Pricing is hard. You ask the target audience: How much will you pay for a service or product?, And in practice you get something else. You try to supplement a profitable offer with upsell and cross-selling - and sales of the product fall (but it would seem).
A million articles have been written about this, and we will not retell the past.
In our article, we will focus on one aspect: how geography and service affect customer behavior and how, based on this, to build a pricing strategy for an online store. For 10 years of work with e-commerce, we have found quite definite patterns.
So let's go.
Once upon a time Vasya and Eustathius lived. Once both decided to open online stores.
Vasya is in Chelyabinsk, Evstafiy is in St. Petersburg.
The cost of goods in Vasya's store was 10% higher than that of competitors. Vasya came up with a super-action: free delivery to any region of Chelyabinsk for purchases of 2,000 rubles or more. But it didn't work.
Evstafy, on the other hand, decided to conquer the market with prices that were slightly lower than those of competitors: For the sake of such prices, you can drive them to Kupchino, he decided.
They both screwed up in the end: the business didn't take off. Let's see why.
Let's look at Chelyabinsk - the city of Vasya. You can get from one end of the city to the other in 30-40 minutes by private car, and without traffic jams. The voyage will take a little longer by public transport. As a result, people are willing to spend time picking up goods from a warehouse or store by themselves and saving an extra 200-300 rubles. Delivery services are not popular.
In cities with high transport accessibility, the price becomes the decisive factor. People go to the aggregators Yandex.Market, Torgi Mail.Ru, go to the websites of large online retailers. Where it is cheaper - there they buy.
The paradox is that the difference even in 200 rubles for goods worth 5-10 thousand becomes critical. For her sake, buyers (not all, but many) are willing to put up with mediocre service or inconvenient online store interface. They will even forgive the lack of descriptions of the goods and the cold communication of operators who forget to call back to confirm the order.
Conclusion: for such cities, the price should be market-based, especially if there is high competition in your segment. You need to focus on the cost of the product. Throw the rest of the resources on the service.
If an online store works for the whole of Russia, then the principle is the same: buyers are more willing to buy goods at a cheaper price and will happily go to pick them up at the point of issue of the order or to the post office.
Why is this so, or an example from life
One of our clients, for whom we made an online store of children's goods, could not understand for a long time why his baby food was poorly sold, although the prices were lower than in other online stores. The answer turned out to be simple: in Auchan it was even cheaper.
If you can't justify
What if there is nowhere below? Justify every penny so that the buyer understands why yours is more expensive: an online consultant with a competent employee, free delivery to the door at any time, polite operators, a loyalty program. In short, take the service.
Good examples:
DODO Pizza guarantees delivery within 60 minutes after ordering. If they are late, they give a certificate for a large pizza as a gift. Bottom line: despite not the lowest prices and limited availability (pizza is not delivered anywhere in the city), the company has many loyal customers.
Lamoda.ru informs in detail about the status of the order using transactional letters, in a few minutes they solve customer questions via a toll-free telephone line, and grants the right to try on the product before making a purchase. But the main thing is that they have a huge assortment, delivery to the regions, attractive fitting conditions and returns.
The publishing house "Mann, Ivanov and Ferber" sends letters with flying elephants, makes it possible to find out about the status of the order, and on the day of the order calls and writes SMS. They also have a strong community, great books and thoughtful marketing, of which the elephants themselves are a part.
Bad example:
Once one person (let's call him Petya) needed an SD card for a camera. Petya went to a couple of sites and found out that on one of them the card is much cheaper. I ordered it. They brought it, but not at all. The product did not match the SKU - it was not in the warehouse, and the employees of the online store decided that the buyer would not notice anything. Even Chelyabinsk will not be forgiven for this.
Small details that also affect sales:
- user-friendly interface and modern design of the online store. Don't have money for the services of an advanced designer? Make a store based on a typical solution. As a rule, their design and technical capabilities are still a cut above the individual development in the same price category;
- adaptability - more and more people make purchases from mobile devices;
- updating information about the balances of goods in real time;
- personal recommendations, video reviews, instructions (we wrote more about the content of the online store on this page here);
- 1-click purchase (the user only needs to enter his phone number for the manager to call back and clarify the details of the purchase);
- smart search on the site (especially great if he knows how to show a selection of diapers for the query "diaper");
- automatic substitution of locations at checkout.
These are generally inexpensive to implement, but these are the things that most e-merchants ignore. Small business suffers especially from total inattention to trifles.
With Vasya sorted out. Let's go back to Eustathius and try to understand what he did wrong
Konstantin set up his business in St. Petersburg - in a city with huge distances, traffic jams and an intricate road map. Here people are ready to overpay for the service and the time saved, but Eustathius did not take this into account.
In addition, he made some more very gross mistakes:
1. Hidden fees
For example, I debited the commission for payments by card and through the Yandex.Money service from customers. Those, of course, learned about this by the fact: that the commission would fall on their shoulders, Eustathius decided not to warn.
Buyers-legal entities also had a hard time: We do not pay taxes, so we add an additional 6% to the invoice when paying by bank transfer, Evstafiy, as it were, told them.
And this is especially awful. So please pay taxes or at least don't tell customers that you are working in black. Moreover, if you trade in the b2b segment.
2. Hidden payments (packaging, customs clearance, etc.)
Evstafiy's price was low, but the buyer found out about the need to pay for packaging and additional costs at the stage of ordering (this is not possible), or even after a letter with the text "Your order is accepted" arrived in his mail.
It is bad to report hidden charges or price changes for an item during checkout. Even worse is changing the price and including additional costs in the price of the goods after 2 weeks of waiting for delivery (one of the large retailers of smartphones and small household appliances once did this). In this case, you can fall under the law. If you keep the price - no way, cancel the order.
However, Eustathius can be understood to some extent. He did not sell goods from his warehouse. The supplier raised the price - Evstafiy honestly shifted the burden of the increased payments onto the buyer. The result was deplorable: for such tricks, the online store was bombarded with negative comments on Yandex.Market. Sales dropped and never returned.
And at the end - once again about the good.
Customers will love you:
- if the goods are brought in neat, beautiful packaging and you do not need to go to the other end of the city for them;
- for fast delivery - be sure the next day (if later - online stores from other regions or federal states start to compete with you. From Moscow, for example, if you sell goods in St. Petersburg);
- if the goods are brought by their own couriers or logistics companies, who will deliver the ordered in the morning the very next day. In extreme cases, you can deliver the goods to the terminal of the delivery service yourself;
- for free shipping. Take over the entire organization and include in the price of the goods. The regions will be very grateful to you. And for Moscow and St. Petersburg, arrange free door-to-door delivery;
- for the opportunity to choose different methods of delivery and payment.