Don’t Compete on Price for Your E-Commerce Site
In modern society, there are certain aspects of business that have become so commonplace as to be expected. For example, when people buy from an E-Commerce website like Amazon, they expect fast and safe shipping that will get them quality products on time.
These sorts of expected aspects have a wider influence on how businesses develop, so much so that business owners might not even realise they’re being influenced by outside sources!
One of these outside elements is ‘competing prices.’
Competing Prices
Competing prices is when one retailer sells an item for a specific price and then the customer goes to a different retailer and asks them to sell it to them for the same price as the other location.
This, when you break it down, is bonkers. You wouldn’t go to a McDonald’s to see that a burger is a certain price and then go to Burger King and have them try to price match, would you?
Although that’s an extreme example, the point stands. Price matching is a weird element that has filtered its way into business transactions.
Competing Prices Are Bad for Business
As if it’s not enough that competing prices is an odd business element, it’s also terribly bad for business on an E-Commerce website.
With competing prices, customers pit retailers against one another in a way that’s different from the usual competition. It’s like the customers are saying, ‘Look, I’ll love you and support your business if you give me a discount.’
It’s bribery in the highest form, but many businesses think they won’t get sales if they don’t cave to customers who want their objects price matched.
This leads to all the retailers lowering their costs until no one is making any money. The only person who is happy in this scenario is the customer. Everyone else suffers by dealing with competing prices.
Also, if you end up competing prices, you’ll get less of a profit on your items. Although once or twice might not seem dire, even those small financial differences can add up quickly!
If you end up competing prices with other retailers, you might soon find that you don’t have enough money to perform upgrades and do specific marketing to drive sales to your business.
The other thing to consider is that, if you list your item for much less than it’s worth, your potential customers are going to think it’s cheap. You could make the most stunning dresser out of the finest mahogany, but if you sell it for €20, people are going to expect it to be a cheap dresser that they could pick up from any nearby home goods store.
So, not only does competing on price prevent you from getting more profit, but it also lowers the value of the items you’re selling in your customer’s eyes.
Don’t do it!
Alternative Options
Many small e-commerce businesses believe that one of the only ways they can compete with bigger businesses is by matching their prices.
This isn’t true! There are other ways to remain big and relevant – in fact, we’ve written a few blogs on that topic, too!
Build Your Reputation
Feedback and reputation are considered as good as gold when it comes to e-commerce website. Buyers will consistently hunt for the item that has the best reviews, and the better-reviewed item will be the one that wins their money.
If you want to see an increase in sales without cutting your prices, you need to make sure that any customers you’ve had will let the Internet know that they were satisfied.
This doesn’t mean that you should chase these people down, but if you’re able to get a positive testimonial from a happy customer, you’ll be that much closer to getting another sale from someone else.
Know Your Worth and Price Your Items as Such
This might seem counterintuitive, but you need to make sure you’re valuing your items accurately. As mentioned, buyers will avoid items they think are cheaply made!
Unless your item is actually trash – which it shouldn’t be if you’re selling it to other people – you’re going to want to make sure that you’re pricing your items what they’re worth.
This will make customers feel more confident when it comes to buying from you, and it’ll allow you to make the profit you’re expecting to make.
There are, of course, other ways to make your name stand out, but these will help you if you’re just getting started. All this to say, no matter how dire things look, cutting your prices to be competitive isn’t the way to turn your ecommerce business into a success.
