What they don’t tell you about online shopping and trading
One of the myths about online retail technology was that it would only pass on benefits to the consumer. That’s not always the case. Everything is cheaper online, right? Wrong! That’s what they want you to believe.
You can often find items for sale cheaper by physically visiting a shop. When I was part of a group travelling to France – all of us heading out from Portsmouth and arriving at Le Havre – I was amazed to find I’d unwittingly got the best deal on my tickets. That never happens. But like an idiot savant shopper, I’d stumbled onto a secret about online trading. The vendors have created a myth to fool the public.
Once there was a mass perception that everything is cheaper online, the stores could sit back and enjoy the benefits. Thousands of customers would pay the highest price while the online shop incurred the lowest costs – helping the business to maximise its profits. Meanwhile the customers are happy because they think they have got a bargain by going online.
As stated before in this column, retail technology empowers either the buyer or the seller – but it’s far more likely to be the seller. Only when the seller is inexperienced does the shopper get a bargain. For example, when small start up businesses and individuals people sell their stuff online. The classic mistake they make is to try to sell on price. Which is why you see millions of people selling their books and CDs on Amazon for wafer thin margins. You can often buy a new hardback book for a penny on Amazon, with the seller making their profit on postage and packaging charges. Hardly seems worth all the effort for a few quid profit.
“The worst mistake you can make is to compete on price,” says Chris Barling, CEO of Sellerdeck, which provides an online trading system start up shops. The competition online is so intense that you can only offer the cheapest price by selling at a loss. And when you can’t afford to stay in the market any more, there’ll always be someone to take your place.
Selling goods for the cheapest price could only really be justified if you were starting out and using your eBay or Amazon shop to build up awareness of your name. So the time and money you lose could be justified as an investment in getting your brand recognised before you decide to create your own shop. But there’s a danger here, because people will associate you with being the cheapest vendor, which isn’t a great recommendation. “Competing on price is the fallback for people who haven’t got any better ideas,” says Barling.
As many an embittered eBay trader will confirm, even people who pay the cheapest price still tend to expect the highest levels of service. Shoppers love to complain these days and eBay and Amazon shoppers seem to delight in destroying online reputations with negative feedback. There’s a new breed of professional grievance monkeys online. They seem convinced that the way to get more for their money is to complain endlessly and threaten to embarrass a vendor. If you are to trade online, you have to bite the bullet and deal with them politely, says Barling.
Don’t argue with customers, even when they’re being unreasonable, he advises. “You have to focus on giving a good service. Customers that have had a bad experience that has been put right to their satisfaction are the most loyal customers,” says Barling. They tend to give you good references too.
Another classic mistake that online retailers make is to spend money on design. They create fantastic looking sites that don’t necessarily bring in anything extra. Functional sites, like eBay and Amazon, don’t seem to have suffered at all from being plain and workmanlike. People are more impressed by the level of detail a seller goes into.
Failing to go into detail is the third classic mistake that an online vendor makes. You need to become the trusted expert authority on your chosen subject. If you become the vendor of spare parts for boats, make sure you include every piece of information that a buyer might want to know before they buy. Barling advises you to practice with a spreadsheet, outlining all your product specifications in Excel in advance of setting up shop. When you do set up shop, in Sellerdesk, you can just port all your information – as comma separated values – from your spreadsheet onto your online shop.
Once you have practiced with eBay and Amazon, you may be ready to start your own shop. But you’re still a long way from getting a profitable business. That’s something they don’t tell you in all those patronising ‘how to start an online shop’ features. Keep reading this column though, and I will give you an honest lowdown.Tagged in: amazon, eBay, online shopping
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