The Online Retailer Trap

by Jerry Hobby on October 2, 2012

The Online Retailer Trap

The model for selling products on the Internet has pretty much been about offering the lowest price for a given product.  Online retailers have sold for prices far below retail stores and have been able to avoid charging sales tax as well.  While you may have to pay for shipping, the cost of shipping was offset by the lack of sales tax and with the lower prices.

Retail stores are now offering online price matching and are able to compete with online retailers.  This is making online product sales far more challenging.  A consumer may see a great online price and then run straight to the nearest retailer and demand a price match.  It is very difficult for an online retailer to make a profit in this model.

 Online retailers are up against brick-and-morter retailers as well as many thousand other online retailers.  Making a profit is nearly impossible.  The companies making profits on products are making profits because they are able to buy at extreme discounts or they are able to sell a large selection of products not available in retail locations.
The third way for an online retailer to make money is to allow other sellers to sell products in their online stores.  For example, when you shop on, and many others, the products you are buying might not be stocked or sold by the company you buy from.  It may be fulfilled and shipped by a vendor under agreement with these major outlets.  This allows the big online retail outlet to carry hundreds of thousands of products with the entire inventory management and fulfillment being provided by these vendors.
What I want to leave you with is that there are ways to build a great online business.  However, to be successful, you need to know where the entrepreneurial tar-pits are.  If you manufacture your own products, you have a unique product that is marketable and can be fantastic for your business.  If you buy and sell other products, you could be stepping off your own financial cliff by trying to compete in a world where you have to lose a million before you make a dime.
Anything Internet helps companies evaluate the viability of their online business strategy and then we help entrepreneurs launch their online business.   It’s far more than just building a web page.  It’s business strategy, branding, marketing, and so much more.  Before you take that step you are uncertain about, call us.  Call right now.


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