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Competing Successfully on Price in Ecommerce

Disruption is the new name of the game in just about every segment of the marketplace. Long time retailers know that word is code for lower prices and eroding profit margins. Even as consumers celebrate each new instance, merchants are left wondering how they’re going to keep their businesses alive in the face of it.

While this thought flies in the face of all conventional wisdom, competing successfully on price in ecommerce is doable. Just as free website themes opened new possibilities for web designers; new opportunities exist in your market too. You just have think strategically!


Give People What They Want

For many shoppers, the only thing that matters is price—as long as the product satisfies their need. Offering budget-conscious versions of existing products can accomplish this.

Luxury retailers such as Nordstrom, Saks Fifth Avenue, Barney’s and Neiman Marcus have introduced lower-priced versions of their flagship operations by specifically commissioning certain merchandise to be sold in those outlets.

Customers get the cache of shopping in stores branded with those respected names—but at lower prices. Yes, some of the goods they buy are lower quality, but most people really don’t care as long as they can say they got it at “Nordstrom”.


Lower Prices Selectively

Consider your competitors carefully to see where they might be weak where you are strong. If, for example you know you’re one of few sellers with a product that is out of stock pretty much everywhere else, you can price it higher.

Meanwhile, keeping your prices in line with your rivals on items that are more plentiful maintains your position in that regard. Scanning your competitors from time to time to see what they’re listing as out of stock will help you implement this strategy.

You might also consider a loss leader strategy wherein you make a marginal amount on one or two very popular products to get shoppers to consider you, then win them over with superior service once you get their attention.

As an example, many web builders offer free website themes to get you into the fold in the hopes you’ll base your site on one of them and avail yourself of their other services. This will work for your ecommerce business too.


Negotiate Better Pricing From Suppliers

Smart retailers know their profit is secured when they buy. The better the price you get from your supplier, the more savings you can pass along to customers, while retaining profitability.

If you aren’t doing it already, you should be constantly monitoring your rivals to see where they are on pricing. If they’re consistently offering deals that look too good to be true, they’re getting a better price than you. It’s time to renegotiate.

Be prepared to show reps the data upon which you’re basing your offers and you’ll have a better shot at getting the best price.


Don’t Go Overboard Lowering Prices

Rather than aiming to be the lowest-priced retailer in your segment, look for ways to can be oneof the lowest while offering value the others cannot match.

The beauty of Saks’ Off Fifth, Barney’s Warehouse, Neiman Marcus’ Last Call and Nordstrom’s Rack, is customers get an experience somewhat similar to that of the flagship stores, even as they pay less for the goods.

Competing successfully on price in ecommerce is largely a matter of looking for ways you can be of better service to your customers—even as you offer low prices. Thinking this way, you’ll find being oneof the lowest-priced retailers can be just as good as—if not better than—being the lowest-priced seller. Plus, you’ll get repeat business because people will enjoy shopping with you more.


Bogdan is the founder of Top Design Magazine. You can find him in Bucharest-Romania so next time you want to drink a beer there and talk about web and stuff, give him a message.