One of the most common selling strategies that companies use to increase sales is to lower their prices which invokes price wars. The downside of this approach is that it often ends in a race to the bottom.

Pricing strategy refers to the tactic retailers use for setting prices. As we know, the price of a product is one of the most significant factors that influence customers’ purchasing decisions. Therefore, you should set prices after considering all factors, such as market conditions, competitor pricing strategies, or brand image.

However, setting a coherent pricing strategy is even more essential when selling products online. Here, the fight for the most competitive prices can be even more difficult than other stores. It is because of the high accumulation of similar products of different brands.

The emergence of new brands or business models could threaten retailers in the industry. These retailers will have to cut profit margins and look for ways to maintain their market share. What other outcomes might there be for companies offering essential goods? Of course, the first consequence of entering a price war is the constant price reduction for strategic products or as low-price promotions result.

Frequently, physical or online stores attempt to compete with those who advertise as being most attractive when it comes to lower prices. They compete by offering aggressive promotions that catch client attention even if they risk their bottom line. To compensate for this decline, some stores are quietly raising prices on other products. This strategy can lead to dissatisfaction and the loss of more informed customers. For this reason, any act of revaluation should be very clearly defined based on market and competition research. 

Make your brand strong, not price wars

These price wars will hurt brands dedicated to innovation and growth most. If they decide to jump in, they may have to lower their prices so much that they lose any added value and value difference to shoppers. With such fierce competition, some brands have already had to drop out of some categories because they could not handle the product offering. Then, when launching new products, it is better to focus on a specific item, both on eCommerce and in physical stores. 

Manufacturing companies must also contend with the issue of private labels offering low prices in marketplaces. In most cases, a price war against them is inappropriate because the costs of producing and distributing them are lower. In contrast, creating a story about your product might be a more effective strategy to gain a high position in the customer’s mind. It can be done by sincerely and simply reaching out to shoppers and gradually building the brand into an industry benchmark.

Supermarket price wars

Food price wars in eCommerce are even more subtle since dynamic price changes can be better controlled. As customers place orders online, not only do conventional supermarkets compete, which already have an online store, but also younger, specialized companies that have an advantage. In addition to price, delivery times also play a significant role in the war for dominance in this industry. The fact that customers attach such importance to responsiveness is one of the factors driving competition among eCommerce companies. 

For this reason, companies such as Frisco and Lisek, which also distribute food and daily necessities, have carved a niche in the marketing chain. While the introduction of new personas into this scenario, as with Amazon, reduces the profitability of companies, brands, and eCommerce businesses, they must look for creative solutions that will increase their sales and connection to the client.

E-commerce success ultimately comes down to experience. For most retailers, it makes sense to steer clear of price wars since customers need more than a good deal to come back. Be original, memorable, and functional instead of battling. It is a less risky approach in business than price wars.