|5 Tips on Developing Your Ecommerce Store Pricing Strategy|
Wednesday, January 23, 2013
Setting the price of the products you sell in your ecommerce store is a fine art, how small of a margin will you accept to remain competitive?
These days it is incredibly simple for online shoppers to compare the prices of a product across multiple ecommerce stores thanks to Google’s shopping search. The big players in the online retail industry such as Amazon have a huge advantage in that they can offer prices lower than most smaller retailers and still make a healthy margin.
Despite this, it is possible to complete with the big players if you create an effective pricing strategy using the tips below:
1. Carefully Monitor your Margins
In this competitive ecommerce world it is very easy to find yourself being dragged into a pricing war. While you may feel this necessary to win customers, it can be extremely damaging to your bottom line.
Also be aware that the new customers you gain during this pricing war may expect you to offer the lowest prices for all of your products all of the time, then if you don’t meet their expectations you could lose them.
2. Ensure You Offer Something Your Competitors Don’t
Ask yourself this question - what (if anything) makes your ecommerce store different to your competitors? Your customers need a reason to choose your store over those of your competitors. Don’t forget, all it takes is a click of a mouse and your customers are browsing another store.
Ideas include - outstanding customer service, free shipping, ongoing support & free gifts with every order. You could even consider making a donation to charity (out of your profits) to give customers that feel good factor when they purchase from your store.
3. Offer clever incentives to buy
Online shoppers love a bargain, it is almost expected these days that every ecommerce store should offer some kind of special offer or incentive to buy.
There are certain ways of wording special offers that can make them seem better value than they really are, for example "Buy one, get one 50% off” - the customer thinks they are getting 50% off but are really only receiving a 25% discount.
4. Loss Leader Products
If you are not familiar with the term ‘loss leader’, think of when your local supermarket offers certain products at rock bottom prices (often below market value), the are happy to take a loss on these products in the hope that you will fill up your shopping cart with lots of other regular prices items.
This exact same strategy can be applied to ecommerce stores, offer one item at or slightly below market value and advertise it well. You will then have the opportunity to upsell, cross sell and encourage the customers to fill up their shopping carts.
Worst case scenario is that some customers only buy your loss leading product and you take a small hit, but on the upside you just gained yourself a new customer who you can target with future marketing, and if you deliver their order quickly without fuss, they know they can trust you and may even recommend you to their friends.
5. Create Product Packages
You can offer great value for your customers whist also ensuring they purchase a number of items by creating product packages.
For example you could create a ‘Mothers Day gift set’ or ‘Starter Pack’ containing a few related products which offer a saving on the price of the products purchased separately.
Product Packages are also handy of you have a lot of stock of a certain product which isn't selling well.
VP-ASP Shopping Cart Software
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