Using pricing, affordability to drive market leadership
One organization, which has adopted pricing as a way to wade off competition and probably remain as the market leader in its category is Jumia.com. A check on some of the prices of products by Jumia showed a competitive pricing edge over other platforms, even with international online retailers.
For instance, the Samsung Galaxy S5 – Copper Gold goes for about $569 on one of the foreign online shops, which when converted into the local currency, the naira, it is about N119, 000, though depending on the exchange rate.
There is no gainsaying it, that with many online retail shops springing up in recent times, price reduction has been used as a tool to beat off competition.
And for some, this might also means compromising on the quality of goods being offered to the customers, especially for organizations that do not care about building long-term relationship with its consumers.
However, some shoppers, who have patronized Jumia, said from their experience, besides pricing, the quality of products being offered is another reason they have continued to make the company their choice. Omotolani Johnson said that she has over the years being an addicted customer of Jumia basically because of two reasons, the pricing of their products and the quality of products. “
These days, I do not bother to check the price of goods on other online platforms because I am rest assured that I will be getting a better price compared with other platforms and the quality of the goods is not in doubt. “So, naturally, I always feel I am wasting my time by checking other platforms to see what their pricing is.
This is an habit I have formed unconsciously after my first five transactions with them,” she revealed. On her part, Ibukun Adeola said that her transaction experiences with Jumia had been very pleasant in terms of pricing and quality the few times she had shopped online using the platform.
This, she said, has made her to continue to return to the platform anytime she needed to shop. She however disclosed that she had an issue recently, which has to do with logistic problem.
Another customer, Chukwudi Ozonna said, “I was skeptical about this online deals especially the quality of the products since they are always willing to offer cheaper prices. But then one day I needed a television for my children’s room. I saw a 22-inch LG TV on Jumia at N21, 900.
I was unconvinced about it but then after I prized it offline and saw that the same TV goes for N29, 000, I decided to give it a try. I have used that TV for two years now; it has never had any fault. It was an original LG product.
I don’t how Jumia does it but I do know they do sell quality products at very affordable rates.” Co-Managing Director, Jumia Nigeria, Dr. Jonathan Doerr said: “Jumia does not sell at cheaper rates because it offers inferior products.
We are able to offer products at affordable and lower prices compared with other online retail companies and those of brick and mortar stores due to wide assemblage of brands by our organisation.
You just name it, from Apple to Infinix to Lego, Samsung, L’oreal and more, Jumia has been able to forge lasting and favourable partnerships with the biggest brand who are able to offer our organisation their products at reduced tariffs and sometimes even exclusively.
These brands are happy and always willing to work with Jumia due to a proven track record of service delivery, customer satisfaction and guaranteed volume of sales.
According to him, the company leverages on its huge customer base, and its resultant economies of scale to drive down cost. “In Economics, there is a concept called Economies of scale.
This concept is about cost advantages, which certain enterprises enjoy due to their larger size, output and scale of operation. Being the biggest online retail store in Nigeria, Jumia is being patronized daily by tons of Nigerians nationwide.
It only adds up that unlike the others, Jumia Nigeria can now afford to plummet profit margins and provide lesser priced products to customers due to a reduced overall operating cost.” He added: “Another clarification as to why you can expect to get the best deals is the company’s fascination with sales promotions for customers.
You can describe it as giving back, if you may, but our company is always happy when it’s customers are happy whether we are making profit or not. Just about every week, one can expect to find a sales promotion on Jumia with products being sold at puzzling and ground breaking prices. Customers who take advantage of these deals are always quick to tell their stories.”
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