Time to Re-Group and Review
The last few years in our business have been quite a whirlwind. We saw success quickly in the beginning and have spent a lot of time trying to keep up. Our busy season has ended and it’s time to review.
This year was the first year that we didn’t see tremendous growth in our business. We still have great traffic, and great orders, but we just didn’t grow as expected this year. I’ve been spending the last couple of weeks trying to analyze why this could be. The economy, the saturation of competition in our market, product availability (a huge issue this year)…there are a lot of variables. One thing that I noticed this year was how many more sites have popped up selling in the same niche as us. This is the downside to running a business that drop ships 90% of their inventory. The products are not exclusive to our site, and the business model is fairly easy to set up. We had more calls from frantic customers that ordered from another site only to find out weeks later that their credit card was charged but their items never arrived. The website they ordered from doesn’t have any contact info available and their event is just days away. They are stressed panicked and confused. Sometimes we can help and we get the sale, other times it is just too late for them to get anything online. They ordered from that website because their price on that item was so cheap. I’ve been doing a little research and I have found websites selling the same products as us at prices that just don’t add up. Some are less than wholesale, others are anywhere from $0.05 to $0.25 markup. Of course many of these are the sites we hear about from our panicked and frantic callers.
I’m not sure how to compete with this kind of pricing. Most of our drop shippers set a minimum retail price or a MSRP but even after submitting complaints to our vendors the sites continue to roll out insane prices. There is no way we can match those prices and I do feel that we have lost sales this year because of them. We offer outstanding service with knowledgeable and caring customer support that is available 7 days a week. A reliable and secure website with stock updates, excellent product photos, relevant and informative product descriptions. But most of our customers are only looking at their bottom line, when they see a wedding favor for $0.50 on one site and $1.00 on ours; we are more than likely to lose that sale.
It makes me sad that these other sites are coming out and saturating the market with prices that just don’t add up. I’m sure there are some that could be reliable and fulfill their orders, but how in the world do they stay in business?
This is something we are really going to have to consider as we enter our next busy season in January. I’m not sure how we can compete with rock bottom pricing, but we will just have to find a way. If anyone reading this blog deals with this same situation we would love to hear how you handle it.