I was invited to speak at the Internet Retailing Exhibition (IRX 2012) at the Birmingham NEC last week. My talk was about my experiences with starting up three businesses and the lessons that I’d learned.
By John Sollars, founder of Stinkyink.com
At the end I was asked a really interesting question, one that is very relevant to any business: “In a very competitive marketplace, how do you set your prices?.” Pause for thought from big John there!
My answer went something like this: “I’m a businessman and I like to make a profit. I know what my bottom line gross profit is to enable me to make a net profit each month and I’m not willing to trade below that line.”
Now, selling printer cartridges online is a very competitive marketplace and to get any orders at all you have to be competitive on price. However, when rivals are driving your prices down you must know what your costs are, so that if you choose to respond, your own prices can match theirs without taking the business into loss.
But it’s not just down to price. Here at Stinkyink we have been very proactive in automating all of our back-end processes to keep overheads down and margins healthy.
I am also sure that we offer the very best service in our maketplace to differentiate ourselves from our competitors.
So, I can confidently say that our prices are competitive (not the cheapest as once you are there, there’s nowhere else to go), our service is market leading and we have a long-term strategy that makes us a profitable business that will still be here for our twentieth anniversary in 2022.
If you are just selling as the cheapest player in your market segment, think on. What else differentiates you and what will give you the financial strength to still be in business in ten years?
This article is to the point, which is good. I agree that a business needs to know it’s costs and bottom margin limit. Sticking to a unique niche helps too, like Stinkink name. catchy!