These goldsmith-techies use dynamic pricing to help businesses max revenues

Anshu Jalora and Vijeta Soni's firm Sciative uses AI, automation and big data to set movie ticket prices, and bus and airline fares, based on the demand curve for these services and products

If you're the kind who can't miss your weekend movie at the multiplex, you would, in all probability, book a seat online or on app well in advance to avoid having to deal with the infernal 'Housefull' sign at the entrance. Even if the hall isn't packed to capacity, the crowds would still be plentiful, and the lines at the food counters during the interval, painfully long.

But what if you took a working day off to catch the latest Bollywood or Beverly Hills flick on a weekday? Anshu Jalora and Vijeta Soni, co-founders of Sciative, would tell you that unless it's a blockbuster, there is a big chance that 40-50 per cent of the theatre would be empty. "On a very bad day, as many as 80 per cent seats go unsold," says Soni. Good for you, but not a very happy situation for the multiplex, which has lost not only the inventory of seats for good but also revenue on pop-corns...and for nothing.

The duo says intercity bus services, airlines and hotels encounter similar problems during lean periods. Every unoccupied seat or room is a revenue opportunity lost forever--unlike a manufactured good, which still has some shelf life.

Sciative's dynamic pricing

This is where Sciative comes to the rescue of these enterprises. The company uses automation, artificial intelligence and big data to set the prices of movie ticket, bus and air fares and even retail value tags, and help businesses in these spaces squeeze some revenue out of capacities that would otherwise have gone unutilised. And when the demand is much more than normal or anticipated, it uses these very tools to derive extra value to raise prices. This dynamic pricing is done in quasi-real time, drawing upon data from the web portals and apps to track the demand curves of their clientele. The methodology is akin to the kind used by cab aggregators such as Ola and Uber, and the Indian Railways.

The result: The promoters say there was a substantial increase in the capacity utilisation and revenues of clientele such as Neeta Travels, Shreenath Travels, Morningstar, and Vignesh Travels, all of which offer intercity bus services in various parts of the country. The company has been able to replicate this success in the civil aviation, retail, hospitality and movie spaces as well, but the duo says they are bound by non-disclosure agreements not to the names of their clients in these spaces.

The company’s SaaS (Software as a Service) products are being deployed for clients in the United States and South Asia. Under its 2022 growth plan, Sciative hopes to expand to Europe and Australia. In fact its ‘Right Price’ Saas product is being used/pitched for one of Germany’s largest companies in the safety and green enterprise space.

“Close to 20 per cent of our revenues are international currently and we are aiming to take this beyond 50 per cent by FY22," says Jalora.

How the technology works

Soni says Sciative’s AI-powered dynamic pricing solution for the travel business, creates an AI bot that replicates human behaviour, for every vehicle (train, bus, plane) it is pricing. At the start of chart opening the bot forecasts the demand by looking into historical data patterns, continuously monitors the current market and self-performance (occupancy and revenues), and optimises prices every 15 minutes. It also generates personalised prices and offers for each customer based on their preference and changing shopping habits.

“Once bots are configured for a business, the need for manually changing prices is eliminated. It provides real-time foresight into demand and supply patterns by looking into 83 parameters such as historical data, seasonality, seat preference, inventories, offers, promotion history, and relative sales performance every 15 minutes. It helps identify ticket prices that will maximise occupancies and increase revenues by 20-30 per cent,” says Jalora. 

The mechanism for cinema tickets is similar, but there are some additional insights here. Says Jalora: “One doesn’t necessarily go to the cinema solely to catch up on a blockbuster. Movie watching is a different experience altogether, and at least at the level of the college kids, it’s more about hanging out and chilling together. On lean shows, the seat prices become very affordable for this set given their limited budgets to plan an outing with their friends. And with blockbuster films the AI bots identify the right premium to divert the demand to off-peak shows.

Value to the customer

Soni says Sciative’s dynamic pricing tech for a leading bus operator in Andhra Pradesh delivered a 34 per cent surge in revenues in non-peak days compared with their high season times when they were manually pricing their fleets. “For another Delhi-based premium bus client, we sold seats at prices higher than airline prices on the Delhi-Lucknow route. And out Ahmedabad-based luxury bus client saw a record breaking 187 per cent occupancy.” 

Pandemic impact

In the hospitality and travel sectors, government restrictions on inventory utilisation and change in customer’s booking patterns did impact the AI model. However, given the self-learning nature of the algorithms, it took barely a few days for the bots to re-learn the new patterns once travel started opening up. Unlike travel and hospitality sectors, the retail sector blossomed especially on the e-commerce side. This transformation supported and strengthened the AI bots further by improving their demand forecasts and market intelligence capabilities. 

Says Soni: "While the hospitality sector was impacted inotially by both, government curbs and fear on the part of the consumer, remote working helped us. Many of our resort clients posted excellent capacities with families or couples driving down and working from these properties, instead of logging on from home."

She does admit, however, that Sciative was hit by the closure of cinemas but adds that the surge in the retail sector more than compensated.

How it all started

The husband-wife duo, both from goldsmith families in Rajasthan, were studying in Texas, US, in the 2000s. After having got out, Jalora, who is also an alumnus of IIT Delhi, and a PhD in Pricing and Revenue Management from Texas A&M University, began an 18-year stint working in the United States first, and India later. During this time, he held senior positions at Starbucks, Overstock.com and PROS Revenue Management in America, and at Reliance Industries and ITC back home.

Jalora's accidental introduction to the transformation of the US airline industry through dynamic pricing and the underlying scientific models piqued his interest in the subject. Keen on disrupting business models with creative applications of dynamic pricing, he built and applied next-gen models for accelerated growth, profitability and customer loyalty for several Fortune 500 companies.

Jalora and Soni, both of whom belong to business families engaged in gold jewellery in India, noticed that the dynamic pricing solutions in domestic businesses lagged those of modern commerce, and their reach was limited to the top enterprises. This gap, and the desire to get back to their roots led Jalora and Soni, who is also an IIM Bangalore alumnus and has spend over 1.5 decade working on designing and developing tech products, set up their startup, Sciative Solutions in 2017 and roll out their first pricing product in 2018.

Current scenario and future plans

Sciative is “largely a bootstrapped startup that has been profitable since inception”, according to the promoters, though the enterprise did raise $1 million from Bengaluru-based InnovationQuore in a pre-Series round. The firm works on both, the licence fee and the revenue sharing model, based on what the client desires, and has an estimated average revenue run rate of Rs 18 crore for FY22, which it hopes to ramp up to $1 billion (Rs 7,500 crore) by 2026-end as it expands its international footprint.

Sciative currently has 40 heads, consisting of full stack AI/ML developers, customer success associates, business growth managers, data analysts, revenue analysts, quality assurance experts. It plans to raise this number to about 100 members in next one year and 500 in five years.

Investor's take

Ganesh Raju, Founder & CEO, InnovationQuore, which invested $1 million in Sciative in a pre-series round, says, "A solution that was once restricted to large corporations with huge budgets is now available through Sciative to mid-size companies. Anshu and Vijeta's expertise in the field, and their ability to surpass expectations with every delivery and product release assures us of their sustained growth. We at InnovationQuore have been backing them for this reason, along with the fact that their understanding and use of AI is so substantial, it has created a moat against any competitors that may come their way.”