in need of some business advice
- Thread starter DanielQ
- Start date
Whoa. It sounds like the two of you have lots to talk about.
We'll leave you guys alone now.
Really tough to give good strategic advice without all the detail, but the first thing I would focus on is doing some deep competitive research. If someone is cutting prices by 45% and the lowest you can go to is 20%, that's a pretty big gap.
Possible scenarios I can think of...
- They are either procuring better than you by finding a supplier that provides for better margins
- They have a better relationship with the manufacturer or possibly are the manufacturer, providing them with better margins.
- They are taking a loss to push you out.
- Their customer acquisition costs are substantially lower which could be due to numerous factors. One example off the top of my head, they have places they are acquiring their customers from that are much lower cost than where yours are coming from (e.g. SEO). Say this comprises 70% of their acquisition activity. The 30% that they are competing with you on (e.g. PPC), they can afford to take a slight loss for the sake of volume because of this channel mix. Their conversion rates, AOVs (incentivizing multiple unit purchases), etc vs. yours could also play a role.
- Retention rates could be factoring in. Maybe they are willing to acquire a loss on acquisition because they know they will make it up over the lifetime value of the customer.
Just some ideas, but I would really try and understand the mechanics of what is going on before you craft a strategic battle plan on how to combat this. If it's simply a matter of procuring more effectively, that's one thing. If it's someone trying to push you out, it's another. And if it's a manufacturer doing it, well that's probably the most challenging of the 3 because you will never be able to compete on price (which is pretty much the single thing that drives most gray market products). Hard to create differentiation in that space I would imagine.
I also concur with bizzy's idea above about positioning a "premium" brand against an "inferior" one. Excellent advice.
Hope some of that is helpful.
Possible scenarios I can think of...
- They are either procuring better than you by finding a supplier that provides for better margins
- They have a better relationship with the manufacturer or possibly are the manufacturer, providing them with better margins.
- They are taking a loss to push you out.
- Their customer acquisition costs are substantially lower which could be due to numerous factors. One example off the top of my head, they have places they are acquiring their customers from that are much lower cost than where yours are coming from (e.g. SEO). Say this comprises 70% of their acquisition activity. The 30% that they are competing with you on (e.g. PPC), they can afford to take a slight loss for the sake of volume because of this channel mix. Their conversion rates, AOVs (incentivizing multiple unit purchases), etc vs. yours could also play a role.
- Retention rates could be factoring in. Maybe they are willing to acquire a loss on acquisition because they know they will make it up over the lifetime value of the customer.
Just some ideas, but I would really try and understand the mechanics of what is going on before you craft a strategic battle plan on how to combat this. If it's simply a matter of procuring more effectively, that's one thing. If it's someone trying to push you out, it's another. And if it's a manufacturer doing it, well that's probably the most challenging of the 3 because you will never be able to compete on price (which is pretty much the single thing that drives most gray market products). Hard to create differentiation in that space I would imagine.
I also concur with bizzy's idea above about positioning a "premium" brand against an "inferior" one. Excellent advice.
Hope some of that is helpful.
That's a brilliant idea!
Do a little SEO reputation mismanagement for your competitors, with "reports" from users who bought off them and then got busted by the cops.
Guerrilla marketing? Guerrilla marketing - Wikipedia, the free encyclopedia
Low cost and suits 'gray areas'. It is tough in business when this happens because if two people are selling identical products the everybody will naturally go for the cheaper. Erm... You want to keep going right? So you have to drop your prices or fold as you are currently not taking any orders. If you can use some of the methods in the above link to really get your brand across, coupled with as much of a price drop as you can take. Then that gives you the best chance of continuing for the moment. Meanwhile, you need to suss out how your competitors are selling at such low prices. As people have said.. they could be trying to force you out then plan on hiking their prices or whatever...
Alteratively,have you considered contacting your competitors and telling them they are missing out on an extra 40% per sale and do they want to set a price with you and let customers and marketing decide. Though this is unlikely in a dodgy market!!
Just my thoughts.
Low cost and suits 'gray areas'. It is tough in business when this happens because if two people are selling identical products the everybody will naturally go for the cheaper. Erm... You want to keep going right? So you have to drop your prices or fold as you are currently not taking any orders. If you can use some of the methods in the above link to really get your brand across, coupled with as much of a price drop as you can take. Then that gives you the best chance of continuing for the moment. Meanwhile, you need to suss out how your competitors are selling at such low prices. As people have said.. they could be trying to force you out then plan on hiking their prices or whatever...
Alteratively,have you considered contacting your competitors and telling them they are missing out on an extra 40% per sale and do they want to set a price with you and let customers and marketing decide. Though this is unlikely in a dodgy market!!
Just my thoughts.