AboutJim Novo Expertise Questions about using customer data to inmprove online profitability, particularly in retailing. Topics include profiling customers using weblogs, figuring out which ads generate the highest value customers, how to reduce the numnber of 1x buyers, how to generate higher sales from current customers, customer analysis, ROI calculation, reducing discounts while increasing resaponse rates. Do you collect customer data (purchases, page views, surveys) and not really use it for anything? Want to find out how? Just ask.
Experience
Past/Present clients Cellular One, MBNA, SteelTorch Software, Retek Direct, CBS Sportsline, Kobie Marketing, Aerial, Tupperware, Barnes and Noble, Comcast Corporation, Home Shopping Network
Expert: Jim Novo Date: 12/12/2006 Subject: GPS price difference
Question Just wonder why the price difference are so big at different on-line stores for the same GPS unit?
Thanks in advance and best regards,
Ning
Answer Generally, the stores have different internal business models and how much profit is needed in the unit to cover costs varies by model. For example:
1. Store may be using unit as "loss leader" to attract and convert new customers. In this case, they might even sell the unit at a loss.
2. Store uses drop ship business model. In this case, they don't actually have the unit in stock, it ships from a supplier, store has no inventory carrying costs, they can sell it for a lower price. Downside is customer service is usually poor in this model, often customer never receives unit or receives it months after order.
3. Store uses customer-centric business model which encourages repeat business. These stores will usually have the highest costs so tend to have highest prices, but if they say it is in stock ready to ship it is, return policy is liberal, they answer e-mails and phone calls within an hour, and generally provide great customer service.
If you plan on buying from the store with the lowest price, I would very carefully read the Terms and Conditions and make sure you are comfortable with the service levels the store will provide. Look for restocking fees, short return windows (7 day as opposed to 30 day) and other such "tricks" which lower store costs but do not usually serve customers very well.
