It’s a concern for merchants, but it is a frustrating fact that there’s no single solution to a successful eCommerce conversion. It can be partly due to different retailers serving different customer bases. However, it is also susceptible to external factors, especially in recent years. For example, let’s say 2020 wasn’t what you would consider an average year. Online sellers have been urged to focus more on experience than product quality or pricing in recent years. You need to be able to compete with many other sellers selling similar products and prices. Customer experience is the best tool.
This argument has many merits. I have indeed made this argument before, though in a weaker version. However, times change, and the formula for success shifts. Businesses need to adapt and price products accordingly. In addition, this is a time when customers are increasingly concerned about the cost of their products. This post will explore the details of this new development.
1. There are many generic products on the internet
It is a common reason to disregard price as a primary concern. It’s mainly due to the enormous influence of the drop shipping fulfillment model. It allows sellers to list products from third-party suppliers in their stores and then takes orders just like they stock them. The relevant suppliers will then process those orders.
The suppliers set prices for fulfillment and products, so sellers cannot reduce costs without losing money. It isn’t easy to increase prices without making them uncompetitive. Drop shippers often fight for small items that have high-profit margins. You can make phone cases, hats, and toys for as little as $1. Then sell it to a supplier for $1. A dropshipper merchant will sell it for $2. Finally, you sell the case to your eventual owner for $5.
It isn’t easy to rely on these items entirely, so many sellers end up selling the same things at almost identical prices. This means that price doesn’t have to be a deciding factor. But, it can, and it does, and here’s how. It becomes clear that you see the same product everywhere. You stop looking at the copy and extra details and assume that the buying experience will remain the same regardless of which retailer you choose.
This visibility has been greatly facilitated by the availability of meta shopping tools like Amazon Marketplace and Google Shopping. Although a product may be described and illustrated differently, its unique identifiers will always identify it. All that matters is that you pay as little as you can.
2. Websites are often more than adequate
A strong user experience was crucial for making a website stand out in an era when many eCommerce websites were poorly designed. Today’s websites are more than adequate to meet usability standards. Even the shakiest online stores are responsive enough to be mobile-friendly for most users.
It is due in large part to standardization and falling costs. It’s not necessary to spend time and money on developing a store site. Instead, it is much simpler to select a platform and a template. A knowledge base that provides instant answers to customers is no longer a luxury but something everyone can afford.
Many checkout systems offer guest accounts that allow customers to use social logins. They also feature a variety of product photos and accessibility options. Customers have the opportunity to get assistance via live chat or regular support systems. There isn’t much to be unhappy about, and most stores are acceptable. It’s only the prices that matter.
3. Proxies for sales are becoming more common
It has been common for small sellers to list their inventory through third-party marketplaces for a long time. With Amazon and eBay dominating eCommerce, This improves customer experience. Although two sellers may have different storefronts and make other tweaks to their conversion processes, they will ultimately use the same process. As a result, it isn’t easy to be distinguished by offering superior shipping and processing.
Additionally, retailers are increasingly taking advantage of social selling options. They add direct conversion functions to social media accounts. Many sellers allow users to manage everything, including creating accounts and payment details, without having to visit their websites. Although it is still in its infancy and doesn’t have widespread popularity, it will gain acceptance over time.
It means that sellers have fewer chances to impress customers with unique experiences. Similar to Amazon, purchasing from one brand via Facebook will cost the same as buying another. And when all else is equal, it’s only the cost that matters.
You can avoid all this by focusing on your store. It’s possible to do so: it’s not expensive to use a full-featured hosting platform. You can also avoid more significant marketplaces. Keep in mind how dominant these marketplaces can be. Although Google remains a popular gateway for online shopping, Amazon has surpassed it in 2018 for product searches. Many people won’t buy from Amazon unless they have to — this is because of the convenience of only one shop for everything.
4. COVID-19 has damaged spending power
People around the globe have significantly reduced their spending power due to the COVID-19 pandemic. It is especially true for this year. It has not only left many workers furloughed or looking for new jobs, but it has also limited people’s shopping options at traditional retail outlets by closing stores and placing stay-at-home orders.
Even in the cases where it hasn’t affected spending power (and there are many of those cases because some industries have been able largely unaffected), it has made shoppers acutely aware of how fast everything can go wrong. Long-term prospects are uncertain, with many lockdown measures being lifted already, some being tightened, and others set to increase shortly.
Many people have drastically reduced their budgets to save money and focus on staples. However, these aren’t temporary alterations that can be dropped once office life returns. Instead, these are adjustments to a new lifestyle (the necessity for which is evident to anyone who has seen the full impact of the global recession).
It’s challenging to shop for groceries without being limited by your area’s stock availability or delivery options. But it’s easier to look for items you don’t need online. Even if you have to wait longer to find a lower-priced product, it is possible to shop around.
What is the value of customer experience?
Although pricing is more important than customer experience, it doesn’t necessarily mean that it doesn’t matter. It is important to remember that exceptional customer service is not very important. If your prices are too high, even the most sophisticated conversion funnel will not win over customers. But bad customer service can ruin everything.
Consider how you can attract someone with your industry-leading prices but still manage to frustrate them enough with your checkout process so that they leave and find another company. It’s all about covering your bases. It’s about ensuring that your operations are at least adequate. The more you can control your purchasing process, the more you will adjust your prices without losing your edge.
How to adjust your pricing
Let’s assume you are convinced that pricing is the most important thing. What should you do to adjust your pricing? Do you set your prices as low as possible without ruining your business? No, not at all. These are the core tips to help you proceed sensibly.
Check the prices of major retailers
Without context, prices are meaningless. It matters what your selling price is relative to other sellers. You can maintain your price competitiveness by paying attention to the trends on Amazon and eBay prices.
You should know when you can hit profitability
Sometimes, it is worth sacrificing your profit margins to gain a temporary advantage or build your brand. But you must know when to do it and when not to. It will require a deep understanding of your financial situation as well as your long-term goals.
You can reduce costs in a variety of ways
Even if you cannot reduce the price of a specific item, why not offer discounts for large orders or customers who have purchased from you before? These tactics can help you undercut your competition while also ensuring that your profitability is not negatively affected.
Make price and experience a competitive advantage
Let’s conclude by saying that customer experience is paramount (especially for customer loyalty), while the price is more important at the moment. These are challenging times, and consumers are trying to be rational shoppers. You can’t afford to spend too much on a smooth buying experience if you want to stay ahead of the curve. So instead, lower your prices.
Disclaimer. The opinions and views expressed in this article are the authors Shalom Lamm.
