Case Study
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Burrow is a direct-to-consumer furniture company, started by Kabeer Chopra and Stephen Kuhl in 2016. The idea was born out of the founders’ own personal experiences buying and building furniture. They realized that while it was possible to buy mattresses that shipped in the box to their doorstep, that convenience just didn’t exist for high-quality sofas. They started Burrow to address this gap.
What started as a journey to design and modularize high-quality sofas evolved over the years into a beloved furniture brand across multiple furniture categories. The ethos for the brand has remained the same – designing furniture from the ground up, to be to be the most convenient and pleasurable experience for the end customer.
Historically, pricing decisions at Burrow have been an art, based on a margin profile they were trying to get to. Like other DTC brands, prices were not changed very often.
When they occasionally tested price increases, the Burrow team would watch out for whether the loss in conversion was made up by the increase in prices. If it did, it was a worthwhile price change. This approach worked early in their business because they had fewer products. Therefore the impact was very attributable to specific price increases on specific SKUs.
However as they expanded to different collections and categories, this approach was no longer viable due to cannibalization and substitution effects between products. It became hard to observe if a price change on a product was simply losing conversion or transferring conversion to another product within the same category.
Additionally, the Burrow team was constantly making changes in other parts of their business, such as running marketing campaigns or running UI experiments. Therefore isolating the impact of price changes became a lot more convoluted than ever before.
As COVID-time demand surges shifted, and the business priority moved to margin and profitability, it became increasingly important for Burrow to have a more scientific approach to pricing decisions. However they realized that they didn't have the dedicated team to be able to solve this at the complexity of their business size, so they approached Luca.
Coming out of the pandemic, Kabeer knew that he wanted to focus on the operational efficiency of the business. The demand in the home furnishing industry had declined over the last couple of years and pricing became a top lever for him to get to his efficiency goals.
“I was looking for options in the market and stumbled upon Luca”, Kabeer says, “What you guys were doing and the team you have seemed really interesting. As we started talking through the process, it became clear that this product was very opinionated in its approach to pricing, and once we started piloting the product, we realized that there was a very clear impact from your approach to pricing”.
Burrow started to use Luca’s pricing engine to make periodic price adjustments to optimize product lines. They still wanted to make infrequent price changes, but with clear hypotheses and results from those changes. Using Luca’s engine, they were able to get their products to ideal price levels which were profit dollars maximizing.
They were also able to shift how they thought about launching new products. Instead of trying to get the price point right, they were able to start with anchor prices but started to optimize those prices over time using Luca’s platform.
With Luca, Burrow has been able to keep their pricing cadence and thoughtfulness, but now with a powerful pricing co-pilot enable each decision.
