The Of 10 Percent Margin, A Powerfull Strategy To Seize Online Business Market Share

Note: Tulisan ini adalah terjemahan Basa Enggres bebas dari artikel ini

Hi friends.

In writing this time, I want to review the topic of online business.

In my observation, the more days of competition in the online business world increasingly fierce. Inevitable. The cause is due to the rapid growth of online stores. As a result, all online shop owners are intensely competing with each other.

In this article, I want to dismantle one of the strategies that are often applied by experienced online businessmen and have substantial capital.

What is that strategy?

Namely: The of 10 percent margin, a powerful strategy to seize online business market share.

Oh yes, there is one important point: Why do I emphasize that this 10 percent margin strategy can only be done by an experienced and robust capitalized online businessperson?

The answer: Because online business with little capital will be complicated (even impossible) to be able to apply this way. Because this technique plays in quantity (sale of goods quickly).

So this strategy requires the perpetrator must have experience and skill, and also must have big capital.

Well, now we start focusing on the topic.

For example, I make an illustration of cash flow rotation as below:

- Shop online A, cashflow turnover Rp. 100 million / month and generate net profit Rp. 10 million / month.

- Shop online B, cashflow turnover Rp. 200 million / month and generate net profit Rp. 15 million / month.

- Shop online C, cashflow turnover Rp. 500 million / month and generate net profit Rp. 35 million / month.

Well, now try to observe and reflect.

Of the three online stores above:

Which is be powerful to exist?

Which is more likely to be able to seize/control the market share?

And which ones are much cheaper?

The answer is obvious, namely online store C.

Take one example:

About a few years ago, I saw one online store that is quite 'crazy' on eBay.

The owner of the online store is selling an E-tech galaxy laptop. MSRP price in America is about 525 US Dollar. But the seller who 'a little crazy' label price tag the laptop is only worth 330 US Dollar only ! (Note: this laptop market average price in Indonesia about 7 - 8 million rupiah).

Because the price is very cheap, so in just four months the laptop has been sold to 5,925! That means it has sold more than 1,000 laptops every month!

What are the important points we can take from all the above explanations?

That is, in the world of online stores, there is a most powerful marketing strategy to be able to seize and market, namely the power of margin 10 percent. The bottom line is: take a net profit on its product is worth 10% only.

Special note: I think personally, in the online business world, 'should not' take a too high margin. Set the most top margin to only 20%. Do not make the margin too high up to 40% - 50%, because it will result in your online store will be abandoned by the buyers. Remember: Online business competition is getting a louder and cruel friend!

Why your store can be abandoned by the buyer if the margin is set too high? The answer is clear. Because logically, of course, buyers will prefer the cheapest product.

The fact is, more and more online stores are competing to sell their products at the lowest price. They prefer the turnover rate and quick sales.

Now, let's try to dissect the marketing strategies implemented by eBay sellers who sell E-tech galaxy laptops (at a 'slightly crazy' price) above.

The price of this laptop at that time (2015) was 329 US Dollars. And the seller on eBay has sold a total of 5,925 E-tech galaxy laptops. So the gross proceeds obtained were 1,949,325 US Dollars.

If calculated according to the value of the Indonesian currency (Rupiah), then the amount Rp. 26,315,887,500 (twenty six billion Rupiah more).

If the sales of E-tech galaxy laptops (after deducting the cost of eBay, and others) get a profit of 8% only, it will succeed to get into the owner's cash (read: no more other costs expenses) within five months Rp. 2,105,271,000 (two billion Rupiah more).

If divided into the period of 5 months, (for the sale of one laptop E-tech galaxy this only), then the owner get a net profit margin about 400 million Rupiah per month!

That is a competitive power that you will get because it sets a margin of only 10 percent. 

You are more competitive because the price of the product you sell is very economical! 

This marketing strategy has a significant effect on online business. Anyone who can process this technique carefully, thoroughly and precisely (calculation), is very likely to master the market share of an online store. And will succeed in it. 

Unbeatable!

However, once again I warning you, how to play 'high level' like this also contains risks. What is that? That is if your calculations are not careful, then will make you lose money. Because it is not balanced between the margin earned with operational costs that have been issued.

Therefore, a marketing strategy like this will only be able to be applied well by experienced online business players.

The success of this marketing strategy is also many factors that influence it. These factors include the work team that has been very solid at the online store. That is, everyone who works in the online store must have known their respective duties. And this is very important!

Why did I say this is so important? Because if there is a beginner online store that tries to join in this marketing strategy (play quantity because he has significant capital but less experienced), then it could be all affairs in that online store will be messy. Why mess? Because if playing in quantity, the main effect is: 'suddenly the days become very busy'. And the beginner online shop is not ready with all that.

Why are online shop beginners not ready with these marketing techniques?

Well, I'll make a real example. I have a partner in business. He is an experienced online business entrepreneur for 10 years (including a big online store). The name is Faisal adlan (owner of 'Icaltoys' online store).

'Icaltoys' online store is selling Hotwheels products. In one auction, this Icaltoys store can sell up to 10,000 Hotwheels! And that is an incredibly busy job!

To be able to sort, pack, and to send a product with that much and fast, Icaltoys work team must have experienced high. 'Icaltoys' online store itself has a core work team of 10 people.

Therefore, as I mentioned at the opening of this article, this marketing technique is not suitable to be applied by a beginner online store. Indeed everything will need a process. My colleague (Faisal adlan) need experience and work process as an online business for ten years. With then, he can become an expert in his shop. 

If you want to know with the address of the Faisal adlan website, please visit the following link: www.icaltoys.com.

Another thing that should be a big point of interest in this marketing technique is, that if an online store wants to play quantity (like the eBay seller or 'Icaltoys' above), they should also to play at the optimum point.

What does it mean?

Yes, it's useless to set a thin margin, but the target quantity is 'not met' (that is, the optimal target number of items sold should meet at the lowest margin price point taken). So it should always go into the optimum position of sale.

Easy analogy:

What is the margin (profit) of candy or a cigarette?

A tiny margin is not it?

But why can a cigarette manufacturer make such strength in its business strength? The answer is: because the number of products sold (per day) is not in a matter of 1-2 pieces, but it amounts to millions of fruit per day!

Yeah! That's how it is the marketing system applied by the E-tech galaxy seller and Icaltoys above!

A marketing strategy (that only sets this 10 percent margin) if you apply well, then you will be difficult to beat by other competitors. 

What is the cause?

Because you sell at the lowest price, so it has become an 'economic law' if buyers prefer to buy your product which is cheaper.

Perhaps some of you are asking me: "Would not a marketing strategy like this be destructive to market prices and tend to be unfair to online businesses with little capital?"

I replied: It may be true (that you say), but in practice, it is not always entirely like that. As I have repeatedly mentioned above, that technique like this is not all traders can apply it.

This technique only applies to experienced traders, has solid and fast teamwork (expert level) and also has strong capital. And the criteria of such traders is not much is not it? And also not everyone is always shopping for them. So you still have plenty of opportunities to get your customers in your store online (even though your shop price is a bit higher than them), because everyone has their sustenance. Right or not? :)

So for beginner online business (who have minimal capital) do not have to worry too much about the existence of the traders of experts above. If you sell your product a little more expensive than they (for example you set a 15% -25% margin), believe me, there will always be people shopping for your online store. Provided you can provide value, excellent service, friendly and fast.

So,,,, you belong to which online business group? Already an expert or still a beginner?

If you are already expert, then please apply this 10 percent margin strategy. But if you are still a beginner, be patient,,, try to keep digging knowledge and experience in online business first. If later you are ready with expertise, skill, and capital, then apply this marketing strategy as well as possible.

If you feel this article is useful, then share it. Hopefully, it can be helpful for your other colleagues.

Good luck always for you all.