all included SKUs will match their price to the lowest competitive price.
  • The price update will be published to the Shop but will not be visible in the Product Overview.
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7 Export Products
It is possible to export subsidized SKUs from a planned or running plan. 		Screen Shot 2016-05-27 at 12.55.06
 8 Burned Budget Report
Export the report at any time to monitor expenditures at SKU and Seller-level. 		Screen Shot 2016-05-27 at 13.01.45

Seller Experience

9 Impact on Seller Experience

  • Sellers are notified that the subsidy is calculated based on the existing price and in case of increase, the product will exit the plan.
  • A price decrease does not impact the product’s inclusion in the plan.

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10

Explanation of Subsidy Value

Affected Prices in Seller Center:

  • Price
  • Sale Price
  • Sale Start Date
  • Sale End Date

Affected Prices in OMS :

  • Unit Price: the price of the product pushed from Seller Center
  • Paid Price: the paid price after customer applies voucher codes

Subsidy amount is calculated in real time when order arrives to Seller Center.

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Impact on Financial Transaction
A new transaction called “{VentureName} Subsidy” is created simultaneously when item price credit is triggered.

 

Impact on Financial Overviews
In all Transaction Overviews, as well as in Order Overview and connected sales reports, the subsidy transaction is visible.

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Document Templates adaptions

 11 Document Templates
Invoices will display the sum of the item price and the subsidy transactions. 		Screen Shot 2016-05-27 at 15.17.53
12 Plan stopped due to budget burned or end date reached
As soon as the plan stops, the products’ prices will be automatically reset to the previous value.

Transaction Rule Engine – Rule Setup

When the subsidy feature should be used it is necessary to update the current transaction rules in order to ensure that the correct transactions get triggered. As customer pay a reduced price, than seller actually offer and the subsidied amount gets added again to the product total it needs to be ensured that all connected transactions apply too.

TRE operation Description
Condition 
 product.isInSubsidyPlan
  •  add in the condition field the check if an item is part of a Subsidy plan
  • this condition needs to be added to all rules (or the negating part to cover, that item are not in a subsidy plan), when subsidies get used
    • existing rule needs to be deactivated
    • e.g. previously one commission rule was in place
    • => two new need to be created: – (product.isInsubsidyPlan) & ( !product.isInSubsidyPlan)
Commission 
item.unitPrice

(instead of paidPrice)

or use 

product.currentPrice
  • seller have to pay the commission of the full item price, not from the reduced one
  • or using the product.currentPrice value
Subsidy amount 
product.currentPrice - item.unitPrice
  • calculate the subsidy amount
  • create a transaction which credits to the seller the subsidy amount
Item Price Credit 
item.unitPrice
  • regular transaction which uses the unti price instead of usually the paid price
Item Price 
item.unitPrice
  •  negating transaction for the item price credit
Subsidy Refund 
product.currentPrice - item.unitPrice
  • Same formula as the subsidy amount, but as the transaction is in this case a debit, the outcome is different.
In order to also reduce automatically the amount in the subsidy budget, please create a TMLSD ticket. The configuration that needs to be updated is subsidies/account_statement_group_ids. There the ids of all transaction groups need to be added, which are related to Subsidies and should trigger the reduction of the budget