This paper presents the design, development, and implementation of a specialized forecast-then-optimize algorithmic pricing tool for sales campaigns in fashion e-commerce. Sales events present unique challenges for pricing including volatile demand patterns, rapid pricing decisions, and the need to balance short-term revenue with long-term profitability. We describe our approach combining daily-resolution demand forecasting using gradient-boosted trees with a multi-objective optimization framework that maximizes both long-term profit and net merchandise value for more than 5 million articles. Our solution addresses key limitations of existing weekly-granularity systems by implementing a forecast-then-optimize architecture that reduces pricing decision time from hours to minutes. We validate our approach through 23 A/B tests across 12 markets during 2023-2024 sales campaigns at Zalando, one of Europe's leading online fashion retailers. Experimental results demonstrate that the new pricing system achieves approximately 6% higher profit while maintaining equivalent performance on sales and revenue compared to the previous manual-algorithmic hybrid approach. Based on these results, the algorithm was successfully deployed to production and now handles the majority of algorithmic pricing decisions for sales campaigns at the company.
Traditional dynamic pricing models in large-scale e-commerce suffer from limited interpretability, poor utilization of unstructured information, and misalignment with long-term business objectives such as cumulative Gross Merchandise Value (GMV), Return on Investment (ROI) and milestone achievement. We propose AIGP, a novel framework that leverages a Large Language Model (LLM) prompted with domain knowledge, structured data and textual context to make interpretable, knowledge-aware pricing decisions. For efficient deployment while maintaining high-quality outputs, we employ supervised fine-tuning for knowledge distillation. Central to AIGP is the Long-Term Value Estimator (LTVE), trained via offline reinforcement learning on historical data, which serves as a reward model to score candidate pricing actions and select preference pairs for Direct Preference Optimization (DPO), thereby aligning the pricing policy with long-term business objectives. Extensive offline evaluations and large-scale online A/B tests on Tao Factory demonstrate that AIGP achieves significant improvements: +13.21% in GMV, +7.59% in ROI, and +8.20% in milestone achievement rate over 14 days compared to the production baseline, while simultaneously providing interpretable and transparent pricing rationales.
Unlike Business-to-Consumer e-commerce platforms (e.g., Amazon), inexperienced individual sellers on Consumer-to-Consumer platforms (e.g., eBay) often face significant challenges in setting prices for their second-hand products efficiently. Therefore, numerous studies have been proposed for automating price prediction. However, most of them are based on static regression models, which suffer from poor generalization performance and fail to capture market dynamics (e.g., the price of a used iPhone decreases over time). Inspired by recent breakthroughs in Large Language Models (LLMs), we introduce LLP, the first LLM-based generative framework for second-hand product pricing. LLP first retrieves similar products to better align with the dynamic market change. Afterwards, it leverages the LLMs' nuanced understanding of key pricing information in free-form text to generate accurate price suggestions. To strengthen the LLMs' domain reasoning over retrieved products, we apply a two-stage optimization, supervised fine-tuning (SFT) followed by group relative policy optimization (GRPO), on a dataset built via bidirectional reasoning. Moreover, LLP employs a confidence-based filtering mechanism to reject unreliable price suggestions. Extensive experiments demonstrate that LLP substantially surpasses existing methods while generalizing well to unseen categories. We have successfully deployed LLP on Xianyu\footnote{Xianyu is China's largest second-hand e-commerce platform.}, significantly outperforming the previous pricing method. Under the same 30% product coverage, it raises the static adoption rate (SAR) from 40% to 72%, and maintains a strong SAR of 47% even at 90% recall.
Pricing food products to balance profitability with consumer welfare is a central challenge for retailers. Dynamic pricing is widely used to maximize revenue, yet most pricing models optimize business objectives while overlooking consumer fairness. This paper studies the risk of consumer exploitation under dynamic food pricing in Canada and proposes a methodology that embeds fairness constraints directly into retail sales forecasting. We model total retail trade sales with a log--log Autoregressive Distributed Lag (ARDL) specification, in which the coefficient on a product price is a sales elasticity, and pose the pricing problem as maximizing forecast sales subject to price bounds anchored to the Consumer Price Index (CPI). We solve this problem with both Linear Programming (LP) and Simulated Annealing (SA), under single-product and multi-product configurations. A key finding is that the fitted nominal elasticities are positive. As a result, an unconstrained sales-maximizer would push every price to its upper bound, and the CPI ceiling is the safeguard that prevents this. Simulated Annealing instead settles on conservative, interior prices that lower consumer cost while still meeting the sales target. We benchmark forecast accuracy against naive, seasonal-naive, ARIMA, and SARIMA baselines, and a CPI-deflated re-specification shows that the positive nominal elasticities are largely an inflation-driven artifact. The result is a transparent, fairness-aware pricing framework.