Using Price to Expand Your Business

Competing on price is a “no no” for many distributors. Few want to say “the reason why people buy from me is price.”  But, do all of your customers want to buy from you for your service, people or your other services? And, in reality, when customers are surveyed, many say they at least need competitive pricing to justify doing business with their supplier.

But, in reality, there is a segment of customers who only are interested in price. And it is their perception on whether that price is low or not. The reality is it is a price that is acceptable to them.

Why focus on price?

There is a lighting competitor that distributors regularly comment on that sells direct.  Ostensibly they are a manufacturer selling direct.  The company is e-Conolight and its predecessor was Rudd Lighting.

Whether you agree or disagree about them selling direct, they are serving the needs of a segment of customers.

In reality, there are contractors and facility maintenance personnel who buy from them, whether opportunistically or regularly.

And while some may comment on the quality of the product, the reality is that the product quality is acceptable to this segment of the market.

Aside from industry insiders who regularly deal with lighting, does the average contractor or facility maintenance person who may periodically buy lighting now if the pricing is “good or bad” (and these are relative terms based upon what an individual customer can negotiate with a distributor.)

But, what e-Conolight is doing better is e-marketing to its target audience.  They make the buying process easy and are promoting like a retailer or e-tailer … a consumer mentality.

Why not you?

As a distributor who has invested tens of thousands, if not much more, into eCommerce, getting an ROI on your investment can only typically happen a few ways:

1. Increased penetration (revenue) from existing customers
2. Customer acquisition of your core customer type
3. Increased throughput that derives improved productivity

Another means to an eCommerce ROI could be taking a page from the e-Conolight playbook. 

Could you pursue all contractors and facility managers within your geographic footprint for highly desirable products … a subsegment of your offering.  Could you market to this audience as a B2C company, but a lighting expert? Could you be a creative marketer? Does your end-user pricing have to be so distinct from your contractor pricing or could you price shop Home Depot / Lowes and be a little lower … flat rate pricing? And periodically offer online coupons, rebates, 1-week sales, holiday specials, etc?  While lighting showrooms have been a challenge for many distributors primarily due to the need for a retail mentality, is it easier to hire a retail-minded marketer to run this segment of your eCommerce business?

Adding another pricing field to your webstore shouldn’t be a problem. In fact, with some systems you could add another industry’s catalog with specific segmented pricing so that you could offer electrical and industrial supplies … with pushing the industrial product orders to a local friendly distributor (and there are master distributors in other industries who will provide an eCommerce offering to you).

So, the fourth way to generate an ROI from your site … expand your customer base and, possibly, expand your product offering for “B2C” customers.

Logistically, while you may not want to offer free shipping on every order, we’ve seen distributors use free freight as a promotion, free freight for $49 orders and $99 orders. E-Conolight offers free freight for orders over $500.  You can be creative but don’t be afraid to charge … or offer a premium loyalty program a la Amazon Prime.  Free freight for a year if customers pay $X … and also provide them some free other services (training?)

And, if you market the right products you’ll pick up your back-end rebates. Become successful and perhaps gain supplier benefits (and some suppliers have marketing content they’ll share with you.)

While you can’t out depot Home Depot, it may help in capturing incremental business and creating another revenue stream that helps you leverage your eCommerce investment and your inventory.  All that is needed is the right marketing person and the right thought process.