Monthly Archives: June 2014

Shopify: A Brief History

After humble beginnings as a coffeeshop based start-up, Shopify have come along in leaps and bounds in the world of ecommerce and online retail. The Canadian-based now-successful start-up turned officially 8 years old last month – here’s their story…

About Shopify

The early pioneers of Shopify spent their first years using a coffeeshop in Ottawa as their first office base. The coffeeshop was called Bridgehead and became one of Shopify’s first merchants, selling coffee beans and tea from it’s online store.

Since then, Shopify have grown to a massive 400 employees around the world. It has gradually evolved from being an e-commerce platform to a broader retail operating system for businesses across the globe.

Shopify’s very first beta users have only grown stronger with Shopify’s success. A mix of online retailers, just a few of it’s beginning online stores include online retailer of textiles, Olive Manna; Canadian artist, Fred Jordan; online biscuit store, Callie’s Biscuits; and pregnancy pants online retailer, bottomsUp.

What is Shopify?

Shopify is an ever-growing e-commerce platform for both individuals and large businesses. What makes Shopify’s ecommerce software particularly attractive, is it’s affordable pricing for small businesses and new online retailers.

Users can build their own online store from which they can personally manage it’s content and inventory; create coupons and discount codes; and accept online payments such as PayPal, BitCoin and all major credit cards.

Prices start from only $29 a month for a basic package.

 

What Is Penetration Pricing?

Penetration pricing is a competitive pricing strategy, particularly effective in attracting new customers and increasing ecommerce sales.

Penetration Pricing

The simple aim of a penetration pricing strategy is to set a very low initial entry price in order to tempt potential customers into switching from the competition’s services. This is a particularly useful pricing strategy for new ecommerce products entering a saturated and competitive market. If a product has minimal differentiation from your competition, then offering a substantially lower price can be your best strategy for standing out.

Pricing Strategy

One of the most common examples of penetration pricing is when you see special ‘introductory’ offers. This competitive method of pricing is great for increasing your market share and pulling in a large amount of new customers for brand awareness. Once you have made an impact in the market, the price can be raised to a more profitable amount.

Pros and Cons

Penetration pricing is brilliant for catching the competition by surprise. Offering such low prices to begin with will also encourage good product promotion through customer word-of-mouth.

However, while ecommerce sales may greatly increase, profits are likely to be negatively affected in the short-term. In addition, the low initial pricing may simply attract ‘bargain hunter’ customers as opposed to loyal long-term customers.

Increasing Sales With Loyalty Programmes

Introducing a loyalty program to your e-commerce store is a great way to attract repeat customers and stay ahead of your competition. In fact, a massive 55% of the world’s top retailers have a loyalty scheme in place and it has proved to be a perfect strategy for increasing e-commerce sales.

Benefits of introducing a loyalty programme in ecommerce

On average, retailers that have a loyalty program earn around an 88% higher profit, with customers visiting twice as often and spending 4 times as much money than normal. Attracting a new customer to your website is only the first step to running a successful ecommerce store, as 48% of consumers surveyed have revealed that their first-time shopping experience is the most crucial time for deciding their loyalty.

How to set up a loyalty programme

A loyalty scheme could be anything from a physical card to an online store account. Most e-commerce software includes a loyalty program feature – if they don’t already have one, then you are sure to find an e-commerce extension for it.

  • Make sure to link customer accounts with a phone number or email address. This will make it easier for your customers to shop both online and in-store.
  • To help increase brand awareness and website traffic, introduce rewards not only for purchases, but for non-purchases such as shares on Facebook and retweets.
  • Use your loyalty program to collect and analyse customer data. You can use this information to offer targeted discounts and rewards, unique to your customers.
  • Having a tiered system will give customers incentives to spend more money and reach the next level for even better rewards.

Is a loyalty programme right for my shop?

Remember, it costs retailers up to 10 times more money to get new customers in comparison to keeping old customers. However, certain e-commerce stores with narrow profit margins may not be able to afford to be so flexible with their prices. In this case – although a great way to increase ecommerce sales – you may find this strategy too damaging for your profits.