It’s an interesting question and one that many eCommerce retailers struggle with. If you lower your price point, you risk devaluing your product and your brand. If you lower your shipping fees, you risk losing money on the shipping portion of every sale if your shipping partner’s rates go up.
Here’s how we see it:
Your brand’s perceived value is the most important asset you have. The cheapest option isn’t often thought of as a better-quality option in terms of quality, and discerning consumers know that buying cheap usually means buying twice. This winds up being more expensive than spending a bit more once.
Another problem with dropping your product price to compete is finding yourself in a race to the bottom. If you drop your price point, a competitor with deeper pockets or more backing will drop theirs just a little bit more, nullifying your new competitive edge. So then you’ll have to drop some more, which makes them drop more, and the dance goes back and forth between you until one or more of you is out of business.
Finally, and most importantly, if you lower your price point, it’s REALLY hard to raise it again. Online shoppers have long memories, and easy access to their credit card histories. They’ll know what they paid last time. And if they have to pay more this time, they’ll go elsewhere because “how dare you.”
If it were us, we’d stay true to the price we think our product is worth and turn to shipping.
Lower shipping costs is a much better way to compete, and far less risky if you have the right shipping partners in place. A recent Pitney Bowes study found that 93 percent of consumers say shipping options are an important factor in their online shopping experience, and 88 percent said that spending less on shipping was more attractive than getting their stuff faster.
But if you’re going to lower your shipping fees, it would make sense to lower your shipping costs. And here you have three options:
- Find a cheaper company, but you’ll get what you pay for.
- Try to negotiate with the major shipping companies for lower rates, but you’ll get nowhere.
- Do what so many other eCommerce companies are doing and sign up with eShipper.
Get “Amazon” shipping rates you can pass on to your customers
Our relationships with Purolator, DHL, UPS and FedEx give us (and you) access to their economy-of-scale rates, which are far lower than what you could get on your own. We do this by pooling you and many other online stores together and buying space from the shippers in bulk. So whether you ship five items a week or 500, you'll pay the same low price.
This cost saving will give you the freedom to lower the shipping fees you charge your customer, or (if you’re brave enough) offer free shipping over a certain amount. That same Pitney Bowes study found that 60 percent of consumers have increased their total spend in the past to qualify for free shipping. With substantially lower shipping costs, you could do the same.
The Bottom Line
Instead of lowering your price point and, by association, the value of your product, raise the value of your service. Being more competitive with shipping will be better for your business in the long run.