Business Direction Dilemna

[luckyg]

I would appreciate your thoughts on my dilemma.

I sell furniture online. I sell high quality furniture.

In the past few years other online retailers have sold similar looking products for half the price I sell them but everything is much lower quality. The foam, wood, leather etc are all bottom of the quality spectrum. So the customer sees a picture of my product v the low end product and cant tell what the difference unless they do research – which most people probably don’t. ( I have tried to address this with videos etc)


They have seriously eaten into my turnover though and now I am thinking of offering two quality levels on my store. Entry level quality and top level quality so that hopefully I can get the customers who like to buy cheap items to my store.

I have a good name though so I am worried I may jeopardise that. The defect rate and return of faulty items will be much higher with the low end products so I will do whatever it takes to keep the customer happy like I always do with refunds and replacements. But my reputation could turn into ‘great customer service but the products are terrible quality’ as I would be aiming to sell a high volume at low profit of the low end products thus more customers and more opinions on the internet.

I feel I can increase my turnover doing this and hopefully take away custom from my competition but at the same time am worried about my reputation.



The other option is to set up a another separate website but this will be hard and take a long time to make its way up the ranks in google etc whereas I am top of google now. The benefit of this might be to keep low quality perception away from my current brand.


What do you think, good or bad idea? What would you do? J

 

[Jayser100]

I wouldn't make a separate website - whichever way you go I'd build on what you have. A new site wouldn't be guaranteed to be successful as it struggles up against stiff competition.

I understand where you're coming from regarding people not realising the difference in quality but you have to also think about the effects of the recession, which has seen even the more affluent in society tightening their belts quite a lot.

If your business is in trouble, then it's probably time to take the plunge with some cheaper lines. It might feel like a bit of a risk, and also like you're selling out a little against your business principles but you need to make a living like the rest of us.

I think sometimes, all businesses need to be reactionary against the times and this is a good example of that.

I actually think it will be a good idea for you to offer those cheaper lines because in doing so, it will highlight the fact there are better quality items on the market - you can actually contrast them on your website and make it clear to the buyer why some of your lines are more expensive.

Remember, bottom line is, making a living. Misplaced pride doesn't always do that for us.

Good luck.

 

[BusinessDeli]

Well I do think you should create the secondary website but have another person run it so it doesn't distract from you operating your main business. This area needs your complete focus and energy right now.

 

[darren atkinson]

My advice would be to try and emphasise the quality of your products over the competition.

I had a very similar problem not too long ago, we sell high end IT equipment to a pretty specific market and there were a few lower end IT suppliers who moved in and started offering products directly to our customer base, the quality of their stuff was low and their customer service levels by all accounts was also poor.

I took the decision to start 'talking up' our products on our blog, writing articles about why our components were better and the benefit to customers by our selection, detailing how the build quality was higher and also why this benefited customers, and quite a few other related items.

I can only say that the end result was really positive, and I genuinely feel like the work put into the blog articles has help improve customer conversion rates and raised traffic levels as a nice side effect.

I detailed the initial issues I was having with some competition here: http://www.ecommerceblog.co.uk/headaches-stress-competition/

I then wrote a follow up article here: http://www.ecommerceblog.co.uk/increase-your-organic-traffic-by-22-start-blogging/ which details the benefits to our ecommerce business by taking the steps we did.

I recommend you read them as they might have some pointers in that could help you out, the 2nd one in particular.

My feelings where that I didn't want to compete on price as there would always be someone who would be able to find a way to undercut you, you have to focus on quality and service.

If price becomes your main feature then obviously your profits will get hit and this can lead you to end up with less money to invest into your business, it's a downward spiral and if you can try and avoid it I'd definitely recommend it.

Hope this helps,

Darren

 

[deniser]

All I can add is that customers, despite wanting to pay the lowest price, don't actually want to be confronted with the reality of getting something which is inferior quality.

We had exactly the same problem but when we introduced the cheaper/budget/value range and marked it as such, people didn't want to buy it.

Somehow, they are happier to be misled and think they are getting a bargain when they aren't. Shopping has a very strange psychology. I also think not that many customers are actually placed to tell the difference.

Could you incorporate some cheaper ranges into your main offering without making it obvious?

 

[PrestonLad]

There is always so much subjectivity with these sorts of things. Who knows what's right?! And so difficult to advise when we don't really know your business.

From what you say... I'd observe that you probably shouldn't try to sell to everybody in town. You can't be a jack of all trades (for want of a better analogy!)

There's nothing wrong with selling cheap tack... but the businesses that do that should be (and almost exclusively are) focussed exactly on that market.

Go for differentiation - along the lines that you've done in the past. But think who your customers are.

Some will be wealthy, and like the best.

Many will be middle class, and feeling the pinch. They are probably feeling disappointed that they're struggling. You could offer them a great pick-me-up if you can find some more 'mid-range' offerings to satisfy them. Something that's got pretty decent quality, sold in a classy environment - where they sense that they are a class above Asda Living / DFS, but with a price tag that's a lot lower than your top notch stuff.

Maybe you already know where to source such stock... or maybe you need to work at it. But if you do work at it, you could bring value to your customers.

If you introduce a "Tesco Value" range in your business, I suspect you could get the worst of both worlds.

Well... that's just an opinion. Like I said... who knows?! Good luck.

 

[Young Recruit]

I definitely would not mix the two 'brands'.

Which is the most profitable? Sounds simple but I would focus all of my efforts on that part of your business. I understand It's difficult to turn away work but its probably worth it in the long run otherwise you'll end up confusing your customers.

As hinted earlier posts, if you decide to target both markets I would set up a completely different business for the lower quality furniture. That way you can orient each of your businesses towards each of the target markets.

JA

 

[DavidWH]

Whilst a different industry, I've a similar dilemma.

PVC banners are available from ebay, vista print etc, for considerably less than what we charge. Although we use quality materials, genuine ink, offer quick turnarounds.

I understand that some customers just don't require an high quality banner, for a birthday, or a short term advert... so we've introduced a budget banner range, considerably lower, cheaper materials, I'd rather do that than give the work away to the competition, and make a little more cash along the way.

 

[luckyg]

Thanks everyone for your replies and opinons so far. Looks like everyone has differening opinions just like I do myself

Anyone else like to add their experience or 2 cents it would be great.

 

[luckyg]

We had exactly the same problem but when we introduced the cheaper/budget/value range and marked it as such, people didn't want to buy it.

But did this then increase your sales of higher end goods and maybe take some customers back from your competition?

I am thinking maybe if they are told it is entry level they will then spend a few extra bucks and go for the mid range level if not the top level, thus getting the job done of increasing customer retention who may have othrwise just gone over to the cheaper site?

 

[stender]

My 2 pence.
Add the cheaper furniture to the existing site but call it another range.
If you can afford to pay a web developer an idea might be to have sliders on your site whereby the customer can choose grades of leather/material/finish etc and the price adjusts automatically.

 

[luckyg]

My 2 pence.
Add the cheaper furniture to the existing site but call it another range.

Ya if i do go on same site they will be called a different brand. thanks for your pennies!