The E-commerce Leader

[00:00:00] Jason: if you’re a premium provider in your niche, like you’ve got the highest price and you’ve got a brand reputation that affords you that, ability than in troubled times you have options. And one of the options you have is to become. Middle priced seller, or even be the low price leader.
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[00:01:24] Jason: According to the bureau of labor statistics from May, 2021 to May, 2022, the consumer price index for urban consumers increased 8.6%.
[00:01:36] That’s the largest 12 month increase. Since December, 1981 when I was 10 years old and I am not a young man. And, so it’s just incredible how impactful the inflation, situation is, touching our economy, this. Climate now that’s created is the biggest threat to business owners.
[00:01:58] In my view, since my, I would assume the last 50 years, what it means is, it used to be you versus your competitors discovering how much pricing power there was in the market and what customers would pay for a product now it’s you versus your competitors versus massive inflation. And it’s like a third party has entered the war and we have to understand what this means for us as e-commerce sellers in this conversation.
[00:02:29] We’re gonna dive into that. We’re gonna discuss how to look at the situation, how to respond and what’s going on generally and, and how it impacts our eCommerce operations. Michael, are you ready to dive into this important topic? Absolutely.
[00:02:43] Michael: Yeah. I would say. What’s interesting to me, just as a surprise to the direct topic is the general context of eCommerce has been, in a period with the odd blip.
[00:02:53] But especially for third party sellers on Amazon or those who’ve been selling on Shopify and these platforms exist really, In a time of recession. I think. So this is for anyone in eCommerce directly, I think an absolutely new experience. Whereas of course, for anyone who’s been around for a very long time, it’s not a new experience, but it has been a long time since these kinds of things have been around.
[00:03:11] Hasn’t it? This very res reminiscent of the seventies in the UK, we’re protectionist against Europe. There’s a lot of strikes. People are asking for 7% pay rises, which is still below the inflation rate and getting 3% and going on strikes. And this is very much the sort of return to the past oil price shocks due to war, et cetera.
[00:03:28] So I think that this is not unprecedented. It is just simply. Not how you muted yourself, not something that we’ve experienced in recent history. That’s all. So you were saying that we are now fighting on three strike, three fronts. So what is the sort of outcome for the. For the eCommerce operator?
[00:03:47] Jason: I think most operators, if they have cost of goods that have, rising amounts, rising costs in their supply chain, they’re gonna lose a lot of profit. And so the profitable eCommerce operators will lose profit. The not profitable eCommerce operators will go from bad to worse. And if you’ve been trying to scale a business and you haven’t really been focused on profit, maybe you’ve just been going after top line revenue, hoping to, get scale.
[00:04:13] Your margins are gonna go from, bad to worse, in, in many situations, depending on the costs associated with your supply chain, for your cost of goods. That means the weakest. Companies will go out of business. Many people will just capitulate. They’ll just say I can’t do this.
[00:04:30] I can’t run my business in the red for this long, this badly. Now it also means a small percentage of savvy operators in my view. Will, be creative in their pricing will be creative in their supply chain, structures and will become opportunistic and will take leadership, and maybe take new leadership roles in their category.
[00:04:52] And maybe, new entrants will emerge that will be, shiny and happy and new and priced wisely and will succeed. I, in this new, climate, I would assume they’ll do that on the basis of appeal to value. And, they’ll be creative in how they attract customers. But then the, the final piece there will be that, old market leaders will fall off and new market leaders will emerge.
[00:05:14] Old market leaders might fall off just because they’re asleep at the switch and they don’t actively manage their pricing. And they don’t understand, how tenuous the situation is in terms of pricing, or maybe they feel like they can’t manage their pricing. They’re painted them in themselves into a corner.
[00:05:29] And they can’t manage their pricing creatively, whereas new entrants can, and that’ll be the basis upon which new entrants overtake the old guard. So this is gonna be a turbulent time, I would say in, in general, most companies are gonna be less profitable if they’re dealing with, physical goods.
[00:05:46] And, that’s just the reality of it because inflation is eating away at their profit margin,
[00:05:51] Michael: Yeah. Some very good insights there. One of which I think is optimistic and I think that’s really important to bear in mind. So I think that to your last point first, I think a lot of people who are, have been in the game for a while will have built up overhead almost, by accident, it happens unless you CU doesn’t it.
[00:06:07] Yeah. But also it will have been overhead. That was an appropriate overhead structure. If there. We used to be profitable well in businesses for a situation in the world that I think is not gonna exist in the future. So I’m in a sense, very bearish on this, but I’m equally, as you say, bullish on the idea that, savvy operators can scale.
[00:06:24] I think that one of the things to that point, of the weakest companies going outta business, those are two sides of the same coin. I’m already way earlier than I was expecting seeing deals, starting to come across my desk. And certainly those of the mass mind where people are just going out of business.
[00:06:39] Who their com competition. Yeah. Some of them are my member. Sadly. A couple of them have actually almost basically gone outta business due to COVID then post COVID and with inflation impressions on top, some of them are saying their competitors go out business and actually one of them has their competitor reached directly out to them and say, would you like to buy.
[00:06:55] Some of our assets and obviously they’re in a very strong position to negotiate and it could be in a real expansion opportunity. It could, the brand exposure and brand assets that this company has, are very powerful. Yeah. But the back end was not well run. And to your point about off, the back end sort of cost structures were, I think really pretty appalling, so good.
[00:07:15] Starting. Yeah,
[00:07:16] Jason: this goes back. What you just described goes back directly to our conversation about the, the star principle and the 80 20 rule from Richard Kotch, which is, advantage, accrues, more advantage. And if you’re a strong operator in this context, in this climate, and you have competitors that are weaker than you, they’re gonna get more.
[00:07:36] And if you can stay ahead of them, they might capitulate and they might, that’s amazing that happened already in your group, that this, what this means is that if you’re the strong and, your competitors are the weaker, you might very well double the, you might grow.
[00:07:51] Through acquisition, basically, you might end up getting the brands that you hated and that you fought against, you might now own them, and then you can’t hate them so much. Yeah. Yeah.
[00:08:03] Michael: It’s a very good point. Cause the must mind member who’s discussing this, which obviously the details of which are very confidential, but I can say that it’s happening in general.
[00:08:10] Was saying that he’s had a couple of my members have had some experience of taking over a business and trying to integrate the staff. And one of the issues exactly what you just said, that, your brand, Joe blogs by, the miles brand takes over the VZ brand. And then suddenly all the miles people are like VZ, but they’re rubbish products.
[00:08:23] And we’ve been saying that we hate you. And suddenly they’ve got to make friends with it. And that can often be very problematic, gear change, mental switch so that it’s not without its challenges, but then everything goes, its challenges, as you say, The star principle absolutely applies. What I think is interesting though, is the star principle traditionally, just to put a nuance on it is about being part of a growing market and being the market leader.
[00:08:45] What I think a lot of us are gonna have to make friends with is being part of overall, at least temporarily shrinking markets and gaining Mar gaining business growth by getting market share, which either means buying out the competitor, which is complex, but ultimately. You’re taking the fight off the board or fighting super hard for market share, which is gonna be brutal.
[00:09:05] I think.
[00:09:05] Jason: The question is how were you the market leader? The, if you’re the market leader, because you, grew fast with a lot of debt, maybe you had some kind of investors or something like that, but you didn’t have margin. Then you’re the market leader on shaky, on shaking ground, on sinking sand to use the biblical.
[00:09:21] Sunday morning metaphor. You built your house on sinking sand. No profit, no, no real financial, solid foundation. Whereas if you’re the cash cow, which, Richard Cash, doesn’t advise people to be the cash cow and the leader, but that means you’re the one who’s really just, it’s a slower growth situation, but you’ve really got a lot of profit coming in.
[00:09:38] In a time like this, if there’s a big recession coming and a lot of, people are gonna exit the market, you wanna be somewhere in the. You wanna be the market leader, but not the market leader with fly flam. You wanna be the market leader with, real cash on the balance sheet and a strong financial position, because then as the 80 20 rule dictates, advantage will accrue to those who have advantage.
[00:09:59] Those who have, will have more. And those who don’t will have even what they have taken away from them to use the Matthew principle, phrasing of it. And, so I think that’s, what’s gonna be happening and inflation will absolutely kick that in. And you’re right to say that COVID, was already a whack, too many businesses.
[00:10:15] I hadn’t thought through that component of it, but the reality is that many bus, good businesses were damaged tremendously by COVID. Yeah, a few businesses were benefited by it. They came out of it stronger. And, so that creates a whole turbulent situation that this whole new layer of craziness sits on top of,
[00:10:34] Michael: the final thing I’d say about the COVID thing, is, two things.
[00:10:37] Number one, Like a lot of the time, all governments in the world and probably quite rightly occur, incurred debt of all kinds of metaphorical land directly, just debt . And so did some of the businesses within them. So in other words, they paid for a lot of people to do nothing, probably quite rightly, maybe not.
[00:10:52] You can argue, but they did another, gotta pay that back. So governments will not be supporting people. Who’ve. Still got the post COVID effects. Actually that’s the first thing. Yeah. So that’s leading, I think, to what I was again, expecting to come earlier is the sort of COVID effect on businesses and a lot of businesses going under business.
[00:11:09] Yeah. And selling the assets. Yeah. That’s now happening later than I was expecting. Yeah. But the other thing. Is that we don’t live in a post COVID world in terms of supply chains. In America, in Europe, in UK, everyone’s wondering out without face masks, nobody cares at all. Friend of mine’s, been living in California and says they’re much strict to that.
[00:11:24] So there is , but it’s post COVID China. Isn’t the opposite. They’re in the biggest lockdown ever in, in the history and they’re good at lockdown. We are not in a post COVID world, so we getting hit from all sides. Just quotes, quotes from COVID and then inflation comes on top.
[00:11:37] So no wonder it’s is challenging.
[00:11:39] Jason: So yeah, just, I was just gonna say, just to speak to that, I just was listening to the all in podcast. I love that podcast, and those guys were just talking about this and they quoted Jerome Phu as said, apparently the fed chair, in essence, he’s willing to destroy the economy to combat inflation.
[00:11:55] That’s the, those are the horns that the dilemma he’s on. He, to, to really combat inflation, his lever, his, pulley, he can move is the interest rate. He raises that thing up and up and up, and the economy’s just gonna get worse and worse. It’s gonna do monumental damage.
[00:12:12] And that’s the dilemma. He. There’s only it’s binary like that. It’s like inflation versus the interest rate. Yeah. And so what that means is there’s gonna be massive pain in the market. That’s just the reality of it. So anyway, yeah, I, it’s a complex time, but man for business in eCommerce operators, people are still gonna be buying toilet paper.
[00:12:31] Yeah. And they’re still gonna be buying, toilet bowl cleaner and to, I don’t know why the folks on the toilets, they’re still gonna be buying toilets. This is gonna be, a lot of discretionary spending is gonna go, by the wayside and. The basics will become more important than ever, but to the point of this podcast conversation, I think the question is how does pricing.
[00:12:52] Play into all of this. And I think that’s probably the thread we wanna pull, on today just to go, go down that road a bit, so
[00:12:58] Michael: absolutely. One final question on macroeconomic piece then, cuz it is, as you say it is now suddenly. A bigger, ever bigger part of our thinking rather than just, oh, that’s in the background.
[00:13:09] I can focus on what competitions are doing. So what do you think are the root causes of this? And I guess we talked about some of this, is it a universal truth you’re describing as parts of better question?
[00:13:18] Jason: Yeah, I think the question is, for, is it universal is, Is this situation gonna impact all eCommerce sellers?
[00:13:25] I would say the eCommerce sellers that operate in the physical product space are most at risk. And inside that risk group, the eCommerce sellers that operate with what you might call discretionary product, lines or products that are, aspirational, maybe brands, that kind of stuff, it’s.
[00:13:46] Toilet paper and, eggs and, peanut butter and stuff like that. It’s more the, luxury watches or, Mon Blanc pins or things that people can say, nah, I really wanted that, but maybe I’ll wait five years. It wasn’t really a need to have. It was a want to have, I think operators in those types of spaces will be the most at risk, operators that are you.
[00:14:08] Maybe in the retail arbitrage space kind of entry level kitchen table entrepreneurs that are sourcing items that are, new in the box at a garage sale and can buy for a dollar and can resell for $17 or $39. I think those sellers will be fine. I think the, the private label sellers who, have good margin, and are in a needed, you.
[00:14:29] Product category will be fine. I think digital good sellers that are, in the right types of niches will be fine. I could explain more on the digital seller side. I know that’s such a niche situation, but that’s this one I live in, the most, but, but the, some of those people would be fine. Others won’t be.
[00:14:45] And I think it’s, it gets broadly applicable. What’s happen. I think the inflation hitting the economy obviously hits all consumers. And so is. Universal and the pricing strategy therefore is, is an opportunity for all sellers or a requirement for all sellers, to think through.
[00:15:04] And so I think in that regard, the inflation versus your pricing strategy is a universal, the category you’re in is a secondary consideration, in terms of how aggressive you have to be to solve your specific problems,
[00:15:17] Michael: Yeah, I think that makes sense. So in other words, it does apply to everyone, but some people in a much more defensible position than others if I’m summarizing correctly.
[00:15:24] Yeah. I think the other thing I would say finally is this, that. Understandably, central bankers and governments, tend to say things like this problem is temporary, which is understandable, cuz it becomes a self perpetuating. Especially somebody at the fed says something, the fed chairman sneezes the wrong day and the entire world, stock market falls down the percentage point.
[00:15:44] Having said that, I think we should believe that. And I really think that. There’s an underestimation of how big the coming trends could be without going too deep into this. Just the final thought on, on the macro stuff before we get into how to solve it. Yeah. According to Zion, there are a couple of things above all demographics, and America’s withdraw from the world militarily, which is, a verifiable, statistical thing.
[00:16:07] Both of them particularly demographics does mean that most countries will not have, the people that provide capital are mostly going to retirement and the baby boomer generation and the people that consume and are the cheap producers in most countries, including, especially China and most European countries are going in are, not being produced in many numbers because people stopped having kids a long time ago.
[00:16:27] America is probably the most proof against that. In the world generally. So I think there’s gonna be a very big division between what happens in America in two, three years time, versus what happens in Europe and UK . And I think that, one of the things I’m trying to encourage everyone to is just, if you’re not already selling in the United States, it’s not gonna be a nice to how it’s gonna be a must house.
[00:16:44] So for me, that’s another. Who’s vulnerable. Who’s not thing. I think if you’re selling to Germans right now, , that could get ugly and it could do so within a matter of months, I think in terms of consumer demand,
[00:16:53] Jason: we’re framing this all as very negative stuff, which it is, but I think we’ve already started to pull through a couple, responses or prescriptions one prescription I’ll just mention.
[00:17:03] And then I wanna men, go into what you just described, but one prescription I’ll mention is, the, the marketplace you sell on itself. Is a prescription to think through, what marketplace offers you the best margins. And that’s a certain, a certainly a consideration for every e-commerce seller.
[00:17:19] Can you make more money selling on. XYZ marketplace than the other. That analysis is really super central right now because the profitability of it is most important. And that the question is what marketplace provides you the most profitability. That’s one thing you just described, another question, which is what, which geographic market, provides you the most opportunity.
[00:17:40] So to, to your point, yeah, I think that’s a second thread to pull on or lever, is what geography. Provides me with the most profitability opportunity. And if you’re a European seller, then it’s you, maybe the us is the answer. I think those two things by themselves are, moving your chess pieces around the chessboard.
[00:17:57] It’s not really a pricing strategy, it’s a location strategy, which is a very valid, and then there’s, pricing strategies that can be brought to, to bear. And, so I wanna talk through those as well, but any thoughts on the geography and the marketplace consider.
[00:18:11] Michael: Yes. Just one simple thing, which is, to your point, which I think is absolutely bang on that.
[00:18:16] It used to be you versus your competitor now it’s you versus your competitor and inflation. I would add into that, as a separate thing, you versus your competitor versus very. in some cases, sharply dropping demand. And I think if the demographics mean that, everyone in Germany is retiring, which they are.
[00:18:30] Yeah. And there were a few young people in Europe as a whole, which is true where we’re very old, continent compared to everywhere else, including America, apart from China. Yeah. That means it used to be that. Germany would be a great opportunity for an American or UK based seller because people get freaked out by the fact that it’s a different language.
[00:18:46] There are a few us sellers, there are a fewer Chinese seller there than in the UK and the us and really solid, wealthy consumers. So that was a great opportunity, I think, going forward, sadly, I’m under German speaker. I love the country and the culture, but sadly, I think going forward, the consumer demand could CRA based on the Ukraine war, depending what happens, this coming.
[00:19:05] Autumn, depending when you listen to this, the demographics are a longer term trend. That could be basically a place that has been an amazing opportunity. Could turn into basically a bit of a dump squib. Whereas America will continue to be very competitive and get more competitive, but it may be the only place in the world left with really solid consumer demand, at least for a period.
[00:19:23] What did you just
[00:19:24] Jason: Was that a British colloquialism? A dance TWI?
[00:19:26] Michael: Is that that as disappointing? I guess it’s a bit like you like to firework and it goes and then sort fizzles out.
[00:19:34] Jason: a dud. Okay. Yeah, it’s a dud. All right.
[00:19:37] Michael: Bri Britain will continue to export bizarre and. Bits of language that Americans don’t understand, but we may not have such good consumer
[00:19:46] Jason: in the future squib.
[00:19:47] So look, I guess we’re come, wait,
[00:19:53] what’s a squib qui what’s
[00:19:53] a squib
[00:19:53] think
[00:19:53] Michael: we may be going down a rabbit hole here. So bring, let
[00:19:57] Jason: me bring us back. Okay.
[00:20:00] Michael: So apart from, the diet microeconomic picture. Some people will be, as you were saying in a better category than others to be protected and some geographies and some marketplaces may be better than others, but what are other things we can actually do proactively about this?
[00:20:13] And particularly with pricing in mind as well. Yeah.
[00:20:16] Jason: The second chapter in my pricing power book is don’t start a war. You can’t win. And the basic thesis, there is many sellers run to discounting as a, a strategy like, Hey, 20% off sale, 50% off sale. And they do that sort of as a competitive, challenge to who else is out there type thing, that is like normal.
[00:20:35] What we’re in right now is like the bizaro universe, anti normal situation. And so honestly, one of the things that you might consider doing in this context is a reverse, sale and telegraphing your reverse sales punches. And so let me describe what that would look like. So rather than saying, Hey, we’re gonna do a 20% off sale starting, on the, 4th of July, you would do something more like this.
[00:20:59] Hey, our prices are all going up by, 10% starting, on the 4th of July to, because our costs have risen. Now, what that does is actually a very interesting psychological, trigger in the mind of the consumer, because if you think through the logic there, if I say to you, Michael, the, new MacBook there is gonna be $2,000 starting July 4th, but right now it’s $1,800.
[00:21:25] You’re incentivized to go buy it today. It’s very weird psychology because it produces the same, response in the mind of the consumer, as does a sale, but it’s a reverse sale. Now, what happens to your daily sales rate after, July 4th? That’s what you’ve gotta think through, but the reality is in inflationary rate, we’re in, I think doing the opposite to quote, George Custanza from Seinfeld might be the right approach, which is, do you know, due the opposite is the right thing, which is rather than having discount.
[00:21:59] Think about telegraphing, your increasing prices going forward and being very transparent with your customers. Hey, we’re so sorry, but our costs just went up by 8% this month alone, and we have to raise our prices starting, August 1st. And we’re so sorry. We’re doing our very best to control pricing.
[00:22:19] And, we’re gonna have, our $20 item will now be 2150, that kind of approach being transparent and honest about it saying that you’re, not claiming victim status, but just being honest about the situation you’re in, I think can be very endearing to customers and you’ll get points for truth.
[00:22:38] And, and you don’t wanna be the kind of salesperson, like those furniture stores that are always going out of business every other month. Like somehow they always have it going out business sale, but the store is still there. Like the next month. You’re like, wait, I thought you went out business.
[00:22:52] Oh, that was just a going out of business sale. We didn’t really go out business. You don’t wanna do stuff like that. That’s like stupid. Shean. But this is not, we’re not in stupid shenanigan time. We’re in, this is real, this is reality. Your costs are going up and it probably does make sense to think through how to communicate that to your customers effectively.
[00:23:11] Michael: This is brilliant thinking. I like it very much cuz it hits so many things in one go. For starters, the economic realities mean that you cannot afford to cut prices to gain sales unless you are desperate for cash. And then of course that is a whole different problem. But also I think as I say to people so often I love negotiations, which is a strange thing to say, but I just find that situation psychologically intriguing and I think.
[00:23:34] The truth is a great negotiating tool, as I say, often, which isn’t to say that, should lie the rest of the time either. But I just, in fact engineering things or acknowledging reality is fantastic. In this case, it’s great positioning, as you say, you’re not being a victim. Nice nuance to that as well.
[00:23:48] But. Being honest about the fact of what’s changing. And the great thing is that every single person out there will immediately feel instinctively. It’s true, even if it isn’t because they are experiencing the same thing in their daily life, their bread’s got up 30 P their, in the UK, the gas, as you would call it, or petrols got up, 50%, 60% in the last year.
[00:24:06] So they’re used to that idea. Okay, that’s a fantastic thing. What other solutions have we got, particularly around pricing area?
[00:24:12] Jason: I think just to play with that idea a little bit, you really can probably earn credibility points. If you play on that strength and. Describe for your customers the way in which you’re trying to be, the low cost provider for them, or, the person who’s battling for them the most, and maybe you even Telegraph your punches.
[00:24:31] Hey, our costs include shipping and the product itself, and then the labor to put it together. Break down your business for your customers and say, look, we’re trying to save money in the following four ways or five ways, but nonetheless, we still have to raise our prices by 3% or whatever it is.
[00:24:46] Those messages, I think, I think you wanna think through that and the copywriting associated, but it’s also the business truth associated with, it’s just this it’s just. What’s happening behind the scenes a little bit more than maybe we usually do. I think that will be helpful. I read one time in the book.
[00:25:02] I always love is, price, the myth of fair value by William Poundstone. I’ve always recommend that book to our podcast, listeners, you probably all sick of me mentioning it, but I think it’s in that book that, one of the research scientists have figured out that if you say to someone that you have to do something negative, They are much more agreeable to it.
[00:25:24] If you just say because, and give them literally any reason and it’s fascinating psychology, but, and I think it was from the Poundstone book. I might be misattributing that, but the idea holds and it’s basically the idea that if you just justify why you have to do something with a plausible.
[00:25:43] Reason your customers will be much more open to it. And they’ll at least in their mind say, oh, I understand. I understand what’s happening. I might not like it. I might not be a agree in agreement with it. But I like these people. I like their product and they’ve told me why, the prices to go up.
[00:25:59] So I think, those components are things to play with as you think about how to increase your prices. So I think that’s, first couple steps into, how to manage this situation effect.
[00:26:09] Michael: Yeah, I like that very much. Giving reasons generally, I don’t think there’s child Dini principle saying the word because, and then giving any, anything really, which isn’t to say that it isn’t true by pounding.
[00:26:18] Cause this is a bit more specific, isn’t it? I think. Yeah. I love your idea of being almost open about your costs and then without. I guess being so open that your competition reverse engineers, what you do, but it may be, they can’t do anything about it anyway. Yeah. And we are trying to save money in the following ways that’s brilliant messaging.
[00:26:34] And I think actually this reminds you of another thing that I I think. A meta lesson that I’m getting from. A lot of this stuff is in difficult times. You’ve got to do the things that in better times you should be doing anyway. One of which they say, people wanna see how the sausage is made quotes So I think revealing how stuff is made, particularly if you’ve got an artisan type product or a premium, or very what’s the word, something where. That people are very enthusiastic about the product type and they want to know about Providence. So that applies to certain times of cheese or whatever.
[00:27:01] My wife is forever watching YouTube videos on how particular French cheeses are made. And without going over the top, you can even apply that to any product category I think, and the more people have to pay for even mundane daily items, justifying that and letting people in on it, instead of trying to, pull the wool in some way, fool them, I think is really important.
[00:27:20] Jason: You’ve touched on an important thing that I was thinking. As I was getting ready for this show, which is, the idea of managing your brand as an upmarket brand or a down market brand is your choice. And so just to describe it, if you’re a premium provider in your niche, like you’ve got the highest price and you’ve got a brand reputation that affords you that, ability than in troubled times you have options.
[00:27:43] And one of the options you have is to become. Middle priced seller, or even be the low price leader, you’ve you could do that now. That’s a one way slide. You can’t, you can generally take your premier brand, your premium brand down market and become, a more con price conscious, middle priced seller.
[00:28:02] Or you can go to being a low price leader and you’ll have brand equity for a while, but. You won’t ever go, you won’t ever reinflate that balloon, it’s a one way slide. And, but you can do that. And in troubled times, if you did have a premium brand, and you’re in trouble, then that’s one of the cards you have on a table.
[00:28:21] And, you can play with your pricing to that degree. That’s a pretty dramatic step. But, to your point, that is one of the things you get to manage is you’re positioning in the marketplace competitor compared to your competitors. And, it’s something to think about as well.
[00:28:34] Michael: Yeah, I like that one way slide it’s a very important point. And to your point also about sales, as opposed to reverse sale, I think there’s. There’s huge danger in, as, I guess we’re dancing around the other concept, which is that price is a positioning tool. Which I know is more about your sort of Princip number three, really which I guess we’re into, maybe we should do that as well.
[00:28:54] Cuz we can talk that one through. So I know from your book pricing, power principle three is aligning pricing and marketing. Yep. So to that point, Price is a positioning tool. If you keep having discounts, for example, there’s a store called DFS, which I’ve never been to in my life, but you cannot move on for TV ads, which I don’t generally watch TV most of the time I go and see my parents or my father-in-law, at Christmas or a sort of Easter, things like that.
[00:29:16] And, they are a hundred percent discounted all the time, as far as I can gather. And what that tells me is it gives me the signal that has not. Enough demand for their furniture to sell the chair at, several hundred pounds or whatever it is supposed to be. And, it feels to me that if they ever tried to claw back to the higher ground of being genuinely premium, I just simply wouldn’t believe them on.
[00:29:37] I don’t think anyone else would
[00:29:39] Jason: So as a business operation, you just create a new brand and the customer doesn’t know that you’re behind the premium brand. And, is so much because it’s obfuscated and you, that, that premium brand then is out there and. You lean into that as the strategy for reinflating the pricing strategy.
[00:29:55] Wrapup: Hey folks. Thank you so much for listening to another episode of the eCommerce leader. I know we are talking about some hard to stomach topics at the moment, I guess that’s because the economy as a whole is looking a bit scary. However, I just want to emphasize that there are real solutions here and that pricing strategy as Jason has identified, hence the book.
[00:30:17] Pricing power is a critical strategy in business at any point, but in a recess rate or downturn time, it’s really critical. So it’s worth buying that book. We’ve talked about principle number two today which is all about Don’t start a war. You can’t win. In other words , don’t start kicking off a war with your competition, but now the economy as a whole, the fed the us fair the bank of England, whoever controls interest rates is entering the fray as is inflation.
[00:30:47] And we willing need to be very mindful of our response to that. Hopefully today you’ve got some useful thoughts on how to actually address this as opposed to just the problem. We will continue with the solutions focus in our next podcast on the topic of pricing. We’re doing a big, deep dive into it because it is so important.
[00:31:05] Principle number three is coming up, which is aligning pricing and marketing. So stay tuned for that. In the meantime, don’t forget that you can find. Us regularly on call in on a Sunday morning, 8:00 AM Pacific time, 11:00 AM Eastern. Or if you’re in the UK at 4:00 PM and you can also find us on Spotify, apple podcast, anywhere else, the final plea would be, if you can give us a rating out of five stars on Spotify or apple, that would be fantastic.
[00:31:33] And don’t forget to subscribe or follow us on those programs as well. Those platforms I should. in order to get more good stuff and keep getting strategies that will keep you and your business. Not only surviving, but hopefully thriving despite these tricky times. Thanks very much for listen.
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