- by eSellerHub
The longer you wait, the harder it gets and eCommerce isn’t a La La Land you expected it to be considering anybody with a little knowledge of the internet and above average hustling skills can make a living there. You don’t need a store, assistants, cashiers, and even startup funding to get started. Most eCommerce stores don’t take more than a couple of hours to go live.
What happens when a segment of retail becomes this approachable? It attracts hyper-competition. And what happens when a business gets this competitive? Profit margins begin to fall, rags to riches stories are hard to come by, and, gradually, it becomes a story of survival. When winter comes, the lone wolf dies but the pack survives.
Behind every story of survival, there is a set of ingenious pricing strategies to drive conversions and raise the bottom-line. In the rest of the post, we will look at some of the pricing strategies you can apply to reach your eCommerce goals faster.
Keep Your Ally Close and Your Competitors Closer
In a hyper-competitive eCommerce space, you don’t decide pricing but your competitors. By competitive pricing I mean, your price should be listed lowest for a product. This isn’t a onetime process. Well, Jack is selling this watch for $10, I will sell it at $9.5. You should a keep close eye on your competitors. Jack might change the watch’s price to push sales and you should be the first to respond to it.
While most sellers don’t changes prices on their listings often, some products tend to be competitive. This goes for products in perpetual demand or seasonal demand. When pollution in Beijing went berserk last winter, the demand of N95 pollution mask skyrocketed, which took many sellers to fulfill. So much was the competition that the sellers were changing pricing every hour. If you’re selling medical equipment with an average profit margin of $7 at 10 pieces/ hours, then a delay in responding to price changes will cost you $70 per hour or $1680 per day.
There is a reason why so many sellers insist on our custom repricer solution for eCommerce sellers. With inbuilt price automation features, the software will adjust the prices in response to your competitor’s.
Avoid What is Strong, and Strike at What is Weak
If calling the prices to its lowest just to survive is threatening your sustainability, then you’re either in the wrong business or selling wrong things at the wrong time. This may or may not true for your competitors. He may have favorable agreement with the supplier or dealer, which allows him to sell the product at its lowest prices. Or perhaps, he is wearing the same shoes as you’re and closely watching who will fall the first. While this a curious condition to be in, but destructive business often have no ends, at least in electronic commerce.
Your competitor may be too aggressive with pricing on a couple of more products you’re selling but not all. The pricing strategy here should revolve around concentrating on your other products for the time being and stick to the pricing on products you’re receiving too much competition on for a little more. Sooner or later, the competitor will stop growing paranoid. This is the time to strike back and steal the victory from his claws. By this time, your competitor would have gone too exhausted in terms of energy and money and put a fight all over again. If that’s not the case, then you’re bumping into someone too large for your boots and you should look somewhere he is not.
Be Where Your Competitors are Not
Not every competitor deserve your attention or is worth fighting for your attention. If there are too many sellers fighting for a product, then you should not be one of them. Rather invest the time into finding products ‘low on competition’ and ‘high on demand’. Do not think all those products are taken. That’s a huge eCommerce myth surrounding eCommerce sellers. Always remember, there is always that one product waiting for you to discover.
At eSellerHub, our tailor-made product listing and inventory management software for online sellers make searching and listing products a breeze. Yes, it will help find not just one product but hundreds of them that fit in the “low cost, high demand” bracket.
The Whole Secret Lies in Confusing
Your competitors are in the business because they survived and we all know how hard it is to survive in the eCommerce business. If they are not just surviving but going strong, you know they are here for a reason: to crush any future competition coming in their way before it finds grip. That competitor could be you and it takes some time to get a grip of the market. Now that you have decided to compete, you should master the art of deception because confusing your competitors is a nice tactic to begin with.
But you’re at loss if you declare a war outright. If the first day of your online selling start with beating pricing on all their listings, you’re looking desperate, weak, attention seeker and easy to defeat. You should deliver the right message to your competitor that you’re here for business and competition will follow regardless of your true intention.
The first step of creating confusion is too act unpredictable. If the competitors is selling the same leather cover for iPhone for $20, you should sell it for $20 too and don’t show any momentum in the price for a while. The time you think you are off the competitor’s radar, lower the prices and wait for him to do the same. The trick is to act unpredictable. If you’re responding to your competitors with every price move then you’re not unpredictable.
Move Not Unless You See an Advantage
You entered the eCommerce business because you saw a rare opportunity. But that opportunity isn’t going to last forever and you must always look at new ones. Opportunities are not easy to come by and sometimes online sellers, now in the business, start selling stuff without much consideration. If you’re moving without seeking a definitive advantage, then you’re not moving at all.
Each of your move in eCommerce business must be backed by thorough research and data. Otherwise, either you’re entering an uncharted territory which will surprise you or you’ll fail miserably. By making calculate moves after understanding the market, you will be in a better position to price products, calculate competition and contemplate risks. For example, if you start selling sneakers overnight, then you’ll have hard time to drive a profit. However, that won’t be a case if you happen to own a shoe store or have worked there. Don’t make a move unless you’re certain this product will bring you profit unless you’re on a strict experiment selling routine.
DIY Price Strategies
The best pricing strategies are the result of ignited minds working towards turning around a losing eCommerce battle to their advantage. Some of the listed strategies might work for you in achieving longer eCommerce goals; some might be irrelevant. That depends on the type of business and products you’re selling. Of course, there strategies are hard to implement unless you insist on an eCommerce automation software. eSellerHub is an industry leader in developing bespoke eCommerce solutions for online sellers that makes their business easy to manage with minimum work force.