Competitor

[harvey_harvey]

We've a competitor who has come on board selling the same product as us, but for a ridiculously cheap price as well as offering free delivery, fast turnarounds and the lot.

I am worried that this may have an effect on our business because at the moment, price is the winner! We know that you we cannot run a business on the silly prices this other 'company' is charging and we're assured because our other competitors haven't changed their pricing or turnarounds.

I am hoping this person wakes up and realises soon and things change, but what do you think we can do to ride through it?

Any help is greatly appreciated.

 

[kulture]

There is very little you can do. Of course it depends on the product, but is there any perceived value that you can bring to the product. Anything that you can say or do that increases the perceived value of buying from you rather than your competitor?

At the end of the day, if you have a competitor who can deliver an identical product, faster and cheaper than you, why would a customer buy from you? If you can answer that question then there is your solution.

 

[harvey_harvey]

Well.... like anyone who provides a product (much) cheaper you've got to ask yourself - how long are they going to be around? If there was a way that our company plus several others who offer the same product can drop their prices, we would. But why should we drop our prices for a flybynight?

We pride ourselves on service - but in this day in age, people don't care about that until something goes wrong!

 

[acewoodturner]

Hi

If they are selling the product cheaper than you can buy it for or just slightly more than you buy it for, and you reckon they are making very liitle or no margin (or are even making a loss on each sale which is even better), why dont you get someone to buy a load from them and hasten their demise. Might be morally wrong, but there again its business!

Mike

 

[Esk247]

We pride ourselves on service - but in this day in age, people don't care about that until something goes wrong!

When it goes wrong who will they come back to...someone who prides themselves on good service perhaps?

Price isn't as big a factor as you'd have thought. It's a major factor, but not the be all and end all.

Analyse the competition some more. Find out more about them before you stress yourself out over it.

 

[Banned]

Once you have lowered the price it's difficult to increase it again, unless it's one off sales with few returning customers. So probably not recommended.

If this product is you only business then you need to compete or move on to something new. There are many ways to increase your margin and lower the price. You could maybe sit tight and do nothing but that is risky if this new company trade for longer than you are anticipating.

What is the product? Are you B&M, internet only or both?

 

[harvey_harvey]

Our business comes 80% of the time via the net.
I've done some digging and managed to speak to some people about this company and basically I am fuming.

I am here paying everything properly - my staff, bills, UK PLC yet this idiot it sitting there, draining money and thinks he can get away without paying his liabilities!!

I have some reassurance through my contacts of their practices, and I can't wait for the day they p*ss off. But until then - customers will flock 'cos of their wonderful prices.

Cowboys!

 

[patientlady]

Hard to give any pointers when we dont know the product really but,
I assume you have done the obvious and approached your supplier?
Many companies have 'loss leaders', is this product being used in this manner?
We have had a company in a very similar scenario, and they have finally been found out by customs & excise, but it took about three years for them to disappear, however another co (not related) has now just taken over from them.

You just have to box more clever. Is the product exactly the same?
best of luck

 

[harvey_harvey]

@patientlady

Thanks for your post
I can't give too much away on here as I don't know who will read it and I don't want to give it away that we're worried about this situation.

It's basically we purchase something, create something with it then send to a customer. This other company is doing the same but at really really really stupid prices. I don't know how they'd be even able to offer free delivery at the prices they are selling at.

Hope they go soon.

The thing is, they 'say' they use the same material as we do.... but I don't think so... I know of another company who got in a lot of trouble for passing a product off as being a particular brand when it wasn't!!!

 

[Chris Ashdown]

Go to your supplier and take them out of the office for lunch or a pint etc, and tell them what you have found out, if they are selling fakes tell trading standards

The only person who can really help is your supplier and sometimes conversations are more open when out of the office environment

 

We pride ourselves on service - but in this day in age, people don't care about that until something goes wrong!

Service only becomes important at a certain price level and product complexity.

Under that its price.

I would be surprised if your competitor is selling at a loss.

As said I would have a word with your supplier as they may be giving them a special deal for quantity.

Earl

 

[MOIC]

Could it be that your competitor is buying from a different supplier, and their suppliers are cheaper than yours?

Unless the products are branded or under licence, the chances are their is more than one supplier of the product.

just a thought.

 

[Posilan]

We've a competitor who has come on board selling the same product as us, but for a ridiculously cheap price as well as offering free delivery, fast turnarounds and the lot.

I am worried that this may have an effect on our business because at the moment, price is the winner! We know that you we cannot run a business on the silly prices this other 'company' is charging and we're assured because our other competitors haven't changed their pricing or turnarounds.

I am hoping this person wakes up and realises soon and things change, but what do you think we can do to ride through it?

Any help is greatly appreciated.

What is the value of the product? Could they be using it as a loss leader for other items they sell?

Steve

 

[harvey_harvey]

We know quite a lot of people in this industry who use the same material as this person who offers it cheaper. They buy a hell of a lot more and much bigger outfit than us and this cowboy, and they know he's pulling a fast one.

Either he is s*aggin' the MD, passing off material as not being what he says he is, or loosing money hand over fist.

 

[AndyBlue]

Is this high volume/price if so potentially could be working a VAT fraud, or creating a long firm. Have you got hold of the product they are selling and actually compared it to yours ? Rather than rely on hearsay/opinion actually get hold of the product and see if it is comparable, if not you coudl get someone to make a cheaper version for you and offer two qualities.

 

[raineshoe]

We have a similar situation. We are a niche product and a couple of people have come in the market selling cheap. One in particular is being extremely aggresive in the market.

I will not lower prices or match any of their offers. I will just sit by and wait for them to go bust, because there is the classic case of seeing money coming into the account and thinking they are making money, but not seeing the money that goes out. My loyal customers will definitely stay. You will always get those that will walk whatever to the cheapest, but they will invariably come back when the service etc doesn't match up, because cheap won't be able to continually fund everything.

Also, price wars don't help anybody either.

 

[Vision]

Where are the other "companys" sales coming from? where are they ranking on Google compared to you and are you positive that although they are offering a cheaper price they are actually selling anything?

I'd order something from them and check out their product and delivery time etc. .

I get it a lot with other companys offering products cheaper than me and then i find out they dont actually have the product in stock!. . my reply is that mine are even cheaper than theirs when i dont have one to sell you!

Mark

 

[kulture]

If they are selling at a loss, then buy from them.

 

[dynamic08]

Exactly the people that come on here and say these people are selling at less than we buy for. Buy buy buy if you think they are losing money and using as a loss leader.

 

[dynamic08]

If I happen to be on ebay buying I will always pay a little more for a faster delivery!

 

[scm5436]

We've a competitor who has come on board selling the same product as us, but for a ridiculously cheap price as well as offering free delivery, fast turnarounds and the lot.

I am worried that this may have an effect on our business because at the moment, price is the winner!

So have you noticed any significant drop in sales? We talked to one of our manufacturers about a few suppliers selling at silly prices and they've basically turned around and said "I've seen how much they're purchasing from us and it's peanuts..."

Just because they have lower prices doesn't mean they're getting tons of orders - it could be your customers even know they exist.