People comparing prices online and says the prices are too high and impossible to sell
One of the biggest misconceptions for e-retailers is that you HAVE to have the cheapest prices to compete. Nature and logic simply kill this in a few seconds. See Mike explaining it in this video here
There is a general view from many retailers mostly in a startup that the only way to compete with your competitors is, having the best prices!
E-Commerce is complicated because people do not need to jump in a car and go around to stores like they used to do a long time ago. Physical stores (before people could search on the internet) did not have to worry about what a competitor in another city sold the same products for. Because it was and still is usually only local people or in the near area, or tourists going to the malls near you.
There is a reason why people in Sweden going to Ullared for 500 or even more kilometers to buy products which is still not cheaper than in the near area in most cases. So why is this? The experience. They like to travel here and makes a trip about it and walk around there. Even if the gas money is more expensive then they earned on the cheap products they bought, they still feel it´s worth it. Do the same with your store online, make sure it´s an experience for customers to come in there.
As we now live in a global market where half of the population has access to the internet there will ALWAYS be cheaper products out there. Even if it is your own brand you are selling. For example, the Swedish bestselling watch brand and global phenomenon Daniel Wellington. This is a success story like no other with over 200 million dollars in sales. They sell b2c on their own website, but you can find thousands of e-retailers out there with exactly the same products for a cheaper price. Not copies, fully original products. So why is this? It is very easy. They also sell b2b to other retailers. At the same moment they send that pallet or container away to a retailer they lose control over the products. And because of the competition regulations they cannot limit a retailer and set a consumer price for them. It is always up to the retailer what prices they sell for.
And what does a retailer do when they cannot sell the products as planned for the original RRP (recommended retail price)? Of course, they lower the price and try to get at least what they paid for it back. There are also companies looking to buy these stocked products who have the channels or customers to sell instead. You can even buy a bulk order much cheaper than straight from the manufacturer. Companies going bankrupt needs to get rid of their stock, these are usually sold for much lower prices than even from the factories themselves many times.
Many people use price comparison websites like www.pricerunner.com to compare which does not give you at all an accurate market price of the product. Also please see the top stores at these comparison websites. The big retailers that do billions in sales are not here, but usually, lower down with higher prices. This is where you will most likely find products like this, and these retailers who get a hold of these stack of products very rarely have continuous customers. Customers who are always out for the cheapest price are not loyal returning customers. They will put the time and effort to find these stores, but I am sure these are not the customers you want as your margins will always be very low and you will have to change your assortment very often meaning no continuity on the products you sell.
So instead of pushing the prices down 1 dollar from your competitor which makes no sense. Make sure you find your customers first, build trust to them and give them a good customer experience instead. This will make YOU have the sale, not the price!
The myth that you need to be the cheapest online just does not add up. As there are millions of e-retailers out there it would only take 100 retailers to lower the price 1 dollar to get it to zero, it´s very easy math. And this would then kill the hole market. Yes, price does matter for many customers. But it is not the most important thing. Here is what you can do to compete with retailers having better prices than you:
- Ask yourself and find the WHY. Why should they buy in your store except for the price instead of competitors? Because as we just said you will never win on only the best price. What do you do better? Make sure you give them an experience just like when they go to a hair salon. They don´t go for the saloon itself, usually, they have a personal attachment to the person taking care of them. Maybe you are the best at your niche and taking care of your customers.
- Outrun them with personal service. Be available and try to answer customers asap. Not only product questions but also returns, claims, etc. Don´t just sell and think “hey I got my money” Remember, a returning and happy customer is the cheapest CAC (customer acquisition cost). Your marketing expenses will go down significantly when you have loyal and returning customers loving you and your store and it will be much easier for you to scale the business after this. The ones who will not come to your store is the ones chasing the best prices all the time. And you won´t survive on them anyway if this is the way you want to compete. They are never loyal. Never ever lie or say something you cannot keep; trust is one of the most important things between you and your customers.
- Build your network and cooperations. A great way to make sales and also reach a bigger network is through partners that bring value to your customers. Just be creative here. If you market and sell locally why not do cooperation with your local restaurants with a discount there if they visit and vice versa for them. If you sell globally you have a great chance to market yourself to new markets and find new customers in places you thought was not possible. Trust me, not everyone is making Facebook ads in Jyväskylä Finland, but I am sure they lack a lot of good products from there and don´t even know your products exist. Be global but with local marketing.
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Now let´s get started and get some sales 😊 Let us know if you have any questions at email@example.com Happy drop shipping!
“Well done is better than well said” – Benjamin Franklin