Everyone loves bargains. Shoppers will flock to your site if you can offer quality branded goods at deep discounts. Not only that, these shoppers would be more than eager to share their best buys with friends, colleagues and relatives. They may even volunteer to buy on behalf of those who do not have access to Internet.
Studies have shown that online shoppers are more price-sensitive. A look at financial statements of listed online retailers revealed an unhealthy trend - cost of sales is much higher than revenue. In other words, most online retailers are resorting to cut throat pricing to increase sales.
While analysts pointed their fingers at new competitive pressures presented by companies that help buyers compare prices online, I believe consumers are simply not motivated enough to make more purchases online if stores do not offer their products at below regular retail prices. In impersonal environment of an electronic store, consumers' inherent desires to seek out good bargains become a dominant factor in deciding what and where to buy online.
How could you sell quality branded goods at 50% off without losing money? Quite simply by securing alternative sources of products. Many manufacturers and wholesalers are flooded with overstocked and surplus goods in their warehouses. They must liquidate millions of dollars worth of top quality merchandise at "distressed" prices every month to make room for new products.
Merchandise can become "distressed" for several reasons: + Overstocked goods are sold as closeouts. + New models make previous models obsolete. + A product line is discontinued. + Changes made to product's color or label. + A large contract order is cancelled. + A manufacturer is forced to close and must liquidate its goods. + A manufacturer is forced to liquidate its goods to generate operating capital quickly. + A manufacturer has limited warehousing space and must move its inventory to make room for new merchandise. + Refurbished products that are as good as new. + Product over-runs.
Whatever reasons, "distressed" goods are still quality products and they carry full manufacturer's warranties just like regular goods.
Most of these "distressed" products are bought by wholesale clubs and online discount stores at prices way below manufacturing costs. Although these products are resold at discounted prices, profit margins would still be fairly comfortable to turn in good profits with a high sales turnover. Online discount stores that adopt this business model includes NASDAQ-listed FragranceNet, DesignerOutlet.com, OutletMall.com, 1bookstreet.com and GotItDirect.com.
You do not have to operate in same scale as these online discount stores. Neither do you have warehousing facilities and resources to compete with these established discount stores. Acting as an affiliate of these discount stores will not work either, as shoppers would have gone to online stores directly on subsequent visits.
The objective of offering bargains to your target audience is to entice them to visit your site as often as possible. Its acceptance will open up many other opportunities to sell your key products and services. A viable approach for small businesses is outlined below.
Adopt a highly selective product strategy. ---------------------------------------------------------- Keep your business simple by staying focus on one product or a narrow range of products that are complementary to what you are offering at your site. Treat business as a form of providing value-added service to attract and retain visitors to your site.