| This 36 message thread spans 2 pages: 36 (  2 ) > > || |
|"Price" most important in buyer's decision?|
I started a post relating to this topic before, and I received some very good replies that "price" isn't the most important factor in a buyer's decision and things like good customer service, good product descriptions, good website reviews, inventory, etc...plays a big part and buyer's paying more for a product.
However, I've been doing some analysis on my site and what I found out is a good majority of my orders are only due to me having the "lowest price".
There are few orders I receive when my "price" is not the lowest. My price would be around 4-8 sites above the site with the lowest price.
I'm glad I'm able to offer the lowest price on certain products which turns into sales conversions. However, I also want to increase my sales conversions when I'm not the lowest price too.
My website's layout is clean, easy to navigate, I've built up a decent amount of website reviews, offer multiple payment options, good product descriptions, etc...
I don't know what I'm missing; what else I can do to trigger more sales conversions when I'm not the lowest price? Offer coupons? Free shipping? Etc...?
I suspect that price becomes a major factor once the customer decides to trust your site.
You might have the lowest price but if the customer feels that you might take their money and run .......
There are several things that I look for before putting any trust in a site, these include some real world contact details (I might even check out the premises on Google Street View)and being up front about shipping charges and delivery times.
I agree with piatkow, if I know item, price it is.
Yes, those are some valid things to look out for when trusting a website and I feel I have those things properly covered on my site.
I feel like when I have the "lowest price" I receive an order from my customer; so they must have some trust in the site to base a buying decision mainly on "lowest price".
|I agree with piatkow, if I know item, price it is. |
Ditto. That, plus delivery time. Give it to me faster, and I might be willing to ditch the slightly cheaper but slower competitor.
I'm sorry, what exactly do you mean by "if I know item, price it is"?
Do you mean that if you know what the actual price of the product should be; then you don't mind paying a slightly higher price if it's from a site you trust?
I don't necessarily agree that price is the most important thing.
In my niche, I'm by far not the retailer with the lowest price. I actually have pretty high prices, compared to my online competitor. However, compared to B&Ms, I'm pretty cheap and I have the keyword domain for the industry, so I think I have somewhat of an implied brand.
There are plenty of examples of these types of stores also doing well in the US. 1800contacts, 1800petmeds, zappos.com; all of them trying to build their business around something other than price.
I meant if I know that I will get the item (no fraud) then I look at the price. Including delivery of course
I think price is the single most important factor in online sales where it is so easy to make comparisons. It's different on the High Street where you would probably have to visit several shops to determine who was the cheapest.
Me? I am open on it but I will generally go for price as long as there are no warning signs.
I think that there is a big difference between people on this message board and your average shopper. We all know how to navigate the Internet and find good deals, but many people don't. They see a trustworthy website, with prices that are either in-line or below the price they are used to paying and they are ok with that, even if there are other retailers that are even cheaper.
I'd echo BDW's post and add this:
Shoppers are more savvy than ever when searching for lowest price. If you are able, persuade them with incentives like coupons (spend x, get x % off), freebies, or rebates.
Testing and optimizing coupon creation and placement is extremely beneficial to conversions. Not all retailers can create coupons, but there are unique ways to persuade shoppers no matter your category.
I like to think of it as a science. You want to provide the biggest incentive while losing the least amount of money to complete that conversion. It's a analytic game that takes a lot of testing and refinement.
|We all know how to navigate the Internet and find good deals, but many people don't. |
Actually I think most UK people are very well aware that it is relatively easy to compare the prices of stuff on the Internet. Every night during peak viewing on TV here in the UK it is unusual when there is an adbreak that does not feature one of "compare the meerkat dot com", "Go compare", "money supermarket, "travel supermarket dot com ", "beat that quote" and the rest.
I assume the same thing happens in other countries.
Do you buy a mortgage broker on price? Do you deal with your accountant on price? Your lawyer?
I have widgets from 10-20 suppliers. Everyone who sells these widgets are required to sell them at exactly the same price, to the penny. I have no, and have never had, a single bit of price advantage over the 30,000 other people that sell these widgets in my country.
So no, it's not only price :).
People buy from me because I'm an expert. I know more about my industry and it's products than the rest of the yahoos out there flogging product. And my website reflects this.
That's probably not the only reason, and I'm sure some stuff is sold on price, but not everything is, not even online.
|I think price is the single most important factor in online sales... |
Yes, I agree...I think "price is king" as long as there are no warning signs. I feel like a majority of sales online are based on item price, shipping price, inventory, and speed of shipment...everything else probably won't sway a buyer's decision that much when it comes to buying a product.
And if this is true and price is a major factor it's hard for me to compete with these other large e-tailers selling the same products based on price. There is no way my suppliers will be able to offer me the same wholesale price that they offer their other larger re-tailers; since I don't bring in the same amount of volume as they do.
|Do you buy a mortgage broker on price? Do you deal with your accountant on price? Your lawyer? |
I agree with you on this statement when looking for a mortgage broker, accountant, lawyer, etc...I would be fine paying more as long as the person has good experience and does their job well.
But I don't think this would relate to "products" that are all made exactly the same by a manufacturer; so when dealing with products I think price becomes a lot more important to the buyer.
I don't buy this 'can't compete on price'. I used to own a niche online bookstore. And I competed and kicked butt on price.
I was small. So when books were released and new editions published, I'd have my spreadsheet ready with my cost and standard markup. I'd watch for the moment the big players would release the book and check out the price. I'd then price my books below theirs. Sometimes that meant I had to knock the price of my books back a bit. And sometimes I had to actually increase my prices so that I wasn't stupidly below them. And 5 minutes after their book prices went live, mine did as well - but cheaper.
You want to explain how the big folks can compete with that tactic?
And I competed on inventory. The big boys had 'staff' who waited for UPS to bring the books from the publishing company. Then they'd take their time, open the boxes the next day, and eventually get around to shipping the books. Me, I drove to the publisher, picked up the books, drove back, threw the books into the packages I had ready to go, sealed them and then drove the packages into the courier for delivery. My customers had new editions of books before the big boys even had them in their warehouse. And trust me, this got noticed online. People were like WTF! Who the heck do you know that you've got that book already? And they'd say "I got it at wheel's bookstore'. that's got nothing to do with price. Sometimes I missed dinner with my family - but the books got out.
I had a client order at 6pm. They were 1/2 hour drive from me. I put the package together and rang their doorbell at 8am the next morning. They had their books for the weekend. That's got nothing to do with price - but they ordered their books from me ever time after that.
I used to get corporate orders for books. Why? Because the corporate secretary would call me just to check it out. And you know what corporate secretaries want? They want you not to be a pain in their butt. Their bosses want a book, here's the money, give me the book - now. And I delivered. These folks demand efficiency and if you take away their problems, you're hooked in permanently. they call me once, books were at their door the next day, amazon didn't have a chance. Price made no difference.
And as I noted, I sell a product that has a fixed price. I can't even compete on price with what I sell today.
And affiliates do it all the time.
Yeah, price may make a difference. But don't use it as an excuse.
I think for a good portion of people, they will always go after the cheapest price. But I think there's people who want more than that and are willing to pay for it. It takes longer to win them over, but you can do it. Those people want personal service. They want to feel like they're buying from a person... not a faceless corp. I make stuff that has DOD applications. Some of the most powerful companies in the world make what I make... But I still get DOD customers. Why? Because I answer their questions and go way out of my way. Something the big companies won't bother with. Finding a niche with people is hard work, but I think it can happen.
dpd1, a lot of times you say, but I already have an Amazon acct so it is worth typing everything, getting my credit card etc for $2. That's true.
Thanks for all the replies; a lot of good info!
I definitely try to go out of my way for customers which I know the big e-tailers don't really do; so hopefully this helps. And if a customer emails me I try to respond as quickly as possible.
I guess at this point I have to take into consideration consumer behavior/psychology and offer them services that the big e-tailers can't do, and not focus on price as much.
I don;t know what you sell. Of course it varies greatly as to what you specialize in. If you were selling some boring object that a million other people sell... Then yeah, you might have a harder time with it. But anything that people look to purchase and enjoy the experience... I think it's possible to succeed in selling those types of people a whole experience... Not just the item. ie: Product reviews, forums, news... whatever. Make it a place people want to come to do more than just buy something. Unfortunately, you're still going to have the cheapskates that use your site for info, then buy someplace cheaper. But whatever. Just gotta live with that.
|But I think there's people who want more than that and are willing to pay for it. It takes longer to win them over, but you can do it. Those people want personal service. |
I think not. We are talking about online sales here. People who want personal service don't buy from online stores.
Price is only one of many factors in online sales. It is an important factor in the buying decision but not the only one. If you have two identical stores people will usually go with the cheaper price. However - even this is not always true - there are products where a low price is in itself a warning signal that may keep people for buying. When a price is perceived as being too good to be true.
Buyers are willing to make tradeoffs. They will trade a certain percentage of the price for factors like:
- faster shipment
- perceived higher trust
- being able to use a preferred payment option
- better quality
- better service
If it takes a buyer too much time to find the products he wants in your shop, he might be inclined to buy somewhere else even if it is more expensive. Up to a certain threshold. If you only offer Paypal as payment option and the buyer is someone who hates Paypal for some reason he might be willing to buy somewhere else for a higher price. If the buyer believes you will sell his personal data he might be willing to pay more somwhere else.
If you charge a very low price this might itself be seen as an indicator of poor quality in some niches. I have made that experience with products that have a "best before" date. You give discounts and buyers believe the products are due to expire.
If you want to be able to charge higher prices, you have to:
1. beat your competition in those additional factors
2. communicate this to your customers
3. back up your communication, for example with testimonials and customer reviews
There are many who do the first, and forget the second and the third. They ship everything the same day, but forget to mention it on their website. Or they mention it on their website, but forget to back up their statements with customer reviews and testimonials. Or you can't find out they offer a variety of payment optinos until checkout.
You can compete on other factors than price - if you are able to convince the buyers that they get more for what they pay more.
However the amount of money people are willing to trade for those additional factors differs greatly from niche to niche. And for some products you can't compete on some of those factors. How are you going to compete on quality if you sell camera X, model Y in original packaging? Or book Y, edition Z. The product will be the same everywhere.
You have to be creative if you want to compete with a higher price. For example I have made it a policy: when you return a defective product I will exchange it immediatly for a new product. You do not have to wait until I send it to the manufacturer. You send yours in, get a new one the same day. This is possible because: the products I sell are not too expensive. The average order volume is about 80 EUR. So the risk is not very high. And there are not many returns.
Nevertheless this policy gives me a small edge and customers perceive it adds value to their purchase. And it comes for a very low price for me. However this would not work if I sold 2000 EUR flat screen tvs.
It is all about customer perception. Customers don't give away money, they want the perception that they receive someting in return if they pay a higher price.
|I think not. We are talking about online sales here. People who want personal service don't buy from online stores. |
Oh OK... Well I guess all the times people said they like doing business with me because of the good personal service... must have been some sort of hallucination I was having.
- faster shipment
- perceived higher trust
- being able to use a preferred payment option
- better quality
- better service
Price is only one of many factors in online sales.
I have to disagree. I don't sell consumer goods online so I am talking as a consumer. When I want to buy consumer goods online then (assuming that the selected website looks pukka) all I am interested in is the bottom line price and perhaps the delivery time when I need something in a hurry.
All of the above have some relevance but I would suggest that there are few people who have the time or the inclination to study things at that level of detail. I will concede that people may be more likely to consider these things when making higher cost purchases but for stuff up to about £50 I would not spend time doing any analysis at that level.
|I will concede that people may be more likely to consider these things when making higher cost purchases but for stuff up to about £50 I would not spend time doing any analysis at that level. |
Actually most people do not spend any time on ACTIVELY analyzing this factors. Because most of this happens on a subconcious level. Let's say someone wants to buy only a £50 item.
Chances are: If he comes to a website where everything seems right at first glance, he won't feel very inclined to shop around looking for a better price.
Of course two factors have two come together here. Everything has to be right - and the customer must be able to perceive this at one glance.
It gets harder of course, when you are selling items that are usually bought through price comparison sites. Because you might not even get the chance to convince a customer to buy from you if you are not one of the cheaper suppliers. But even then, most people do not simply go with the first listing.
You really think that people can perceive all of that in a split second?
I will admit that I am getting on a bit ;) but it would take me much longer than a split second to acknowledge and absorb the availability of the item, the CC symbols, the contact info, the star rating, the number of reviews, the guarantee terms and the service phone number.
But I take your point. :)
|You really think that people can perceive all of that in a split second? |
Test it. Go to a good website, and check how long it takes. Ok - it might not be a split second. But on a good website you really will be able to perceive all this information at one glance. No looking around actively. Actually there are not that many good websites - that is the only reason I am still able to compete.
What I forgot to add: As a merchant it is not important how many items of a product you sell, but how much profit you make. An example. Let's say your wholesale price is 50 EUR. The recommended retail price is 90 EUR. You sell for 70 EUR.
Now you raise your price to 90 EUR and immediately loose 50% of your sales. What does that mean?
You are making the same money as before.
Before you sold 10 items day and made
10 * 20 EUR = 200 EUR.
Now you only sell five and make
5 * 40 EUR = 200 EUR.
This might be pointing out the obvious, but actually especially many small businesses owners have never ever made a simple calculation like that. They go with gut feeling and not with math. And they forget that even with a 5% or 10% discount they are sometimes throwing away 50% or more of their profit.
The arguements in this thread are starting to go around in circles. Like BeeBeeDubbleU I don't sell consumer goods. As a consumer price is important to me but not 100%
The relative importance of factors will vary by product / business sector and if it is a new purchase or repeat business.
If I find a reliable supplier for something that I buy regularly then I won't keep checking the price and will be prepared to pay a reasonable premium for more reliable service in areas such as delivery and availability.
For a first time or one off purchase price will be a major, but not the only, factor in selecting which site to purchase from once I have weeded out those that look dodgy or too good to be true.
OK, I worked in retail marketing for 25 years before the web became a major factor in consumer sales, but I've watched the business evolve and I've seen that the basics still apply. The question olimits7 is asking is excellent and the replies have been good.
Just know that there is a huge, huge "it depends" on what you, as a retailer, do. It depends on:
-the competition in your sector
-your customers (women are different than men, youth are different than older people, New Yorkers have a different approach than those in Denver...)
-the time of year
-the amount of time you have been in business (newer enterprises have to get customers from others, more established firms should work hard to keep there customer base happy because the current customers are the best source of new customers; people like to talk about where they shop)
-Walmart. What Walmart is doing and how they are doing it drives the attitude and approach of many of your customers and your competitors. Even if you sell products that Walmart does not sell.
-Unknowables. I mean, consumers are weird. You can do everything wrong and still be successful.
So, how about a case study?
Last week I decided I needed one more computer monitor in my office. I wanted a good price but I wanted a nice monitor as well. Here's what I did.
First I went to my local Best Buy. They had only three on the floor that was the size I wanted. I bought the one that had the best color, which was the middle of the three. I went back to the office and went to Amazon. They did not have the Best Buy monitor I had.
Lesson one: Have something at least a little different. It's more difficult to compare.
Online, I researched the monitor I had bought from Best Buy. It got ok reviews. And the price was about right.
Lesson two: Have products that consumers like. Tell your customers why what YOU are offering is being offered with specifics if possible.
Back to Amazon. Read the reviews of some of their monitors. They had the brand that I bought, if not the same monitor, which got good reviews. But, I looked at the most critical reviews and found reason to question my purchase.
Lesson three: Even if there are just a few negative reviews about products or your store, it can hurt you if the complaints are not rants but thoughtful, fact-driven concerns. Address real issues openly and completely.
At Amazon, I found a monitor that got excellent reviews and had one feature that the one I bought didn't have. AND it was $55 cheaper with free shipping than what I had spent at Best Buy. I ordered it and when I went into the area of my Best Buy, I returned the monitor in the box unopened.
Lesson four: Price does matter, but especially in context with features. In other words, it's about value.
The new monitor will be delivered this week. I'm type of person who will ship it back only if it has major problems. But, if I'm not delighted with it, next time I make a similar purchase I'll likely go to a brick and mortar. If I am delighted, I'll return to Amazon again for this type of purchase and even others. I am shopping more and more online. Amazon is getting a lot of my business. But, I will use the search engines and other sites will get a shot at my business IF they can offer value. .
|When I want to buy consumer goods online then (assuming that the selected website looks pukka) all I am interested in is the bottom line price and perhaps the delivery time when I need something in a hurry. |
And when I buy my fishing tackle online, I never check price. I simply go to the store I buy from and order. They have the widest selection and reasonable prices. I don't shop around. If I'm buying $50 of product from them (or $300) I never shop around for price to find the same thing for $48. Price only has to be reasonable.
I did shop on price a bit over a year ago, on some computer prices. Bought a whole bunch of stuff from the online computer retailer and went through the checkout process. Was not happy with their checkout process - distinctly unhappy. The end result? I emailed the company and called them to cancel the order. Went and paid more for it somewhere else.
People may research price online, but that no way means they buy the lowest cost.Some people, sure - but everyone? No way.
We sell B2B and B2C.
We're rarely the cheapest. Almost everything we sell can be bought on Amazon, usually at the same price or slightly lower.
We employ 15 people, and are doing quite well thank-you-very-much.
Our site is clean, we offer a range of payment options, and we have several USPs. Our niche is semi-technical, so we offer advice (online and on phone), comparisons, selectors, post-sales support.
We do great repeat business.
However, the truth is a lot of people use our uncharged services, get a product, and then search for the lowest price. We can't help that. But we generate enough good will in enough cases that people recognise the "free" services are paid for by higher margins.
Also, as we are a decent strength brand, we pick up a fair few customers where our cut-price competitors fail the sniff test. Which is another point- the 'sniff test' is highly subjective.
| This 36 message thread spans 2 pages: 36 (  2 ) > > |