Online shopping offers shoppers an incredibly easy chance to compare the prices of similar products across multiple stores. The bigger layers in the online retail market like Amazon enjoy an obvious advantage as they can still enjoy healthy margins while offering prices that smaller ecommerce store would struggle to compete with thanks to the sheer volume of their sales.
|Image Credit: Adam Tinworth|
In spite of the bleak scenario, our small ecommerce website can still compete with the bigger players if you develop and implement these effective ecommerce pricing strategies. Below are a few tips to get you started:
1. Monitor your margins carefully
The ecommerce world is growing more competitive as more people look online whenever they want to buy something. Many ecommerce stores find themselves getting dragged into pricing wars in a bid to get a competitive edge over competition. While you may be tempted to take a similar route to win customers, it can have an extremely damaging effect on your margins. You also have to keep in mind that most new customers you gain during a pricing war may expect your business to always offer the lowest prices in the market for all products and services all the time and you could easily lose them if they feel that their expectations are not being met.
2. Offer something your competition can not
When analyzing your business strategy, ask yourself what, and if anything, makes your store stand out from the competition. You need to provide your customers with a reason to buy at your store rather than from your competitors. Remember, it only takes a click of the mouse to see the customers browsing for similar products at another store.
Things that you can do different to set it apart from the competition include offering free shipping, an excellent customer service, free gifts and ongoing support with each order. You could even go as far as making donations to charity so that your customers can get the feel good factor that they bought something from your store.
3. Provide customers with incentives to buy
Online shoppers are attracted to bargains. These days, almost everyone expects ecommerce stores to offer incentives or special offers. You have to find ways of wording your offers so as to give an impression of higher vale than they really are. Fr instance, saying “buy 1 get 1 50% off”. The customers think that they are getting a whopping 50 % discount when it is only 25%.
4. Lose leader
This involves selling below the prevailing market value for the products. This kind of highly discounted pricing can pay dividends if combined with a vibrant merchandising strategy. The strategy is founded on the assumption that items sold below market value encourage buyers to purchase more thereby increasing revenue per use (higher average shopping cart value).
Even if the profits don’t turn out to be so impressive, lose leader stimulates customer acquisition. The value of the transaction is outweighed by the value of client acquisition. A different strategy would e to select products with low CPAs (cost per acquisition) to keep loses at a minimum. The goal is to sacrifice by losing money on 1 product in order t gain profit on all the other products.
5. Test the ecommerce pricing strategy
Just as with every other aspect of life, one shoe does not fit all when it comes to online marketing. It is therefore important for businesses to measure and quantify the changes in your online store’s conversion rates after implementing a new pricing strategy, and compare this with your previous performance. There are numerous analytics tools dedicated to measuring every change (i.e. Google Analytics, Mixpanel, Shoppify Sales Dashboard).
These tools will help you find out how successful your “Summer Sale” really as successful as you expected it t be.
Jason Smith is an online manager for WebpageFX. Jason likes blogging about online strategies that are related to SEO, Content, PPC & Lead generation.