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Is Amazon’s bark worse than its bite?

Written by Jeff Allen on November 4, 2014 in

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The short answer is no, it’s not.  Amazon is still one of, if not the, ecommerce big dog out there.  And it has a very powerful bite.  However, it might not be as powerful as we’d all assumed

A recent survey held by Wells Fargo and data firm 360pi returned some interesting results: Amazon doesn’t have the lowest prices online.  Say what?  It’s a confirmation to some, and a downright shock to others.  While Amazon has great sales prices, stores like Target and Walmart actually win the prize for lowest prices.

We’ve always known that Walmart was pretty much king of low-price, but this news opens some possibilities for dropshippers and others with ecommerce sites.  To be specific: possibilities of up to 10%.  That was the difference between prices on walmart.com and amazon.com.  Amazon still had the edge on like-for-like sales, but Walmart and Target both had lower prices on clothing, shoes, housewares, and health/cosmetics.  Are any of those ringing any bells?  They should.  Because those are the categories that dropshippers make the big bucks on.

So what does this mean?  It means you can adjust your prices to be even more competitive.  It was long assumed that Amazon was the go-to for the “best” price.  They always had the lowest prices, so if you didn’t want to undercut your profits, you’d try to match theirs.  Rarely did people compare prices with Walmart and Target because Walmart was a necessary evil (just kidding for all of you who like Walmart.  But for you who don’t, I’m totally not) and Target was just….well, Target.  

With this report it’s time to change how you compare prices and sell competitively.  Amazon has lost its edge.  If you compare your prices to those of Amazon, know that you’re generally selling your items at a 10% increase than the lowest prices.  And this isn’t insider information.  The survey was made public.  So you can bet people will be changing their buying habits as well.

Now, as you're competing on prices, don’t try to compete with Walmart.  Walmart always wins.  Ever wonder, “Man, how are their prices so low and they still make a profit?”  Yeah.  Nobody knows.   But if you tried to compete on Walmart’s turf, there’s no way you’d be able to keep up.  You just don’t have the financial wellspring that Walmart does.  

So how do you compete?  Set your prices somewhere in the middle.  Compare both Amazon and Walmart/Target prices and put yours somewhere in between.  Now that the word is out that Amazon isn’t the cost-saving guru everyone thought it was, people are going to be looking for other businesses to buy from.  

Sure, people are going to flock to Walmart and Target, but that’s nothing new.  The interested shoppers, the loyal customers, are going to be looking for a new go-to for their discount prices.  

Amazon had a near-monopoly on ecommerce for quite awhile.  It has since lost its hold as new businesses are making a name for themselves.  Yes, it still has a majority share of ecommerce business, but now there’s room for others.  Ecommerce is exploding, and Amazon can’t stay King of the Hill.

If you’ve been competing against Amazon, it’s time to change gears.  Find your niche, do your research, and find a price that people are willing to pay.  Your competition isn’t all about the big names anymore, it’s other businesses like yours.  With ecommerce still relatively in its infancy, there has been no better time than now to start selling online.  Do yourself a favor and develop your bite now, so you don’t need a loud bark later for compensation.

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