Forum Moderators: buckworks
See, I put this on my site (it looked good), but my friend and a few people I mentioned it to didn't think it would be good. They thought the feature would stop people through the buying process OR or make my customers to price conscience... Any thoughts?
With commodity items like DVD, books, music, etc - price is a big factor assuming comfort factor is about equal.
Offering a "make an offer" feature could work for you if you automate it. I think the system you are suggesting is somewhat laborious and would not scale well. You'll have to chase down the customer and try to convert their offer into a sale. More labor, less profit.
If after your purchase you find the item for a lower price we will refund the difference.
Or within 30 days of the purchase.
The customer would also help you stay on top of competitor prices since they'd hopefully let you know when a lower price was out there.
A javascript opens up a little box that says, "please enter your zip, email address and url of where you saw the X product at a lower price..
They may never come back.
And personally, when I shop online, I always sort by customer ratings, not price.
[edited by: Wlauzon at 9:00 pm (utc) on Oct. 7, 2006]
I would think most people will just get it from your competitor (I know I would).
-Corey
It could be a real educational and possibly lucrative experiment as long as you stay on the ball and monitor things closely,
We found in most cases (probably 90%) we were already beating the price. Most of the time our price looked higher but when you factor in shipping ours was in fact lower. We wrote up a response (had a template) and detailed the pricing and then even offered them a discount even though we were already lower. Probably around 2% would buy after all this work. It was not worth the effort.
My guess is that while they filled out the forms, they ultimately bought from the site that "appeared" the lowest so they didnt have to wait for us write up the response. We ALMOST always replied withing 5-10 minutes depending on the time of day.
Anyway, my .02 .. not worth it.
Mike
I was shocked to see how negatively that feature effected your site. You did exactly what I was talking about. And I probably would have had a response time of 5-10 minutes as well.
...why not ask your customers to find lower shipping rates, better service and selection, a better return policy, faster deliveries, etc?
And I know you won't want to ask them who has a cleaner, easier site to use!
Focusing on being the absolute cheapest is the mark of someone brand new to retailing... on or off-line.
His question was thought out and legitimate and he was seeking advice.
Not silly, educational.
A somewhat offense statement to make don't you think? Some businesses are focused on price beause that's how they want to compete. What makes your method better? You don't know what this person sells nor what their margins are.
(does anyone remember when bankrupt K-Mart was the cheapest?) Heck, I'm old enough to rattle off the names of 20 "bargin barn" chains that failed decades ago, and are now fogotten by most.
And yet WMT's success is based on far more than price... a great distribution and sourcing system, for example. Being a hot publicly owned company has enabled them to pay fairly low wages and attract good talent with stock. Sam's Club grocery business offers some delicious food not available from the big chains...cheesecake, ready-to-go pizza, ribs, chicken, for example.
Yes, I'm grouchy on this subject. Half the newbies who show up online think being the absolute lowest is the way to go. Yet, they have no buying power to squeeze price concessions that strong established retailers get. They're picking the wrong fight. Two month latter they have no profits to fund PPC advertising, and that's about the last we hear from them.
Start with the Dow Jones 30 corps. ('m looking at a list of them now) Aside from Wal-Mart, name one that focuses almost entirely on price?
[edited by: jsinger at 6:29 pm (utc) on Oct. 9, 2006]
Half the newbies who show up online think being the absolute lowest is the way to go
I just bought $600 in software.
I did NOT go with the lowest price. I went with the one with the highest customer ratings.
Sears (price match guarantee)
Circuit City (price match guarantee)
Office Max (price match guarantee)
Best Buy (price match guarantee)
Home Depot (price match guarantee)
most other retailers that sell high dollar items.
These are all retailers I deal with and take advantage of price match. When building my deck, I saved roughly $1000 by using a price match guarantee from home depot.
Anyone who thinks price ISNT important is sadly mistaken. Price is not the only factor though. If you can offer a great price with excellent service, then you are looking for success.
My point is, everyone is a "newbie" at one point or another in their life. The only way to progress is by asking questions which is the purpose of this board.
Mike
8foldpath asked for thoughts on the subject and because they did that tells me they haven't totally bought into the concept. jsinger makes some good points and offers some good examples. But I think it's worth taking a closer look at this idea. What I'm reminded of are the Progressive Commercials - "sometimes we're the lowest, sometimes we're not." But I'm not sure how to capitalize on the angle.
I agree that shooting to be the lowest price is probably a sure way to lose money unless you've got capital coming in from other sources and you have a plan that considers the cash flow, sourcing, etc. issues - typically a game played by much larger and more established companies with very deep pockets. Other than having very slim margins and going for quantity sales I'm not sure how you could turn this into a viable business model. If you can, great! :)
Don't mistake a low price guaratee with lowest price. :)
And who else has their house brands...Craftsman tools and Kenmore etc, etc. You better believe Sears works on chubby margins.
As for most electronic chains, they make their money off accessories and outragiously profitable maintenance contracts.
it is the lowest price if you take them up on the offer .. they beat the lowest price of a competitor by like 10%. :)
Anyway, its all good. :) I just dont want people to be afraid to ask questions because of fear they may look "silly"; thats all.
Cheers :)
How many of these focus almost solely on being the cheapest? Aside from Walmart, Low price (but not lowest) is a major factor at Home Depot, McDonalds and Alcoa, I guess. Many on this list are among the priciest suppliers in their fields. Most could crush a lot of competiton on a price basis if they chose to.
--
3M Co. (NYSE: MMM) (conglomerates, "manufacturing")
ALCOA Inc. (NYSE: AA) (aluminum)
Altria Group, Inc. (NYSE: MO) (tobacco, foods)
American International Group, Inc. (NYSE: AIG) (property & casualty insurance)
American Express Co. (NYSE: AXP) (credit services)
AT&T Inc. (NYSE: T) (telecoms)
Boeing Co., The (NYSE: BA) (aerospace/defense)
Caterpillar, Inc. (NYSE: CAT) (farm & construction equipment)
Citigroup, Inc. (NYSE: C) (money center banks)
Coca-Cola Co. (NYSE: KO) (beverages)
E.I. du Pont de Nemours & Co. (NYSE: DD) (chemicals)
Exxon Mobil Corp. (NYSE: XOM) (major integrated oil & gas)
General Electric Co. (NYSE: GE) (conglomerates, media)
General Motors Corporation (NYSE: GM) (auto manufacturers)
Hewlett-Packard Co. (NYSE: HPQ) (diversified computer systems)
Home Depot, Inc. (NYSE: HD) (home improvement stores)
Honeywell International, Inc. (NYSE: HON) (conglomerates)
Intel Corp. (NASDAQ: INTC) (semiconductors)
International Business Machines Corp. (NYSE: IBM) (diversified computer systems)
JPMorgan Chase and Co. (NYSE: JPM) (money center banks)
Johnson & Johnson Inc. (NYSE: JNJ) (consumer and health care products conglomerate)
McDonald's Corp. (NYSE: MCD) (restaurant franchise)
Merck & Co., Inc. (NYSE: MRK) (drug manufacturers)
Microsoft Corp. (NASDAQ: MSFT) (software)
Pfizer, Inc. (NYSE: PFE) (drug manufacturers)
Procter & Gamble Co. (NYSE: PG) (consumer goods)
United Technologies Corp. (NYSE: UTX) (conglomerates)
Verizon Communications (NYSE: VZ) (telecoms)
Wal-Mart Stores, Inc. (NYSE: WMT) (discount, variety stores)
Walt Disney Co., The (NYSE: DIS) (entertainment)
Does it really matter? Many of us that sell online have very different goals than Fortune 500 companies. I left the Fortune 500 environment based on personal values and ethics. Sometimes its enough to make a living without engaging in disgusting behavior just for the sake of profit. Don't get me wrong, there are many lessons I apply that I learned from Fortune 500, but not all my goals are aligned with corporate values.
You can compete on price, but you must be very a smart buyer and work diligently to purchase from the source and in volume. That probably means establishing working capital, minimizing your overhead, and automating where possible. I think labor and customer service is most difficult to scale, but you can also utilize cheap labor from the day labor pool or free labor from universities via "internships".
Important yes.
Over riding, no.
For example, Fry's Electronics often has the lowest prices in my area. I absolutely REFUSE to buy from them because of the worst possible customer service in existance.
