Everyday Price War for Australian Retail Industry
It doesn’t take much time from an observant eye to notice the continual every day low prices one sees online. Some of the prices are now far below profit points. They are the click bait but the problem is sometimes they are the actual product which brings in the profits!
Few industries are not apart of this low growth environment. And to and salt to the wound, unfortunately, there is not much of a change in the Australian economy.
Most online and offline businesses are tightening expenditure and overheads. However, the repercussions of this are other companies do the same and worst of all is when companies tighten in eventually the consumer does too! It all has an eventual flow-on effect.
There is no one size fits all rule for any business?
A key factor to bring up is a price war. How do you win it or how to maintain afloat in a never-ending one? There is no one-size-fits-all approach. The answer for all cases though is in the analytical numbers.
Some products can perform well with a low pricing strategy and some products best suit a high pricing strategy. The information an online business needs to gather is an audit of the relevant products or services over a significant period of time and uncover the exact impact the pricing variation strategy has had on those particular items.
What your business will find is certain characteristics associated with different products achieved different results. Some results will reveal a successful growing baseline. But it is almost impossible to maintain across the board low prices on all items, every day. This system will not financially work.
What online products are okay for a short or continued price war?
Some of the characteristics in the metrics you will find for successful low priced items are
- products or services that are well known by users. They are mature products and users are familiar with them and repeatedly purchase them.
- Staple products which are frequently purchased and have a consistent demand
- Seasonal products. Such as Christmas items, easter items, valentines day items where users see a sense of urgency to buy then and there.
- Once a product has already reached market penetration and there is very little room for growth it can be ok for the price to be brought down and sellers should also expect this.
- Products that often experience every price movement from competitors and experience very little additional profit from online promotions.
Products which do not perform well in a price war?
- If your brand has low recognition we recommend you not take part in a price war.
- Products that are not regularly sold should not be placed on an everyday low price sale.
- Products that cannot be