Tuesday, September 20, 2005

Selling "Cheap" Isn't the Best eBay Marketing Strategy -- Blue Nile and Tiffany & Co.

Seth Godin’s book, All Marketers Are Liars, talks about why selling “cheap” isn’t the best marketing strategy. It’s a quick road to oblivion, actually.

He uses Bluenile.com as an example. Blue Nile is the online diamond store that’s whipping Tiffany & Co. at their own game (or a similar game). They sold more engagement rings than Tiffany’s last year.

Blue Nile sells jewelry identical to Tiffany’s, but it’s half the price for obvious reasons (no retail space in NYC, for one). But Godin writes, “But if cheap is what you want, you can buy cheap cheaper somewhere else. Cheap is not marketing.”

He’s right. Most businesses understand that they can be undersold. So they use marketing and persuasion and storytelling to create images and feelings around their products. They build in customer service and a feel-good experience. In Blue Nile’s case customers get the feeling that they got a better deal than Tiffany’s. But Blue Nile also goes to great pains to tell the stories about their diamonds and the uniqueness of the gems. This is a different experience than going to total low ball dealer in some sleazy neighborhood and hustling out the door with a diamond ring. The classiness and the spirit of the purchase are somehow cheapened when you go to the sleazy hood.

Intelligence and rationality tells us that it’s better to get the gem at the lowest price. Yet, many of us still opt for a more service-oriented experience (complete with stories and long descriptions of the gems). There’s something about the buying experience that matters.

When you sell on eBay or in any other ecommerce setting you need to focus on the experience. The only way to do that, says Godin, “is to stop focusing on things like carats and start telling stories instead.”

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