Ecommerce is one of the most price-competitive arenas in which one could ever operate a business. Think about it, comparison-shopping is laughably easy. If you start a furniture business—or any other kind of store really— a customer can ping you and several of your competitors to find the most favorable pricing. This makes developing smart pricing strategies for ecommerce crucial to staying in business. The trick is “looking between the cracks” to peep the games of your most successful competitors.
Balance Pricing Against Costs
Yes, this sounds like Business 101, but a lot of first time ecommerce entrepreneurs will miss it nonetheless. Rather than jumping on every opportunity to reduce your prices at the expense of your profit margin, look for ways to minimize your costs so your profit remains stable even at a lower selling price. Optimizing costs gives you more room to work the other side of the equation.
Find an Opening in the Marketplace
When you get really good at containing costs, you’ll be in a position to better many of your competitors on price. However, rather than racing to the bottom and leaving mounds of cash on the table in your wake, look for an opening between your competitors—or just enough below that of your closest rival to earn a good profit while offering service that will help set you apart.
Negotiate Better Pricing
If your rivals in the marketplace are consistently beating you, maybe they’re getting a sweetheart deal from the vendor of which you were unaware. Smart retailers know you make your profit when you buy, rather than when you sell. The more favorable the price you pay, the more favorable the price at which you can sell profitably.
Always push for the best pricing you can get. Shop around and find examples you can show your rep where your rivals are selling the product far more cheaply than you can because of a deal you aren’t getting. You’ll have a good shot at getting better pricing!
Look Back to See Ahead
Pay attention to the pricing strategies of your competition over the course of the year. This is particularly important the first year you start a furniture business—or any other retail endeavor for that matter. If they’ve been around a while, you can bet they know the ebbs and flows of the seasons and are pricing accordingly.
Yes, the holidays are a no-brainer, but other times of the year can trigger specific pricing events as well. Watch how the OGs play it over the course of each year. Copy them (yeah, we said it!) to take advantage of the same opportunities.
Watch Their Stock
If you aren’t shopping your peers’ sites, you’re doing yourself a real disservice. Looking around, you might find several members of your competitive set are out of stock on some item of which you have a hefty supply.
When demand is high, and supply is low, products command higher prices. This is the time you’ll want to up your ads around the items you have that they don’t to lure the frustrated traffic to your store.
Online shoppers tend to move on to another retailer when what they’re looking for is marked out of stock, so this also represents an opportunity for you to conquest customers who may have previously been loyal to a rival.
These smart pricing strategies for ecommerce will help ensure you’re competitive with the other players in your set. The key takeaway here is to pay close attention to their actions so you can keep pace with whatever moves they make.