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Friday's Debut Stock Price
Just this past Friday, Groupon released their IPO. In the first few hours of trading, the stock jumped from $20.00 a share at the opening to $26.11 dollars at the close, a 30% increase. But it’s not just startups that are part of the craze. Google has recently started Google Offers, with several preliminary markets in Los Angeles, Atlanta, New York, Houston, and Chicago. With all the hype on daily deals and cut rate discounts, how are eCommerce merchants supposed to compete? In order to keep up with daily deal and deep discount sites, eCommerce merchants need to evaluate what their strengths are and how to leverage their competitive advantage to move ahead of the competition. Here are three ways in which your site can beat the price war:
1.) Stock/Inventory: Daily deal and discount sites often have a limited supply of goods in their
inventory, precisely because they purchase excess inventory for firesale rates and resell them to the general public. Brand names, like the one on the right, often go for 80-90% less than their MSRP. They sell these goods until they are sold out or the deal expires. Have a well stocked inventory or a reliable supplier, and customers will be pleased that their products are available.
2.) Aesthetics and Variety: One way eCommerce merchants can rise above the competition is to have an intuitive and easy to use site. Sites like 1saleaday.com have little else besides the four items of the day for sale on their site. There is no welcome page or the ability to browse different categories. Your advantage is to provide choices for the consumer, even if your site sells a niche product. The ability to customize and provide a satisfying customer experience is underestimated, and can be used to great effect on your site.
3.) Incentives and Recommendations: You can’t compete with these sites on price, but that doesn’t mean you can rule out incentives. Well placed incentives, whether it be free shipping, discounts, or rewards for customers who purchase from your site, increase your conversion rate. But don’t stop there. Target customers by analyzing their purchase intent and show incentives to customers who are on the fence about purchasing your products. Not only does this increase revenue, but profits increase because customers who would have bought anyways are not shown your deals. Here at Runa, we call these Smart Deals.
Smart Deals are the future of eCommerce. Forrester recently conducted a study of the trends in eCommerce, and came to a conclusion that methods of using algorithms to predict consumer behavior was the next big trend in the online retail industry. Here is a small excerpt from that study:
For retailers looking to grow their conversion rates — which typically hover around 3% —
conversion marketing provides opportunities to address the other 97% of visitors. Some
examples include startups like Runa, which enable retailers to trigger offers to customers that
are only valid for a current session
More from that study is here.
You can’t win a price war with these sites, but here are just three ways that eCommerce sites can rise above the competition to grow their profits and revenue. Focus on what your site does best; like the aesthetics of your site, the variety and the availability of products for sale, and most importantly a way to target and incentivize those customers who are on the fence about purchasing your products.