Undercutting Competition

I’m dabbling in E-Commerce now with the MonkeyDoo. The prices are ok but there are still competitors who can beat them, so why not go to the source? Alibababa (www.alibaba.com) is a great palce if you are really serious about the selling products online. They have thousands of manufacturers (mostly from China) that have items ranging from tea pots to laptops. So I assumed they would have novelty/prank items as well and I was correct. I am going to purchase about $4,000-$5,000 worth of inventory from China and then I will undercut the prices to all my competition. I’m going to have about 30-40 products in my store, so hopefully that will be enough for now. The question is, if my prices are lower than the competition, would advertising on Google AdWords be the best idea or will my lack of products (most of my competitors have over 200) cause visitors to become disinterested? If you look at the sponsored ads for online stores on Google, many of them are targetted towards a specific product (depending on your search). Take a look at the search term “shock pen“. Zymetrical comes out at the top with an ad:

Shock Pen Only $3.00 ea.

Zymetrical.com Below retail, batteries incl. Low S&H. Wholesale pricing.

Now, this ad costs around $0.70 a click, considering not all people who click through become a conversion, aren’t they losing money on this ad? That is until you realize that Zymetrical’s product array encourages the customer to buy more items. On top of that, if a customer has a good experience with them, they are likely to stay with them for future “prank purchases”. Right now, I am not willing to put in the investment needed to have a product catalog as large as Zymetrical’s, so when a visitor comes to my site they are less likely to purchase extra items, so the $0.70 a click I am paying may not be worth it. Instead of trying to get the top spot, I will aim to get the middle spot for about $0.40. The reasoning behind this is, if I include the lower price inside the ad text then the user will click it regardless of where it is position on the results page. Even if they don’t convert or buy extra items, I am saving myself almost twice as much as Zymetrical is paying.

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