When it comes to the online game however, things are a little different. Products are being commodities and people know how to get the best deal. With comparison websites and tools such as google shopping, it makes it increasingly easy to find the best deal, and simply go with it. This current trend is forcing nearly all stores into being price leaders...offer the same product as other people, but just do it that little bit cheaper. There are plenty of drawbacks to this way of trading and competing. Firstly you fail to create that vital relationship with your customer because you are acknowledging that your product is a commodity, and that even you, the retailer, know that in the future the customer will continue to compare to find the cheapest deal. Secondly, you are driving profit margins down, and eventually you will price yourself out the game when you realise you can't compare with the big cost leaders exploiting economies of scale.
But fear not, there is a solution to avoiding commodotisation and the devaluing of your brand. Online differentiation! You don't NEED to be a price leader to be successful. Take John Lewis for example. In the e-shopping arena, John Lewis are by no means the cheapest, one would assume the couldn't compete online, but their sales figures suggest a completely different story. They manage to capitalise on their strengths. Their knowledge of what customers want, why people shop in the John Lewis store, and what customers want from the on line shopping experience. John Lewis have managed to put across their customer service, service quality and brand loyalty across to the customers. They have differentiated by doing this allowing them to maximise their profits.
Online stores should learn a valuable lesson. You can differentiate in other ways than your price. You can offer superior customer service and after sales, you can provide blogs and reviews on products you offer, you can have an innovative and functional website, or even provide some rich content media such as videos and games. Many of these differentiators will not only give you an edge over the competition but further develop your relationship with your customers, increasing loyalty and repeat sales.
What should you take from this blog?
- Yes, people are treating products more like commodities and searching around for the best deal nearly every time they make a purchase online.
- No, you don't always have to be the price leader. The best price isn't always 'the best deal'. You can differentiate in other ways, which will help your profits and customer lifetime.
Dare to be different.
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