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Price War In Online Store And Offline Store Are Increasingly Worrying - What's a Solution? (Part 1)


Note: Tulisan ini adalah terjemahan Basa Enggres bebas dari artikel ini

Price war in online store and offline store are increasingly worrying (What's a solution?)

Lately, price wars in online stores, marketplaces, and e-commerce have become increasingly worrying. Yeah! These symptoms are not only 'craze' in cyberspace (online stores, e-commerce), but also increasingly prevalent in the realm of offline stores (physical stores, markets, supermarkets, etc.).

The price war that occurs in online stores has even exceeded the fairness limit. Many traders sell their products at meager prices to get customers. And this is a lousy competition!

What is the reason?

Here's the explanation:

If this price war continues, then the 'jungle law' will apply. That is, whoever is the strongest (in business capital and human resources) will be the winner. Even if this competition continues to a more extreme point, no one will be a winner.

How come?

Yes, because the selling price/market price has already fallen to the deepest ravine, so there is no more margin (profit) that can be obtained. Even if there is, the margin is only enough to cover operational costs like people who grow rice, when the harvest gets the pulp.

The price war is usually made by many new traders. They want to capture market share with shortcuts (instant). This behavior can lead to unhealthy competition among fellow traders themselves. Because, if there are new traders who reduce prices arbitrarily, of course, other traders will feel upset. And finally, they too went along with lowering the cost of their merchandise.

That new trader not ethical. New traders should adjust the selling price of their products with the standard selling price (market) that has been formed by old traders. Such is more the ethical way so that a healthy competition system will be maintained.

Traders who already have branding (read: favorite) and have spent time years in their business (usually) rarely do price war tricks because they are very aware that such a method will lead to an unhealthy competition ecosystem.

To captivate the hearts of buyers and make them targets to become loyal customers, the old traders generally prioritized service and customer satisfaction. That is by providing friendly service, fast delivery and always maintaining the quality of its merchandise.

Maybe you will ask: "What is meant by maintaining product quality?"

What is meant by maintaining product quality is: check in advance the condition of the product before shipping. If the status of the goods is right, then the buyer does not need to complain to the seller.

Conversely, if the seller is not careful with the product, as a result, the buyer must make a complaint (example: after being accepted, there are parts of the product that are damaged). All of it will be troublesome for the buyer (also does not satisfy them).

Other things are not less important, namely sending goods that match their specifications with product descriptions (usually written on online store web page). Even if we have to ship goods that are not by the order (because the color of the appropriate product is running out for example), then ask the buyer first (does he agree if the color is replaced?). If he accepts, then say: "we will send your goods soon." But if he doesn't agree, then try to offer other options, such as exchange with another product that has the same value as the product.

The bottom line: prioritize maximum service and do good communication so that that customer satisfaction can be obtained. In general, old traders (especially those who are already famous), are maintaining the comfort of their customers. They are more inclined to implement strategies like this rather than doing instant tricks such as price wars.

Even if they must make a price war, usually the old traders do it this trick is only for specific purposes and reasons. For example, when they want to sell the rest of their products at low prices (in Indonesia it is usually termed: "warehouse cleaning"). Or make a price war for promotion. For example, they are giving discounts on certain products, sale at the end of the year, and others.

So their goal of carrying out a price war is not to drop market prices. They conduct price wars only at certain times (for promotional purposes). Should the new traders have to follow the way the senior trader when competing to win prospective buyers? Yes! Of course! They must do clever tricks, namely tricks that do not harm the future of all traders. And, that's should how healthy competition is.
Other Exciting Articles: 17 ENTREPRENEURIAL MINDSET and BUSINESS LOGIC (Part #1)

So, avoid the price war as possible. Even if it has to be done, make it the last choice.

What's the reason?

Because the tricks of the price war are==>> "non-creative trading strategies." This is the softest expression from me.

I ever read articles on someone blog. The content of that article is very frontal, stating that people who often carry out real price wars have done "STUPID STRATEGIES!"

Frontal once indeed. hehe 😂

Maybe the author is a blogger and also an online shop owner. Perhaps because he was too sick of by the phenomenon of the price war that was so severe. So that made him state that.

But if discussed in more depth, that blogger's statement does have a point too. A price war is indeed a 'stupid strategy.'

Therefore, this strategy should be the last choice of an entrepreneur. As long as there are better strategies, then avoid it this price war tricks.

What is the reason?

Because price war never requires creativity. Therefore, do not be surprised if this strategy can be done by anyone. And because everyone can do it, this 'race' will undoubtedly continue towards the future destruction of the traders themselves. Well, if a strategy destroys the future of the traders themselves (in the long run), isn't that a foolish act?

Maybe you will ask: "If a price war is called a stupid strategy, what kind of smart strategy?

Hmm,,,, there are many ways we can do to increase sales but not to hurt the future of our business. The key is: Increase creativity in business and provide the best service to your customers! Such is a smart strategy!

Remember one thing: "Everyone can become a trader, but only a few can become entrepreneurs." And a smart strategy can only be done by an entrepreneur.

What is the cause?

Because to be able to reach the entrepreneur level, one must have a high level of creativity. And not everyone can reach that level. A person can be called an entrepreneur if he has proven creativity, ability, and foresight in facing every competition.
Other Interesting Articles: 17 ENTREPRENEURIAL MINDSET and BUSINESS LOGIC (Part #2)

Next, I give an example of a case of competition in an offline business, and how to deal with the competition intelligently. I will make an example with the narrative of a Padang restaurant.

(Note: 'Padang' is one of the tribes in Indonesia that has a unique and world-famous cuisine. The name of the dish is 'Rendang').

Suppose you married a woman from the tribe of Padang and opened a restaurant near a terminal. And you set a price for 1 portion Rendang according to the price of Padang restaurants in general. Suppose you sell 20,000 rupiahs per portion (around 1.5 US $).

After a few years, it turns out that your Padang restaurant is very crowded, so it will attract others to try the same business as you (near the terminal location). And it turned out that it really happened then! That new Padang restaurant belongs to someone else and officially becomes your business competitor. The place not too far from your Padang restaurant, about 100 meters.

Remember one thing == >> the new competitor is setting up a business that exactly matches you so that it can lure your customers to come there and taste the taste of the new Padang restaurant.

What happens if it turns out the selling price per serving of food is much cheaper than you?

For example, for one portion of Rendang food that is the same as your Padang restaurant, the new competitor sells at a much lower price. If you sell Rendang 20,000 rupiah per serving (around 1.5 US $), then he sells at a sloping price, is only 15,000 rupiah per portion! (around 1 US $ more)

This massive price difference can undoubtedly make your customers turn to the new competitor. Of course, this is risky to make your business fall because of rich price competition.

Now if there is such a condition, what action will you take?

The example above often occurs in reality. And it can happen to all types of businesses especially if your business is a type of business that is easily imitated by people.

And you have to be prepared for the conditions above. 😅

If you experience a condition like the one above, you may feel very upset. As if your head has been trampled by a new competitor, of course, you feel angry about it. And this is commonplace as human.
OK! Everything has happened and cannot be avoided. And you have no other choice, except to accept the fact that you have got a new competitor.

Yeah! That is the reality of the business world, competition will always be there, and you must be prepared to face it. After all, it's impossible for you to force the competitor to close his business. And forbid him from opening a shop near you. hehe 😁
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What do you think about smart ways and more appropriate strategies to solve the above problems?

You might think: The easiest way is to sell food at the same price as your competitor (15,000 rupiahs or about 1 US $ per serving). With the hope that your customers will come back to shop at your Padang restaurant.


What if your competitor decreases prices again, again and again?

Today your competitor drops the price of 1 portion of Rendang worth 13,000 rupiahs (around 92 cents US $) per serving. And then you sell for 13,000 rupiahs per serving.

Not long after that your competitor selling cheaper for 12,000 rupiahs per serving.

And you go back reduce the selling price of food at your Padang restaurant.

A week later your competitor is getting crazy by setting the price 'flat,' that is, all food portions on average sell for 10,000 rupiahs!

And do you know?

If the price war like above continues, it's better to close your Padang restaurant!

What's the reason ???


Yes, because there is no point in maintaining your business!

Try to think for a moment,

If the margins of a business are very small, not even enough to pay for operational costs, is the business still worth keeping?

Therefore, if new competitors emerge using the price war strategy, then don't reply in the same way. Why? Because it is not a smart and elegant way. Because in the future, it can destroy your business prospects.

Especially if you face competition by playing witch doctors, or even drive away and challenge your competitors to fight, it is more not elegant hehehe. 😂

All attitudes like above, (actually) make your image as an entrepreneur will be tarnished!

What caused it?

Because you are not able to compete and healthily serve your competitors.

You are like a child who calls his parents after an argument or losing something.

Never do it like that!

If your opponent isn't fighting in a classy way, then you are competing in a smart and classy way. Show your level is not the same as your competitor! 💪

In competition in the business world, set lower prices should be the last choice. In healthy competition == >> if a new competitor comes, then a smart strategy is to increase the value of your services.

So if your competitor makes a price war blindly, then don't you follow a way compete like him. Because lowering the price without calculation can turning off your business prospects (and also reducing the quality of your business).

Usually, low prices are directly proportional to service and poor quality. Example: a restaurant that is too cheap must taste less tasty. Online stores that always carry out price wars, usually result in services being less friendly and slow responses. That's how it is. Remember the phrase: "Prices can never lie. There is money; there is value for goods".

Therefore, if you come along to participate in lowering prices, automatically your quality and business services will also decrease. The effect == >> your business is just waiting for the time of 'death' because customers will gradually leave you.

Now we return to the example study of the Padang restaurant above. If the most appropriate (and smart) way of competing is by increasing service to customers, then what services should be improved?

Find the answer in the article part # 2, Here
Bang izal
Bang izal Saya Seorang Praktisi Bisnis Mainan. Sangat hobi menulis dan suka berdiskusi. Saya ingin sekali saling berbagi ilmu, dan pengalaman, dengan teman-teman semua melalui blog ini.

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