If you run or own an e-commerce store then you’ll know that competing on price is a very, very dangerous game. It’s often a race to the bottom, if you tweak a product, you see your competitors are doing cheaper, you adjust yours to cheaper, and they just there’s the cheaper, and before you know it you’ve got no profit, no margin and you’re out of business! Simple!
So what are some ways you can actually combat that and not compete on price. How do you not compete price? You add value to the end-user! You try and wrap value around your product to get people to stop thinking about price as their core motivator. So, you’ve got people like Amazon, who are actually doing dynamic pricing look at every ecommerce store out there and then adjusting their prices down to compete so you just shouldn’t be competing on price.
So let’s look at adding value. So if I’ve done here’s an example, I’ve done a search for Black Hawk dog food and there’s a couple of different sites offering prices of exactly the same right down to the cents. So here’s an example of they’re probably input in using dynamic pricing software to make sure their prices are competitive.
So I’ve clicked through and had a look at this product. Let’s have a look at this one, and what’s what’s adding value on this page? What’s going to keep me on this page? I know that a competitor is the same sort of price, so high quality images for a start, not just one they’re actually a done the back as well, so they know that they’ve got to present the product well that’s a value add at some conscious value add.
In some cases it may not be just this product that so they may not be making margin on this product, but the add-on products or the bundled other products that go along with this type of product might be where the value lies for the ecommerce store. So another option is, what other product ranges are out there that your competitors may not be able to offer. So in this case these guys do a 40 kilo bag as well, so other competitors may not offer that.
It keeps you purchasing on this site. What are some other ways? Reward loyalty! Keep people on the site. In this case these guys do auto delivery for dog food you can set up a six-week timeline down the track and you would just get the dog food arrive on your doorstep in six weeks without having to think about it!
How cool is that! It’s loyalty! Keeping people in the site another way to do it is recommended products. So you may not make much money on that first click through that first purchase but in these recommended products is where the margin lies, and where your profit margin lies. So see here there’s three other “you may also like” or “people also bought” so there’s tools that you can turn on in your e-commerce store to really add that value in the process.
Another way is “shipping offers” we can’t see it here but you can go hey if you spend over $200 on my store, you will get free shipping. So you’ll see that very often and it’s a way to add margin back into the overall cart, so again they’ve got to add other products to the cart those other products may not be your price sensitive are really margin…
Low margin products that might have a nice bit of fat in it. So think about how you bundle your products, and deliver each product to add value and you’ll find that you increase your conversions and increase your overall basket size and make more coin!Posted by Jason Hawkins on 9 June 2019