Pricing is the process of maximizing profits by taking into account customer base, limited stock, inventory turnover, dealing with slow sales, etc. The reference indicators for ranking on various major platforms are different. The “three-point ax” of sales volume, price and keywords is always a tough move, and the most critical factor affecting sales volume is price.
There are many sources of goods in Shenzhen and Yiwu in my country, and they are all purchased from the same place. The homogeneity is serious, price wars are common, and pricing has become almost rough. In actual e-commerce operations, we must first clarify the relationship between several prices and adopt different pricing strategies for products with different positioning.
The listing price (List Price) is the sales price, the discount price (Discount Price) is equal to the listing price multiplied by the discount, and the transaction price (Order Price) is equal to the sales price minus marketing discounts (full discounts, coupons) , bargaining discounts, etc.), that is, the price paid by the user after the final order is placed.
Secondly, consider the mark-up ratio, which is equal to the difference between sales revenue and cost of sales divided by cost of sales. Among the million-level sellers on Amazon, 45% have a price tag between 10% and 25%, and the other 25% to 50% account for 23%. The price tags above 50% are in single digits, which probably reflects the profits of large sellers. level.
The costs include at least the product purchase price, international freight and platform commissions. Cross-border logistics costs can be as high as 40%, which is very sensitive to pricing impacts, and logistics is related to products. To this end, smart pricing tools have emerged on the market, providing dynamic, real-time automatic monitoring of product price adjustments and low-price protection.
For example, large goods and small items have completely different ability requirements for merchants. Sellers who are engaged in export retail of small items can ship directly from China. Due to quality and volume restrictions, large-scale products can only be shipped locally through overseas warehouses, forcing sellers to build overseas warehouses. This requires sellers of large goods to conduct comprehensive control over the chain of production, transportation, target market customs and taxation, product certification, after-sales service, target market finance, etc. The difficulty and complexity are very high. The number of sellers of large goods is smaller than that of small goods sellers. Much more.
The most important ability for sellers of small items is to control the number of SKUs. Many sellers of small items have tens of thousands of SKUs, while sellers of large items have much fewer SKUs, and they pay more attention to stocking and logistics. and inventory and other supply chain capabilities. In terms of brand building, large items are easier than small items, and the brand impact will be more lasting than small items.
Pricing also depends on marginal demand. “Niche Behavior” says: “After basic bargains meet people’s daily needs, people are willing to search for more unique, distinctive and well-designed products.” commodity”. Standard products are standardized or standardized consumer goods. These products have clear specifications and models. Different sales channels will not affect their use and value. Low-price strategies are commonly used. Non-standard products have opposite meanings to standard products, and there is no unified measurement. Standard and fixed output channels, product features and service forms are relatively personalized, and the premium will be higher.
However, as consumer demand changes, the distinction between standard products and non-standard products will become blurred. Compare Amazon and Walmart, the offline retail hegemon and the online retail giant. Both companies are ranked at the top of Gartner’s global supply chain rankings and have “hurt each other” in the retail market.
However, their respective areas of focus are different. On the same demand curve, Wal-Mart focuses on “popular products”, while Amazon’s success comes more from the “long tail” it covers. “niche market”; the difference is also reflected in the focus of their respective supply chain operations. The former advocates “affordable prices every day” and achieves cost leadership through its excellent supplier management and efficient operations, while the latter advocates “shopping convenience” and provides rich A complete range of products, as well as convenient and reliable logistics and distribution, have advantages in customer experience. Obviously, the price obtained by online shopping may not necessarily be the best.
Online and offline, both are working hard to narrow the gap. In addition, free shipping for items priced too cheap cannot be guaranteed, not to mention that all major platforms require traceable logistics. Products must be profit-planned, and unplanned pricing and promotions must be avoided. There is no minimum in price wars, only lower prices.