Many people who were supplementing their income by selling small personal items like jewelry, watches, clothing items or other trinkets on eBay or through their own websites find themselves unable to compete against Chinese companies. Even if you are well heeled and can import in larger quantities, when you add all your costs, the Chinese still under price you. How can it be? In my personal experience, many Chinese manufacturers also sell directly to the end user under different names. If they make it, they can always sell it cheaper than you. But isn’t their shipping cost going to be higher if they are shipping individual items by mail to USA. To me it seems like their government is subsidizing postage because their postage costs are very low.
The bottom line is that no matter what your product line, you cannot compete on price against a competitor who has deeper pockets. You also cannot compete against a person/company who also happens to be your supplier or the manufacturer. His cost will always be less than yours.
So how do you compete?
By being smart.
What do I mean? First don’t sell a brand item that has fixed specs. For example, a Western Digital WD1600AJS is the same drive no matter who sells it so the guy with the lowest total cost wins. Sell something that you can differentiate yourself on.
Let’s take our example. One of our business is selling customized golf clubs. Thousands of sellers sell golf clubs too. So why should people buy from us?
There is no stopping us from building clubs using different components. A golf club is composed of a clubhead, shaft and grip. We pick combinations that others don’t while delivering superior performance. Does that raise our cost. It does. Do we sell at a higher price than others then? You bet. We sell at a higher price than our competitors but still less than major brands sold be chain stores. Our target market – the relatively more knowledgeable golfer who can understand the specs. on a club and decide accordingly.
So how do we do it?
1. We build the clubs and test them in various situations. We then compare them with other similar clubs. After weeks of hard work, blisters, sunburn and aching backs, we upload results of our testing to our site.
2. When a customer comes to our site, he can peruse the test results and get a better idea of how the clubs perform on various shots. Remember, when selling online, the customer does not get to physically see and hold the product. Whatever you are selling, try to give him as much information as you can so he can make a more informed decision. Add videos if applicable.
3. I see so many people listing personal items like jewelry with only one picture. It doesn’t sell so they keep lowering the price till somebody bites. Why sell an item for $7 when you can sell it for $24. Take extra pictures from different angles, show the necklace on somebody’s neck, show a comparative picture of a couple of other necklaces and help the customer decide which one to buy. Not my field but there is so much potential there.
4. We encourage the customers to buy one or two clubs instead of complete sets. This way, they can buy a few and get a feel for them without risking much and if they like, they can buy additional clubs.
5. Provide options where applicable like different shafts, grip sizes/makes etc. Encourage your customers to contact you for customizations if possible. Yes it requires more emails and phone calls to be answered but it also establishes trust.
6. Every now and then, you will mess up and end up shipping the wrong product / wrong specs. When you do, fess up, apologize and try to correct the mistake the best way possible.
8. We have a long delivery time. Almost two weeks. We custom build all clubs so we can’t just ship that day. Besides, clubs are expensive to ship Priority Mail so we have to ship ground. But we are up front about our shipping times. Still we get some grief in this area.
9. I understand most small sellers don’t have a marketing background but there is nothing stopping you from learning. There are a ton of books and courses. Invest in your education.
10. We have a very healthy repeat and referral business. If you follow the above steps, you will too. You don’t have to compete on price. Take a more elaborate approach. Your manual effort up front will be higher but the rewards will justify it.
Did that help?