Price War In Online Store Are Increasingly Worrying - What's a Solution? (Part 2)

Note: This article is part # 2. If you have not read the first part article, then it's strongly recommended that you read the article first. Because the contents of this (part #2) article are very closely related to the previous section, please read the first part HERE

PRICE WAR IN ONLINE STORE ARE INCREASINGLY WORRYING - What's a Solution? 
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Well, I will try to give a few simple examples. To improve service at the Padang restaurant, can you be done in the following ways:

#1. Free juice drinks will be given every 15:00 to 17:00 a.m. (note: chosen because of that moment usually empty of visitors. So by offering a promotion like this it is expected to be able to bring in buyers).

#2. Or you can also put a large banner in front of your Padang restaurant, and include the sentence below.

"Notification to our esteemed customers: We recommend that the receipt is stored and do not throw it away. Because every ten payment receipts (IDR 50,000) collected can be exchanged for a free lunch promotion package for two people. (Note: this promotion is valid for two months. ) ".

#3. You must continue to maintain and enhance the taste of your Padang restaurant food. If your food tastes delicious, then customers will remain loyal buy-in your restaurant food.

Remember: as I often say, "prices are directly proportional to quality and service".

Your competitors, Padang restaurant that lowers prices to about 10,000 per serving, are impossible to serve delicious dishes. Note: IDR 10,000 is around 80 cents the US $, and the general standard price of 1 portion of food in Padang restaurants is about 1.5 US $). So, because the worth of food is sold too low, resulting in lowering the taste of the food.

What is the cause?

Because its prevalence the price be directly proportional to quality, it has become an 'economic law.' So, if the quality and taste of your food are always maintained, then surely the customers will remain loyal to shop at your Padang restaurant (even though it's a little expensive). Believe me!

Those are three smart ways when facing price competition.

The illustration above is just an example. You certainly can apply other methods that are by your strategy and style. The critical 'key' remains the same, namely: Creativity!

In the manner above, you can still win the competition and attract your customers, but without having to destroy the prospects and future of your business (without a price war). This is what characterizes the thinking of a true entrepreneur.

And one more thing: Smart ways like the above won't be easily copied by others. It's very different (by the level) with the tricks of slamming the prices that even kindergartners can do. hehe 😂

 

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But, what if you have already followed the way of the new competitor (making a price war) and getting stuck in unfair competition? And finally, make you 'dragged' towards the destruction of your business?

What is the solution?

If the price war has already been carried out and your business can no longer be saved, then you should immediately move to a new location with a relatively still competitive and fair business ecosystem.

There is no point in keep staying where your old business is if the market price is battered. This world is expansive, there are still many thousands of other places that are more strategic, and the traders are always fun (read: fair/sportive) when competing. Correct or not? 😉

The description that I narrate at length above is an example of unfair competition in the offline business.

Well, what about the conditions of competition in the online business?

The condition is not much different, even worse! The competition and price wars in the online business community are increasingly 'crazy!'

One of the factors is because it is easier to sell and make online shops for free on the internet. Especially now that e-commerce users and marketplaces online are increasingly spoiled by the various conveniences and free shipping promos provided by all the most popular e-commerce/marketplace online in Indonesia.

All e-commerce compete with each other to provide convenience to its users.

Even in the past month, my physical store (author) has been visited by 'delegates' from the site of the Bukalapak. Note: 'Bukalapak' is one of the leading marketplaces online in Indonesia).

The envoy offered me assistance to make an online store account at Bukalapak.

"Free, no need to pay sir," said the Bukalapak 'delegates'.

After the 'delegations' from the Bukalapak site were finished from my shop, then they took turns to come to the other shops (next to my shop).

Well, now what's on your mind? Online marketplace users are increasingly being served easily right?

Therefore, don't be surprised if more and more people sell online on the internet.

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The above conditions are very different when compared to businesses in offline stores (physical stores). In the offline store, there is no free service! Even offline businesses need substantial business capital, such as the cost of renting a store, making a shelf/product display, and various other operational costs.

It's a very far difference between an online store and an offline store.

"Like heaven and earth."

If you want to create an online store, you don't need to pay a lot of money like setting up an offline store. At the 'venture capital' online store all you need is an internet quota and a little knowledge about how to create an online store account. Then you have succeeded in making an online store (in e-commerce / online marketplace) immediately.

Even for people who are still clueless with internet technology, it has now been served directly by the 'delegation' from the online e-commerce/marketplace. Yup! They came to help those who are clueless internet so that they can have an online store for free (as I mentioned above).

That is why they are now increasingly mushrooming open online stores. Yeah! Everyone now wants to open an online store! And this phenomenon will have side effects.

What is that?

Yes, THE PRICE WAR!

Well, that's the fact! This phenomenon is like a snowball effect or a domino effect.

Maybe you will ask: "What do you mean, Mr. Izal?"

Yes, the effect is like a chain.

Because now so easy to sell online. Even now you can get free service if you want to create an e-commerce account. So that more and more days are mushrooming people who have online stores. As a result, intense competition is unavoidable. Because of the fierce competition, make so many newcomers use shortcuts to grab markets/buyers. That is, by way of a price war.

Even more extreme conditions have occurred. Namely, some new sellers happen to have substantial capital. Now they are making a price war with the aim to grab other online store customers (old traders). If such unethical tricks continue, then, of course, old traders will not be willing to their customers taken over granted. Finally, they were forced to go along with dropping prices (making a price war back).

What's even more worrying is that news has spread that distributors/importers/ suppliers are also playing in online e-commerce/marketplaces. If they sell their products in bulk, it certainly won't be a problem. Now the question is === >> they sell their products in retail, but the selling price is worth the wholesale price. Helllooow, are you kidding me? No wonder the small sellers many are 'killed' by them!

After all, why did you have the heart to kill small sellers? (reseller). If the resellers are all 'killed,' of course, no one will buy your products (the distributors/importers/ suppliers). Well, isn't that the same as suicide?

So the situation is like there is a broken 'chain' system. If in the past the chain was like this: importer-dealer-seller-reseller-buyer.

So now the 'chain' is cut into importers-buyers, or distributors-buyers, or at least semi-distributor-buyers.

In essence, the 'chain' of sellers and resellers is like being ignored or left to die slowly. Sadistic! Hhh. 😂

Now, try to imagine, what will happen if the practice of price wars like this continues? Then surely you already know the answer, namely: "THE FUTURE DESTRUCTION OF ALL TRADERS! 

Even if there are traders, who win in a system like as above, of course only people with substantial capital. Whereas for those with small money? Yeah, you must accept all fate and your business death! So the applicable law is 'the law of the jungle!'

Just look at the most extensive online e-commerce/marketplace sites in Indonesia such as Tokopedia, OLX, Bukalapak, Lazada, Alibaba, and others. For the sake of gaining reputation and buyers, there is some massive seller (read: strong capital ) set a margin for products that they sell for just only 5%!

Over time this competition will lead to an unfair system.

If this unfair system continues, then finally no one will be the winner. All of them will fall into the 'death' of the future of their business (except only a small portion is left, namely the traders who have a large capital. That is what is meant by 'the law of the jungle').

So ... Is the solution?

The solution is only one, namely the awareness of all the traders themselves to try to create a healthy competition ecosystem! That's the most reasonable way, even though I admit that idea is also difficult to implement. Because in the wilderness of the internet world there are thousands of people who have different interests and thoughts.

In the end, my hope might only be utopia. That is a dream that is difficult to realize. But at least I have been able to contribute ideas about ways that are elegant, smart and effective when facing competition in online businesses and offline business.

Thus, in the end, I can only hope, hope you can all apply smart and elegant competing for methods as I have explained at length above.

Maybe we will not be able to change a system as a whole, but at least we can change the order starting from ourselves.

Therefore, from now on don't make price wars. Compete in a healthy way, because that will save the future of your business.

And that is also as proof, that you are indeed a true entrepreneur!

I HOPE SUCCESS IS ALWAYS FOR YOU!