Price Still Most Important Factor for Retail Success, But Losing Ground
Traditionally, the website selling a particular product at the lowest price has a huge advantage over the competition. However, according to a recent study from Shopzilla, that may be changing.
The survey of about 2,000 online shoppers revealed that 49% of shoppers considered the price to be most important factor in making a buying decision. That is down from 59% in 2003.
So what factor is taking the pace of price? The answer may surprise you–18% of shoppers said that customer feedback is the most important factor. Only 7% picked customer feedback in 2003.
As the web becomes more and more dominated by user generated content, it is obvious that customer feedback about companies and products will continue to grow in importance. This trend especially gives hope to small online retailers that cannot compete on price, because smaller companies should normally have an advantage in customer satisfaction.
Two of my greatest fears about the future of online retailing have been monopolization of industries and commodization of products. We have seen that trend in recent years as large companies are beginning to dominate, making it practically impossible for small online retailers to sell at competitive prices and get any kind of momentum.
Because of this, I currently view the Internet very differently from when I started my first company in 1999. At that point, a startup company could be competitive and profitable immediately. As the landscape has changed, that is no longer the case. In fact, it requires significant capital and expertise to start a successful company today, and success rates in many industries are low even for well-capitalized companies.
If price continues to lose ground to other factors, this trend toward monopolization could reverse and open up new opportunities for online retailers. Let’s hope that happens soon.