(0:00-0:13)
Hello everyone, Welcome back again to this wonderful session where today we will learn “How to sell effectively on E-Commerce?”.
Yes, how you can grow your business and step up in E-Commerce.
Yes, so come let’s start with this special topic of our special training program. That is “understanding of setting up the price”.
Well yes, previously we discussed about “manufacturing cost” and “MRP”. Today we will learn about the “selling price”. Yes, selling price. How can we set a proper selling price on E-commerce? And what is actually a selling price? Okay.
So come, let’s understand this through an example. Now, consider that you go to a grocery shop and pick up a product, okay, any product. For example, you can see a lot of products on the screen here.
Suppose I am choosing a product that is a washing powder, any washing powder where the MRP is displayed as 100 rupees. 100 or 110. Okay, as we can see here, “Some product cost that is MRP is 110 rupees. But the retailer sells it to you at 100 rupees”. Yes, he sold it to me for 100 rupees. This means that I saved 10 rupees.
Now, as soon as you reach home, you might think that did the retailer earn any benefit by selling me a product for 100 rupees whose MRP was 110 rupees? Did he earn any profit? This is a question; did he actually earn any profit? Well, my answer is yes, he earned some profit. You might wonder how? So, previously we discussed “MRP” which is the “maximum retail price”. Look, try to understand the wordings, maximum retail price. “Maximum” means more, “retail price” which means you cannot exceed this much limit, you cannot go above 110, you can go below 110. (I hope you are following).
Now, suppose I have purchased a lot of detergent powders in bulk in a single purchase, and as I purchased in bulk, I gained more profit. So, even if I sell you the product for 5 to 10 rupees less, I am still gaining profit. Hence, I can do that.
Yes, MRP gives you the possibility to sell the product below the desired MRP cost. And that’s what we call “selling price”. Well yes, there is an “MRP price” and a “selling price”. MRP means you cannot exceed the cost that is already set while the selling price depends on whatever you can maintain. But you have to keep certain things in mind.
We will have a look at the same example where the cost of this mobile is “10 thousand nine hundred and ninety-nine (10,999)”, where the actual “MRP” is “12 thousand nine hundred and ninety-nine rupees (12,999)”. Here you can notice that the selling price is also “12 thousand nine hundred and ninety-nine rupees (12,999)”, then how come the special price is “10 thousand nine hundred and ninety-nine (10,999)” for you?
Look, friends.
Flipkart is a very known and popular brand in India after amazon. What does Flipkart do? They purchase the products in bulks. Well, what happens when you buy a product in bulk? So, when you purchase orders in bulk, the “transportation cost and the maintenance cost” reduce. Also, by purchasing the products in bulk, you might get a few “extra discounts”. “Extra discounts” mean more profit. Now, even if you sell the product at a bit lower price to the customer, you are still benefited.
Yes, friends.
This is a technique where whatever amount or cost you save for you or the customer between the “MRP price” and the “selling price”, you will still gain a lot of profit in the long run. But it is very tricky to calculate this. You have to strategize and properly calculate this so that you can calculate “MRP, selling price and special price” in the right manner for your business. Okay. (I hope you have understood so far).
04:55
Now, “who sets the selling price?”.
Well, yes, it is completely your decision of how you want to set a selling price in your business. But you have to think before you act. You should not act the same just because you saw on the competitor’s website that he is selling a product for 10 thousand but you will gain profit only if you sell it for 11 thousand. But you sell the product in 10 thousand anyways just to keep up with the competition.
If you remember I told you in the previous session that many people enter the E-commerce industry but quit after 1 year due to disappointment, why so? Because they cannot maintain and understand the gap between the “MRP” and “selling price”.
If you analyze your business in a proper manner to understand the gap where if I am purchasing a product in bulk from the manufacturer, how much will be the transportation cost and the manufacturing cost? How much will I pay as the fixed cost and the rent? After calculating all the costs, when you look at the price while keeping the profit margin in mind, you will realize that no, 11 thousand was the correct price and not 10 thousand.
When the competitor is selling in 10 thousand, the customer will obviously go there. Yes, the customer is a customer. He will go where he gets the best cost of the product but I will explain the strategy for this in the next module in detail.
Here you just have to keep in mind that if you are selling the product at a higher cost or at a very lower cost, are you gaining any profits or not? (I hope you are following). If you gain any profit, then only maintain the selling price according to the standards. But if you fail to maintain the selling price in a pro [er way, your business will suffer. Your business can suffer a great loss.
There are a lot of strategies and I will keep pointing out the strategies as we proceed friends. There are many strategies but you should understand whether you can fill the gap between the “MRP” and the “selling price”. Well, if the answer is yes, then you already are or going to become a successful marketer and a businessman. But, if you fail to understand the gap between the selling price and the MRP and fail to mention the proper cost of the product in front of the customer, what will happen? You will have to suffer through some major losses.
Yes, because what is the major thing in the supply chain? Price.
Look, friends. To run our business, we will need funds. We will also need money to get the “raw material” from the “supplier” through the logistics, petrol is needed, also the labor cost will apply. We also need funds for the labor and logistics of transporting the materials from the “supplier” to the “manufacturer”. There is a labor cost as well as the transportation cost including the petrol or diesel again to transfer the product from the “manufacturer” to the “distributer”. All the things that are required for a direct supply are needed here. (Understood?).
The cost keeps adding on every step of the way, but you have a good opportunity. You might wonder what is it? Well, you are in E-commerce, right. Now, tell me one thing, suppose you are listing all the products on your website by taking them directly from the manufacturer. And whenever a customer orders on your website, you can simply purchase it directly from the manufacturer in bulk and deliver it to your customer. As I said this is a very good opportunity. These are some tips for you by me.
Well yes, if you properly understand the supply chain or the transportation as well as the maintenance gap, then you can precisely mold the price. You can move forward in the competition. We will discuss this in the next module for sure. (Clear, so far?).
09:06
Now, let’s have a look at the “manufacturing cost example” again. I want to make “50 computers”.
For that, I have the “direct material” of “1 lac”, “direct labor” is “50 thousand” and the “manufacturing overhead” is also 50 thousand. So, the “total cost” is “2 lacs”. Yes, the overall cost is 2 lacs. Well, what should be the selling price for this in such a way that the MRP is not affected and I can gain maximum profit? Yes, I want to gain as much profit as possible. But we can’t ignore the fact that we also have to keep the consumer act in mind.
Well, if the “department of consumer affairs” catches us violating the policies of the consumer act, we will have to suffer some major consequences. Why? Because you are in the E-Commerce industry where you have already submitted the documents with written proof of selling the product at the decided cost. Now, if a consumer files a complaint against you, you will have to suffer a great loss in your business as well as pay a major fine. So please, this is my humble request to all of you to visit this website and just go through the consumer act once. Okay, friends. (I hope you have understood so far).
In this session, I tried to explain all about understanding the “MRP, manufacturing cost and the selling price”. There is a lot to explain, friends.
Now you might have one more question in mind. “Is this a good decision or a bad decision?” (repeat) Will it be a good decision if I set the selling price to a very low amount? Suppose you saw that your competitor is selling a product for 2 rupees, then you decide to sell it for 1 rupee. Or a competitor is selling a product for 5 rupees and you decide to sell it for 3 rupees. Will this be a good decision? So, it purely depends on how you manage your business.
Well, if you understand your business properly as well as if you properly understand the connections between the “manufacturer, wholesaler, consumer” in the supply chain, then you can truly understand the gap between the MRP and the selling price.
Let me give you an example. I have a friend in Mumbai that launched his start-up business recently on E-Commerce only. He was very motivated about his business. His business was for groceries like all the vegetables and stuff and he was going to add it to the online portal. The name of the website was also related to the groceries only. I will not mention the name, sorry for that. What happened? So, they set a proper MRP and the selling price. Now, what happened is there was a very big competitor that noticed all the prices and cost of the products and lowered it a lot on his own website. Due to this, the customers were attracted to his website only. He kept doing this for 2 to 3 months and went on until all the competitors and the online dealers were removed from the market. After that, he created a monopoly, and today again the prices have hiked as they were before the competition. He changed the rates back to as they were before 3 months. What he actually did was, he removed the competition entirely.
Well, friends, this kind of situation can also arise. You will find many people in the online industry that will compete with you and lower the selling price to a point where you won’t be able to understand if you should focus on the business or the competition. You will wonder if it would be a “good decision or a bad decision” to increase or decrease the selling price based solely on the competition. We will discuss that in detail in the next module.
But friends, with this example I am trying to make you understand that everything depends on your management skills. How do you manage your business? How well do you understand the gap between the MRP and selling price?
13:52
Look, friends. It is not necessary to always lower the selling price than the MRP. You can also sell a product on the actual MRP. There is no issue. Start by selling the products on MRP and as you move along, try by lowering the selling price. But pay attention to this, do it in a way that your business should not affect, the profit should not suffer. If you cannot gain any profit, then what’s the use of launching your business on E-commerce? And what is the use of taking this training?
At the end of the day when you reach home, your wallet should be stuffed with money. Because we are spending everywhere. To buy a product, we need money. To give some funds to our family, we need money. So, money is involved everywhere. Therefore, it is necessary for you to understand, how you can study the “manufacturing cost, selling cost, and the MRP”.
If you study this well, it is going to be a very good decision on your part where you can easily manipulate the funds as per your requirements. Whenever you visit any website, try to notice that they have understood the manipulation game too well.
In this game of manipulation and “modification” in this digital world and in the E-commerce industry, you will see that whoever has understood the “price manipulation” in a true manner is included in the list of lakhs of the E-Commerce website that are popular. In this E-Commerce world, only those people are valued in the special list that has mastered the pricing game and understood the modification game very well. (I hope you are following).
I promise that if you follow this training program sincerely and truly understand each session, then you can also be from among those special people.
Well yes, friends.
If you have any queries or comments, click the discussion button below the video and post there. This way, you will be able to connect to fellow learners and discuss the course. Also, Our Team will try to solve your query.
So, see you in the next module with the next session. Till then, happy learning and stay tuned.
Well, come let’s summarize this module once again.
Here we saw all the factors that manufacturing cost is dependent on. “Total manufacturing cost is an essential metric”. Yes, we discussed the importance of manufacturing costs in this module. Also, how and why does this affect your product?
Then we learned the importance of MRP as well as the selling price. We explored and understood everything related to the MRP and whether it’s good or bad in this module, friends.
I hope that you understood this module of the supply chain thoroughly.
So, see you in the next video with a new module.
Thank you very much.
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