This Is How Competitors Squeeze Your Profits—And What to Do Instead
Your competitors copies your products & steals your sales. This is the way most brands Squeeze the profit.
You always wanted to take the profit to your pocket and grow the D2C brand successfully.
Everyone thinks the same. Right? We all want more sales and profit.
So, most e-commerce stores get into the trap of copying the products that are selling fast.
Not only that, they also reduce prices to increase sales.
I hope you may experience the same problem. You always want to increase the profit percentage above 20% per sku, but you may have constant pressure from competitors that will take your profit away.
They might copy your product & drop the prices to get more orders via ads & marketplace.
This happens more frequently in the marketplaces. When competitors notice your products perform better than others, they copy them at a lower cost.
Everyone else does the same. It became the practice to stay in business. Otherwise, someone else will take care of your sales, leaving you out of the business.
This is how you keep reducing the profit over a period of time.
I recently came across this laptop stand. Although the brand is different, the product design is the same, but the colour is different.
If you look at the price, you can see a 100 INR difference.
The second one has 12K reviews, indicating it was launched long ago. The first one has just 600 reviews.
Have you ever noticed the same?
This is pretty normal. Most people copy products. You can’t stop them until you have the product patent. Even people crack that. They will decode and change something that is not in your product.
I can understand that when you see your competitors, you may panic & start doubting whether you will lose your product market or sales.
But no worries!
Here is what you can do to avoid a drop in sales.
Build a brand that no one copies your story & what you stand for.
The competitors who copy your product will not tell the same story as you. Also, show trust. Use images, reviews, and videos to show your prospects that other people are using your product.
This makes visitors validate the products by observing similar people using them.
Innovation
Building a brand story alone will not help you. Some customers move to competitors just for a lower price. So, innovation or introducing new product variations is key to attracting those people.
Introduce your product to the market after making some minor changes in the existing products. It should not be a normal product similar to competitors. The most important thing is its uniqueness or solution to customers ‘ problems.
Let's assume I already have a personal diary I purchased from your " X" brand. The product cost was Rs. 1999.
However, now I can see similar diaries for Rs. 999 on ads, Google, and marketplaces.
In this case, you might be losing some sales. This is the time to innovate the products beyond just dropping prices.
If you research the reasons why some people are looking for the product, you will get some ideas.
For example, I am looking for a smaller diary for travel purposes. I need one that is small enough to carry easily.
You can launch a new tiny travel diary at a lower price. Don’t reduce the size of the dairy. Include some product story & position so that it will not compete with your current product.
At the same time, people will choose your product over competitors because of its better price, story, and positioning.
Cut your costs & increase your profitability.
If the above 2 strategies don’t work, don’t reduce the price massively. Try to cut the COGS production cost and increase profitability.
When you have more profit than your competitors, you will be making money. They aim to beat you by reducing the price.
They fail to notice that they are losing profitability or profit. This will kill their product in the long term unless they can stay profitable.
Still, if you want to reduce the price without losing the same percentage of profit, reduce the price along with the expenses. This will maintain the same profit level.
Stop thinking about your competitors.
It is good because you will get a chance to change the product. If you have had any similar experiences, please share your thoughts in the comments.
P.S. If this resonates, share it with a founder who needs to hear this. 🚀