How Direct-to-Consumer Ecommerce Brands Can Beat the Likes of Amazon

Bryan Karas

August 20, 2018

The one way an Ecommerce brand can compete with the likes of Amazon, Walmart, Wayfair etc is to sell one thing and then make that one thing really freaking good – all while building a brand. So let’s take it back to the basics – all that stuff you learned back in college – and figure out how these companies position their brand and PRICE their products…

Perfect example? Warby Parker – no company before Warby let you try on five different frames at home for free before making a purchasing decision.

Next? Casper – they flipped the mattress industry upside down with great branding, quality, and fast shipping.

Now you have Burrow – a couch built for a modern “millennial” lifestyle. The couch is easy to assemble. It uses interchangeable parts so when you get that promotion next year and you upgrade to a slightly larger apartment, you can add one more section to your loveseat and turn it into a sofa. It’s made with high quality, stain resistant and durable materials and comes with a USB charging port – oh, and fast free shipping.

Assume the position

Brand positioning is vital when building a successful direct-to-consumer (DTC) Ecommerce company – and it starts at the beginning…not 6 months after launch when all the initial hype is gone and you’re wondering why sales are falling off a cliff.

Burrow understands their target market – the hardworking millennial who wants a high quality sofa that can grow with them – if your life changes and you move or grow into a larger space. Burrow can easily be transformed into a chair, loveseat or larger couch…any combination.

But at such a high price point – around $1500 for a sofa – that millennial also has to have tons of disposable income. So that “hard working” part means that once they get home they just want to crash on the couch, turn on Netflix and forget about their day…

That’s the position Burrow is taking and it’s evident in their newest brand campaign…

Show me the money $$$

There are three main pricing strategies out there: cost-plus, competitor-oriented and value-based.

Quickly – cost plus prices a product based off the cost and what particular margin you wish to achieve. Market-oriented pricing considers your competitor’s price rather than cost/margin or customer value. Value-based pricing is all about the perception of the target customer and what price they believe they should pay for a product…that’s my favorite 🙂

Let’s take a look at how you get started with value-based pricing:

Analyze your customers and build customers personas
Figure out who these people really are using market research and demo data
Understand your “features” and how your customers perceive each features’ value
Find out how sensitive your customers are to a particular price and their willingness to pay

Value-based pricing is by far the best strategy for Ecommerce businesses. It allows you to control price and margins. Branding plays a huge part in value-based, customer-first pricing models. How you communicate with your customers, what sort of content you put out and the quality of customer service all play roles in how high you can price items.

How to Really Nail Down Your Pricing Strategy

Bob Barker (and Drew Carey) want you to know that the Price is Right! First Round Review published an amazing, in-depth article about the essential tips for nailing your pricing strategy. You need to check it out here.