Ecommerce, online shopping, and selling online are very popular in today’s world. Customers shop online because many of them believe that they are getting a good bargain. However price wars and undercutting other sellers is not the solution to winning at this game and increase sales. No doubt, customers look for a bargain price but the long term solution for a seller is not to enter into a price war with other sellers so that they can sell more. This only leads to the creation of a weaker market.
The entire Ecommerce scenario is governed by discounts and coupons. Price competition is high amongst sellers; the battle field is warming up with offers of next day delivery, rock bottom prices, buy two for the price of one and even coupons codes or free shipping. Festival sales further seem to be an extended affair and all this is to the advantage of the customer. There are also certain tricks of the trade that aid in lowering prices as browser plug-ins. The question here is~ are Ecommerce price wars the answer to making bigger sales?
Lowering prices drastically only encourages the bargain hunter and not the shopper who is looking for quality. In this brand loyalty will neither be there nor can be expected. With the encouragement of reviews, it is to be noted that even the bargain –only shopper is writing reviews and searches are revealing the lowest price across segments. This is detrimental to business of big brands because “tech add-ons are comparing and contrasting the available outlets for the customer to make it even easier.” So most bargain hunters; are flocking to websites with the lowest price. This does not create a healthy market.
Let us check out some important dos and don’ts.
- Price your products in terms of what they offer to your customers. A customer should not feel that the product is of a cheap quality or they are not getting what they pay for. Human psychology is such that the tendency to regard the lowest priced item as of the cheapest quality is not uncommon. So in a desperate attempt to sell at rock bottom prices the seller should not miss out on sales altogether.
- Tailor your approach to customers so that they feel special when shopping. When that happens they will buy from you even if your prices are not rock bottom. Take control of your pricing as well as how you present your products in order to give a wholesome experience to the customer. Offer a variety of prices for different versions of the same product, customize shipping options and make the check out process smooth. Breaking your customers into segments would help you to price your products appropriately thus ensuring happy customers from every level.
- Make the price-point experience smooth with simple pricing and faster check outs, effecting positive decisions. Many a customer would prefer that than a bargain. It ultimately boils down to who you sell to. So don’t get into the biggest mistake of Ecommerce-price wars because that weakens the market affecting business in the long run.
- Switch to automation where pricing is concerned. Available data helps you to indulge in positive optimization of prices. It is advised that all online retailers use price testing strategies powered by technology; this helps you to implement the best method of pricing suitable to you product known as A/B tests.
- The success does not lie in getting into a price war but by promoting your product through SEO and strong marketing strategies. Emphasize on your attributes, sell upscale niche products and have a band of loyal premium customers rather than compete at lower pricing strategies. Offer signature products so that the customer remembers the experience rather than the price.
- Lower prices means that there are fewer returns and logically you need to sell more to improve on your returns. This is a bad precedence and affects the entire market adversely. Pitting against each other in an inadvertent attempt to sell more is not the best option. A hostile environment created by retailers who are at war would not only spell doom across the board but would nullify the aim of every seller which is to ensure that profits are sustainable.
- The answer to many of the problems related lie in studying the psyche of the shoppers and giving them a unique, memorable and functional shopping experience that makes them come back for more at the same time making the prices attractive enough.
Possible negatives could be
- People buying from you at a lower price using the drop ship option and selling elsewhere at a higher price.
- You can never be sure of the most effective pricing option. So it’s better to get good reviews for upscale products to counter the cheap ones. Many customers believe in being better safe than sorry and will choose a higher priced product if he has confidence in the brand. That is where a good review and past experience plays a crucial role and could be the deciding factor of a purchase.
- Counter the price wars with hour to hour variation in prices by keeping a sharp eye on the customer trends. Introducing an organic search on Google that gives your products higher visibility, a fair returns policy, powerful product images and great descriptions contribute more towards sales than the humdrum price wars.