eCommerce Tycoon

**cgchris99** · 04-12-2006, 02:36 PM

we have a brick and morter store but also have an online business. We have found that we are getting requests to price match. Some of the price match requests are for internet only shops which of course have less overhead.

What are your thoughts on price matching. We are having a heated discussion over this internally. Some say we offer better service so don't price match. Others say we must price match because the internet competition is not going away. My thoughts are if we price match, we will get the orders instead of the competition plus if we keep this up, the competition will not survive because we are getting the orders.

What are your thoughts?

**3pointRoss** · 04-12-2006, 03:11 PM

I would do some number crunching and see what the financial outcome would be if you price matched.

If you can still make a profit, figure that those people will come back and spend more, then maybe it is worth it.

However, if it is going to put you in a situation where you can't possibly make money from doing it then losing customers or not its not a great idea.

I don't know much about brick and morter, but maybe you could start writing some content about why your brick and morter is of better quality than the "fly by night" internet-only sites?

That way you establish yourself as a serious company providing a quality product, rather than making the cheapest and crappiest brick and morter you can find...

**remindme** · 04-17-2006, 11:57 AM

I agree with your first statement..

I have never worked much on price myself..

but when it comes to on-line business.. consumers tend to stray to the lowest
price competitor...

So I guess my question to you is this, what industry is your brick & morter??

Depending on the industry and the competition out there... you should be able to get your answer...

If your producst are commoditized then you have to play the game... unless you can show value to your sevice??

What industry is this in?? too many variables to answer this quickly.. :-)

**Eurofreelancer** · 05-15-2006, 08:31 PM

This is a thorny topic that actually covers a couple of problems, the first is a legal hurdle and the second a strategic one:

1. Legally price matching equates to price fixing and is illigal in most westernised countries - as it artificially affects prices in relation to a competitive market. This is a good reason against it.

2. Strategic - ignoring the legal implications, think of it this way:

a) If you don't price match, you risk being undercut and entering a price war which you will lose due to increased overheads, shrinking your market share ggloabally down to a local level where you have a rep and "loyal" customers.

b) If you price match, you become "part of the game" and lock yourself into a cycle in which you have to meet Internet stores' pricing strategies while trying to cut corners with your cost overheads. inevitably leading to the same conclusion - as internet competition grows (and it innevitable will, it is a more fluid & agressive marketplace), prices fall due to economies of scale and you are drawn into lowering prices again until you become uncompetitive.

Thus both options, quite frankly, suck.

I would suggest that you need to rethink your business model & focus your online store on competitive values which make you different from the competition:

- what about a brick & mortar backbone gives you an edge?
- Can you synergise any of your in-house operations with the website's database or functionality (e.g. order processing, administration, purchasing, stock tracking), if so, doing so may lower overheads and make both the store and ebusiness "lighter"?
- Do you have hard-won realtionships with suppliers, if so, can they be leveraged in offering a more competitive online service than alternative etailers (e.g. direct ordering / stock pricing with smaller margins)?

Admittedly you have many options to fix this conundrum, but I think it would require a re-think of your overall operation to take into account competition from as-yet undealt with areas.

Sorry for the long post,

EF