Pricing Strategy

United States United States
Kudos: 18
Joined: Nov 14, 2014
Pricing Strategy
14 Nov 2014
Hello! I'm in the process of researching and getting infrastructure together for a small online retail business selling baby and children's apparel.

I've noticed many of the small designers and suppliers in this industry who I would buy wholesale from are also selling their products retail. Meaning if I include a brand name in a product description than a consumer can easily look on the manufacturers website and buy it from whomever has the best price. I've seen retailers of all sizes with this same issue and I don't see any consistency in their pricing. (The same as the supplier, more, or less, etc.)

What is the recommended pricing strategy in this case?
Herts, England United Kingdom
Kudos: 11,516
Joined: Jan 1, 2001
Re: Pricing Strategy
25 Nov 2014
Hi kneff, thanks for posting

My take on this is that it's more about your own positioning and branding than that of the products. If you are putting yourself across as a high-end retailer with an impressive site, great photography, wonderful customer service etc. then it makes sense to price at the high end. If the products' own brand is not that important (people aren't persuaded to buy because of the brand) then you can exclude it and make it harder to compare prices - as far as the buyer knows it's your own product.

Then again, if you are expecting your traffic to come from people searching for products, and your site is only functional, then you are in a position where you have to compete on price as it's only one click back to find an alternative.

Does that help?
Andy Geldman, Web Retailer
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Derry United Kingdom
Kudos: 150
Joined: Jul 24, 2013
Re: Pricing Strategy
27 Nov 2014
Hi Kneff

Andy is spot on with this advice—if you are creating a brand image on your site and the products you’re selling match that brand image then customers are likely to ‘buy into’ that and be less price sensitive.

On online marketplaces like Amazon and eBay price is obviously much more important since the customer usually knows what they’re buying and multiple sellers are competing for the sale.

If customers are arriving at your site through amazing content or because your product descriptions match very specific keyword terms, then your brand and site design have an opportunity to dilute price sensitivity, however, if they’re just searching for product A and arrive at your site which simply looks like an online retail site, then there is no compelling reason other than price to differentiate you from your competitors.

Decide where you want to sit in the mix—a brand can take a long time to establish and it’s a costly affair driving unique traffic to an independent webstore (but not impossible). Setting up shop on Amazon or eBay, on the other hand, brings with it a huge ready-to-purchase audience of millions that can buy your wares with one click, however, it’s much more price sensitive as you’re competing directly with other sellers. On the face of it, you’ll enjoy higher profit margins on your own site, but net profit over the course of the year could be much higher on a marketplace like Amazon or eBay.

Best of luck whatever you decide. I hope the advice is helpful.
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