Competing on Price – Or Not

Recently had a talk with someone who asked me a simple question ‘Isn’t online difficult? You just have price to compete on’.  It is perhaps one of the most common beliefs out there, and the simple fact is that it’s not true.  On the surface, price definitely looks like the only thing that we all compete on; but it really isn’t just about the price + shipping.

Customers choose one company over another for a series of reasons including:

Usability

How useful is the site? To what extent does the site offer you the tools that you need to put an order through.  This can range from offering a payment method that you prefer to a wishlist / guest registry to reviews.  Heck, it could be as simple as having the right colour font.

Reputation

Buying online (heck, buying in general) is a leap of faith.  You only need to go to BGG’s Discussing Retailers section to see the number of times customers have to ask ‘is this company good’?  Having a reputation of good customer service can put you ahead of a similar, less well-known company.

Shipping Speed

How fast does your order go out? Does it take a day? 2 days? A week? It matters to some people, it doesn’t for others.

Selection & Availability

Does a company have everything you want? Do they have it in-stock? Amazon’s a great example of a place that has low prices (especially when you include Free Shipping) but do they have everything you want in-stock? Sure, there’s not a huge difference if you can do multiple small free-shipping orders (like in the US with Amazon Prime) but what if you struggle to reach that threshold?

Returns, Mis-shipments & Other Exceptions

What are the return policies of the company? What are their policies on mis-shipments or wrongly labelled / addressed orders? What are their policies on exceptions or mistakes in the ordering / shipping process?  When everything goes well, we never worry about these things but when it doesn’t, you need to know the policies of the site.  In Canada alone, among the major game stores, the policies dealing with any of these areas are quite different.

Customer Rewards

Are there any? There might be, there might not be; and within the rewards programs there’s quite a difference in degrees and options available.  These things can complicate even a simple site-to-site comparison.

Pre-Order Policies

Lastly, what are your options with regards to pre-orders? There are obviously a lot of ways to take pre-orders – from adding individuals to a notification list, a reservation list, taking orders (and charging for orders) to just taking an authorisation (the way we do).  All of these policies affect customers differently, and again differentiate the customers

The Hidden Cost

Here’s the truth though – the more lax / favorable the policies are towards a customer, the more likely the prices are going to be higher.  As an example – it’s easy to do returns with a B&M store compared to an online store, but you do pay for that convenience.  Again, the same with game space (which we don’t have).  The more you expect in terms of favorable policies and the like, the higher the prices are likely going to be.

There’s a disconnect between us and say, Amazon though – they provide great policies and low prices; and manage to do so without impacting their service much generally.  Of course, they also have a bottomless bank-account.