Dumping

Definition

Dumping is the deliberate reduction of a product's price below cost or below an economically justified level with the aim of pushing out competitors, gaining traffic, or winning the preferred position on a product card.

How dumping works: mechanics and triggers

Dumping is implemented through several common tactics that are important to recognise when selling on Kaspi.kz:

• Direct price cuts. A competitor lists a price below market to capture clicks and orders.
• Coupons and short-term promotions. A seller uses coupons or limited-time discounts so that their offer becomes the lowest on the product card for a short period.
• Bundle and package deals. Reducing the price for a set causes single-item offers with higher margins to be displaced.
• Price “fork” play. A series of cuts and returns to undermine competitors’ price discipline.

From the buyer and platform algorithm perspective, dumping affects the marketplace like this:

• lower price = higher click-through; on product cards buyers often pick the cheapest offer;
• low price quickly increases turnover but does not guarantee profit — with negative margin, a seller loses money even if sales rise;
• frequent price spikes reduce inventory predictability and make procurement planning impossible.

Why a seller needs to understand dumping

The consequences of dumping for a seller on Kaspi.kz translate into concrete figures and risks:

• Margin erosion. Even a one-off price drop of 10–30% on a key SKU can wipe out a month’s profit — especially for products with base markups of 15–25%.
• Increase in returns and disputes. If a seller tries to compensate dumping by cutting packaging or logistics quality, returns and negative reviews rise, reducing visibility in search results.
• Risk of working-capital shortage. Fast sales at loss-making prices create a cash gap: money goes to replenishing stock while profit is absent.
• Long-term brand damage. Constant discounts teach consumers to expect low prices and make it harder for the seller to return to normal pricing later.

Practical metric: if your target gross margin for the category is 30%, a one-time 20% price reduction combined with a 10% platform commission and 60% cost can routinely convert profit into loss. Therefore, price control is not a theoretical task but a financial necessity.

Examples on Kaspi.kz with calculations

Below are simplified illustrations to make the effect of dumping concrete. Numbers are hypothetical but reflect typical marketplace economics.

Example 1 — direct price cut by a competitor

Assume:

• Cost (COGS): 6,000 KZT
• Platform commission: 10% of the sale price
• Target gross margin: 30% (on selling price)

Target selling price to achieve ~30% gross margin (approximate):

Required net revenue = cost / (1 - target_margin) = 6,000 / 0.7 ≈ 8,572 KZT. If platform fee is 10%, the listing price must be ≈ 8,572 / 0.9 ≈ 9,525 KZT.

If a competitor drops price by 20% and the market price falls to 7,620 KZT (20% lower than 9,525 KZT):

• Seller's revenue after fee = 7,620 × 0.9 = 6,858 KZT
• Profit = 6,858 − 6,000 = 858 KZT (margin ≈ 12.5%) — much lower than target;
• If the competitor goes even lower (for example to 6,800 KZT), seller revenue after fee = 6,120 KZT → loss of 120 KZT per unit.

So, a sustained competitor price below a certain threshold rapidly turns healthy SKUs into loss leaders.

Example 2 — coupon or flash action

A seller uses a coupon to make their offer the cheapest for a short window. That drives high turnover but at the coupon price the unit may be sold at a negative margin. Even if this is temporary, repeated short promotions can:

• shift Buy Box selection toward the couponed offer;
• create a consumer expectation of lower price;
• force other sellers to react and risk margin erosion.

Practical tips: how to protect yourself and react

• Monitor prices continuously. Track current and historical prices on the product card and competitors’ offers. Look for patterns, not isolated dips.
• Document everything. Keep screenshots, price histories, coupon records and sales data with timestamps.
• Use price tiers and unique offers. Differentiate by offering bundled products, added services, or unique SKUs so you aren't directly competing on price only.
• Adjust stock strategy. Temporarily limit available stock for loss-making SKUs to reduce exposure while avoiding a public price war.
• Improve perceived value. Work on the product card, photos, guarantees, delivery speed and packaging so customers choose value over the absolute lowest price.
• Communicate with the marketplace. Report suspected predatory pricing to Kaspi.kz support with documented evidence.
• Automate alerts. Set up triggers to notify you when a competitor price drops below a predefined threshold.

Response algorithm when dumping is detected

1. Fix evidence: take screenshots, export price history, save coupon and bundle details, and record any abnormal sales velocity.
2. Analyse impact: calculate margin at competitor price, estimate weekly/monthly loss if the trend continues.
3. Operational measures: temporarily reduce replenishment, pause marketing for the affected SKU, or switch to a differentiated offer (bundle, warranty, service).
4. Marketplace escalation: submit the documented case to Kaspi.kz support and request review — attach evidence and calculations.
5. Legal/administrative steps: if damage is substantial, file a complaint with the Agency for Protection and Development of Competition of the Republic of Kazakhstan (see next section).
6. Automate prevention: implement price monitoring, alerts and rules so the next episode is detected and handled faster.

Legal and documentation aspects in Kazakhstan

Available legal steps and best practices:

• Collect evidence thoroughly. Price histories, screenshots, order and refund reports, details of coupon usage and any communication with the competitor or marketplace.
• File administrative complaints. Submit a complaint to the Agency for Protection and Development of Competition of the Republic of Kazakhstan if you suspect unfair competition. The agency considers predatory pricing cases that harm market competition.
• Use marketplace channels. Report violations to Kaspi.kz support — marketplaces have their own rules and mechanisms for sanctions.
• Civil claims. For significant losses, a civil claim through a lawyer may be appropriate; legal proceedings require a clear causal link and a solid evidentiary base and take time and resources.
• Act commercially in parallel. Legal procedures are important but slow — combine them with commercial measures (see practical tips) to limit immediate damage.

Automation of price control and the role of tools like AWW

Automation is a key defence against dumping. Tools such as AWW can provide:

• continuous competitor price parsing and historical price analytics;
• alerts when price falls below configurable thresholds or when velocity spikes at negative margins;
• automatic rules to switch offers, enable/disable coupons, or change stock levels based on detected anomalies;
• dashboards that show gap between your price and the card minimum, share of clicks, and impact on margin.

Combine automation with human oversight: tools speed up detection and initial response, but strategic decisions (legal steps, communication with Kaspi.kz, partner negotiations) require human judgement.

Brief summary and practical tip

Dumping is not just a pricing issue — it is a strategic threat that affects cash flow, margins and brand perception. The immediate response should combine rapid monitoring and documentation, short-term commercial countermeasures (differentiation, stock adjustments) and, when needed, escalation to marketplace support and competition authorities.

Practical tip: set up automated alerts for price drops below a safety margin and create a pre-agreed playbook with steps, responsibilities and templates for reporting — this turns chaotic reaction into a predictable, fast process and minimizes financial damage.