Over the years, the e-commerce industry has fought for the customer, cutting prices as much as possible. This trend is being reversed. Online stores also need to start charging higher bills eventually. As a result, industry has joined the engines of inflation. However, this does not mean that buyers will turn their backs on online stores.
Inflation. This word has been changed by all the cases in recent months in the public space. The prices of almost all products are increasing. Some only slightly, but others, like fuel or food, even by tens of percent. The main reasons in recent weeks are, of course, the war in Ukraine and the sanctions imposed on Russia by many countries. These events have increased the prices of fuels, gas and coal. This, in turn, increased the costs of transport, electricity, building materials and many other products.
As a result, there was a domino effect. Suppliers have started to pass on their costs to producers. Producers over sellers. And vendors for customers. The latter felt it strongly in their wallets. In March, inflation in Poland exceeded the level of 10%. In the European Union, it was slightly lower and amounted to 7.8%. This is a level we haven’t seen in a long time.
No more hot deals, we’ll pay more online
The current market situation has also affected e-commerce, an industry that has not been sensitive to sudden price increases for years. Furthermore, the expansion of e-commerce has been argued to help lower inflation for two reasons. First, compared to fixed sales, running a business is much cheaper. Secondly, the strong competition in the e-commerce market encourages entrepreneurs to lower prices, because customers are looking for the cheapest offers, and thanks to fast search engines, this is very easy – explains Wojciech Kyciak, chairman of the board Board of Directors of Bezokularow.pl SA, one of whose brands is wOkularach.pl.
As a result, the products became cheaper, which was highly appreciated by consumers. Online stores fought for them, outdoing themselves with other ideas as well. Promotions, big discounts, free deliveries, gifts. It’s been the market for years. However, this is only a memory. Why? In fixed stores, restaurants or service points, the price increase is associated with a certain longer process. You must print new labels, menus or modify the table with the price list. After all, blurring old prices is not an option for image reasons.
It’s much easier online. A few clicks, change the numbers and you’re done. The new price is displayed to the customer. Indeed, if a restaurant offers a menu in the form of a QR code, which has become fashionable during the pandemic, the price increase can also occur quite quickly and go unnoticed by the consumer.
Therefore, online stores change prices much more often than stationary stores. Now, in a context of galloping inflation, buyers accept such an increase more easily. After all, everything will become more expensive.
Some e-commerce entrepreneurs are taking advantage of this. Especially those who bought the goods much earlier and have stocks in warehouses. Now they can charge a higher margin and earn more.
Of course, this may seem tempting for many entrepreneurs, especially since the prices of all products are increasing. However, such an economic model is a short-term activity. In the long term, this will also affect entrepreneurs, because customers will give up buying products that are not necessary for them – notes Wojciech Kyciak.
He knows what he is talking about because his company is also suffering the effects of inflation. The world’s leading eyewear manufacturers are also raising their prices. Some up to 5%. This is linked to the increase in the prices of glass and other materials used for production. The wOkularach.pl store tries to ensure that the growth is not higher than that resulting from the increases introduced by the producers.
We can fight traditional lobbies by using the already built advantage. We use new technologies in online sales. Customers can try on the frames and check their adjustment to the face thanks to the camera and the possibilities offered by artificial intelligence. Thanks to this, we do not have to raise prices significantly. In addition, we can still offer promotions on some of our assortments – adds Wojciech Kyciak.
In the United States, inflation does not threaten e-commerce
However, not everyone is in such a comfortable position. Some online stores simply don’t have inventory and have to import products from manufacturers at new, higher prices. It is not helped by the aforementioned increases in energy prices or disrupted supply chains, which seem to have caught their breath after the pandemic, but the war has once again made it difficult to transport goods. This makes them unable to maintain the current supply. Prices increase by several or several tens of percent.
When customers see prices go up, they are willing to pay more. They are afraid that it will be even more expensive in a month, two or a half years. These behaviors drive sales.
This is confirmed by research conducted by the American company Adobe, which in addition to providing software, also deals with marketing in the broad sense. Its analysts say sales growth in the U.S. e-commerce sector in January and February this year was $3.8 billion (total spend is $138 billion), mostly due to rising prices. .
In addition, inflation has also made its mark over the past two years. Adobe investigated that US e-commerce from March 2020 to February 2022 was worth $1.7 trillion, of which $32 billion was directly related to rising commodity prices. The company expects online commerce to top $1 trillion this year, with an estimated $27 billion surplus attributed to inflation.
However, these data cannot be translated one by one in Polish e-commerce, even if we keep the proportions resulting from the overall difference in size of the two markets. The very structure of American e-commerce is different. In the USA, many more customers buy food products online (according to Adobe, it’s nearly 7 billion per year – editor’s note) or other products necessary for everyday life. That is why it is so clearly visible there that price increases have not affected the frequency of online purchases. In Poland, we buy second-hand goods much more often, which will be easier to give up when inflation continues to rage – emphasizes Wojciech Kyciak from the online optical store wOkularach.pl.
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Lightbe / KG