With the growth in the ecommerce industry, retailers and stores find it extremely challenging to increase prices. Unless it is necessary and unless they are on the brink of losing their business, they don't try to increase the prices of their products.
In this competitive landscape, if retailers try to increase their profit margin, they can even lose their business. The giant e-commerce industry derives its price margin from the below-average prices of the products they offer.
If you are a retailer looking to increase profit margin without losing customers to your competitors, this article is for you.
We will look at every little step you can take to make your products competitive. We have come up with different strategies that not just gives your business a competitive edge but also organically grows your brand in the long run.
Understand your position
Before you think about increasing the price of the products you offer, it is important to understand the product position. If your products are already priced high as compared to your competitors, there is little scope in reaping the profit margin unless your products are exclusive.
At this junction, it is important to make a proper evaluation, why your store price is higher. There can be a number of reasons that your products are costly. Most often, businessmen are confused about how e-commerce offers products that are so low priced. Sometimes the prices are so low that it doesn't even cover the per-unit cost. But, there can be different reasons for this too.
For example, your competitor might be getting the best deals from a good supplier, or they may be in direct touch with the factory manufacturing the product. Thus, your competitor has eliminated middle-men, and thus, they have been able to reduce the cost. When there is a tool for competitor monitoring you will be able to find out where your brand stands among your competitors.
Pricechecker experts suggest that you categorise your total products into range of items with low price sensitivity to high price sensitivity. This way your business will be able to group the products that need to be watchlisted against the competitors. Most often, you will find only this segment of products with high price sensitivity needs to be compared against competitors.
Be competitive with offers
Customers are attracted to the word "offers."
Offer here does not mean offering discounts. Make a rule to fix the prices of your products that are as per the market average. Putting the prices of your product too high or too low will throw you away from the competitive arena.
Every business gets customers who have different payment capacities but must ensure they have a
competitive pricing strategy.
Thus, it is important to offer products that can be purchased by different types of customers.
For example, if you are selling Bluetooth speakers, you can offer three different ranges of speakers with different price ranges. The one range should be high priced, the other should be low priced, and the last one to be moderately priced. This way, customers with different pocket capacities will visit your shop to make the purchase.
If you are unable to stand the highly competitive market, pricechecker experts suggest trying the ‘small offering method’. This method has been tried and tested in the food & beverage industry. This process has been working well for centuries, and it can be easily used by all types of markets. No matter if you are selling food products or electronics.
Gifts attract customers
Offerings like getting gifts generate a positive feeling among customers towards a particular brand or product. Thus, you can easily add a small gift to your package. You don't need to spend a million dollars on gifts. In fact, just add a little gift item that is appropriate as per the product you are offering. For example, if you are selling coffee, a small-sized cookie will work like magic for your brand. This same philosophy can work for all types of products.
The best part about e-commerce is that you get to know your strengths and weaknesses instantly through customer reviews. Today everyone checks the review of the product before they make the purchase.
Thus, adding a small gift with your product will help you generate lots of positive reviews from customers, which will drastically improve the sale of your product.
Thus, you don't have to always increase the prices of the product to get a bigger profit margin. In fact, small steps like offering gifts can also attract lots of customers to your products.
Improve your Customer support
Every customer wants to get treated like a king. In fact, one of the major business philosophies is to treat your customers like kings. If you are thinking about increasing the price of your product, there may be chances of getting pushback from customers. But, you have to be ready with your arsenal of customer support.
You may receive hundreds of emails and complaints about why the price of a particular product increased drastically. Your customer support should be ready to answer their questions, and they should be ready to explain the reason for the increased price. For example, ask your customer support team to answer why the price of the product has increased, but the quality has also been improved. Thus, getting your customer support team ready to answer queries and questions of customers can be a major strategy that you need to follow after increasing the price.
Partial price increase
You don't need to disrupt your business all at once by increasing the price of all products in your store. It is important to put yourself in the shoes of customers before you plan to increase the prices of products. It may seem strange to customers if the prices of all products are increased in a store. Thus, plan to go for a gradual price increase instead of increasing the prices all at once. You can even strategize to increase the price of products from a specific category and then move towards another category.
pricechecker comes in handy for strategizing pricing for products. It allows you to perform product matching and price matching against your competitors. This competitor monitoring task will allow you to make an informed decision on how much to increase the price of the product.
Off-season price increase
Waiting for the off-season to increase the price can be one of the smartest strategies to follow. For example, if you are selling ski clothes, you can increase the price in summers, and no one will notice. Thus, increase the price to a point where you can offer discounts in the new season. This way, you won't make any loss on your product. This strategy works for most of the businesses that are stuck with the loss. This off-season price increase won't put you in a spotlight in front of your customers, and it will also attract lots of customers in the new season when customers are ready to make purchases.
Test and take action
It is always advisable to test your steps before you take any action. You have to evaluate the market condition; you have to go for competitor analysis and then think about increasing the price of products.
Every retail business wants to increase their profit margin but very few of them successfully do it. Information about the competitors and the market condition remains the key in improving their profitability.
It is not a one-size fits all but when it comes to optimising your product feed or staying ahead of your competitors. However, with the help of technology there is a way to create a blueprint and increase the profit margin by closely watching your competitors.