I do not see the future of e-commerce sites as brilliant. Contrary to popular opinion, I think a lot of e-commerce sites will go on shortly. One of the biggest causes of this is the ignorance and inexperience of pricing. Pricing is actually one of the most important work areas of the business.
Pricing is the most basic metric of whether a mark will go away or not. But you can not believe that the so-called simple pricing errors can sink the companies. As you know, the average profit ratios of e-commerce sites are around 3%. Even when the majority reaches 1% profit, it is happy. That 150% profit rate among the new entrants in the sector is just one city legend. Especially those who deceive people under the name of dropshipping education, I leave the hope traders on the edge. The 3% profit rate is actually a very dangerous rate. With very little changes you can make, you can fall in love.
One of the most frequent promotions that e-commerce sites make is a customer. Although I objected, I wanted to see the results firsthand. 75TL shopping for free shipping! Sounds like a very innocent campaign, does not it? Actually not. The campaign, which he did without raising the price of the product, suffered a serious injury. Why did it happen? What happened?
My client sells hand tools on the e-commerce site. Profit ratios are around 3%. After launching the campaign, sales increased by 30%. First he was very happy, but when he was examining the report of the end of the month, it was a bitter reality. While the profit from the purchase of a product of 100 TL was 3 TL, the cargo charge of 5 TL actually cost 2 TL from the fact that we paid it. To be able to make a profit, the average basket amount had to be around 200TL. However, as the orders increased, another risk was introduced. The loyal customers who made the purchase also bought the products they intend to purchase in the next few months just to pay the shipping cost. The effect we call cellar effect was coming out. So the customers were stockpiling, which meant we could not get new orders from our loyal customers in the coming months. We both suffered this month and the next 3 months of sales.
What would happen if you made the basket paying the cargo to $ 200 to prevent this damage? Here is the e-commerce dirty market where it comes into play. The opponent would not work because he gave free shipping at $ 100. So what if we increased the price of all products by 3% and put them in sale? Here, too, mathematics comes into play. A 3% increase in prices does not mean a 3% profit. It is no wonder that low prices are enough to sustain the competition in the price field. The price increase will not save this sales scenario.
In fact, many of those who live in the e-commerce site. They lose sight of the fact that they have not released a healthy profit-loss balance. At the end of the day they ask themselves why we are battling. Determining the strategy in the pricing of products must come first. The main reason why the cargo campaign does not work is not about the campaign but about the strategy. Regarding pricing positioning.
There are three ways you can choose when positioning your prices. These three ways are directly related to your products and service. The first of your options is to target the luxury segment. If you want to keep this segment, all of the products you sell must consist of luxury products. So you can not sell Indesit fridge and Miele fridge together. You will have to sacrifice Indesit. Not only your products, but your service totally flawless Must be. When your customers call you, they can be reached 24/7 and you should not have to wait at least one minute during the call. You have to sell a limited number of products, rather than tens of thousands of products you sell. Little availability is an important pricing factor here. You should be able to add yourself +3 years during the warranty period. In this way, an e-commerce site differentiates itself does not come to mind in Turkey.
The other pricing positioning is the premium category, which is headed by Gittigidiyor. Never cheapest There is no such claim to be. Because the cheapest usually hurt. The harmful can not provide a sustainable cheapness. The products you sell in the premium pricing strategy should be higher value products. In other words, you do not position yourself with the approach of putting a sale on my ecommerce site, which is classic, elite.
The largest and most profitable area you can place your pricing positioning on is the low price category. But sometimes there is no strategy of low price strategy. I can not give you one example that has been successful with this. If you follow the low price strategy, you should adjust the lowest prices and an acceptable quality ratio. In Germany, Aldi, BIM is a good example of this in Turkey. It is not enough to negotiate with suppliers just to get the lowest price. You need to be a manufacturer. It is almost impossible to sell a product you do not produce at the cheapest price. In order to be completely free in your pricing strategy, you must be the main dealer. This is also the reason why market places sell their own products. I do not think they want small e-commerce firms in the marketplace to survive in the long run.
One of the biggest mistakes is the market share misconception. If you are growing your market share and you are not profitable, you are not achieving sustainable growth. Especially in a Japanese customer, this disease (cultures I learned later) was too much. Each account responded to how it would affect the market share. To increase market share, shifting from marketing budget to lowering prices is not really a sustainable strategy. If a company wants to grow, it has to make a profit. Those who think it is a shame to want to profit, so many who write everything but profits to their vision. I want to end with a promise that Peter Drucker loves.
"Profit for a company is like oxygen for a person. If you do not have enough of it, you're out of the game. But if you do not mind, you're really missing something. "
Online cironuzu Growth Hacking Consulting Would you like to optimize your conversions by incrementing with?