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How dynamic pricing algorithms can increase gross profit by +10% | Towards Data Science

The Oil & Gas sector in Brazil has been facing challenges due to the economic crisis and the technological revolution. These are the main pain points:

1. The fuel resale segment is in a context of restrained margins by both sides of the supply chain:

• The upstream segment reduces gas stations margins through increased fuel purchase costs.

• Consumers are facing limited family budget and becoming more price sensitive, turning it difficult to resellers to pass on cost increases.

2. Mobile apps (such as Waze) are providing consumers with real-time price information, allowing customers to find out which is the nearest and cheapest gas station in the region before refueling.

3. Petrobras, the semi-public Brazilian petroleum multinational, has implemented a new pricing policy which allows prices to move accordingly to fluctuations in international commodity prices. This new policy, which begun in 2016 and has been intensified in the following years, brought a new dynamic of fuel purchasing costs. Resellers do not know how to deal with it, since this sector has been consolidated in Brazil during decades of high-regulated prices.

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How dynamic pricing algorithms can increase gross profit by +10%.

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