The truth behind e-commerce price wars: Why do 90% of sellers have to lower prices, while top sellers can increase their prices?

Have you discovered a particularly heartbreaking truth?

They both opened online stores.

Some people can easily sell at high prices, and customers are scrambling to buy them.

Some people work themselves to the bone to reduce profits, but customers still complain about the high prices and leave.

a lot ofE-commerceNo matter how many years the boss has been in the business.

They can't escape this vicious cycle.

We are working tirelessly to optimize our products.

Desperately cut costs.

They worked tirelessly to learn operational techniques.

In the end, they could only fall into the quagmire of price wars and couldn't climb out.

They often asked me with a puzzled look on their faces.

My product quality is clearly much better than that of my competitors.

It was only 5 yuan more expensive.

Why do customers immediately turn around and buy the cheaper one?

I'm putting my words here today.

This really isn't because you didn't try hard enough.

It's not that your product isn't good enough.

It's not that you lack operational skills.

You've made a strategic mistake that could ruin your entire business.

You're trying to be in a category that's inherently "poor".

Go earn the money that only "nobles" can earn.

This mistake has nothing to do with effort.

It has nothing to do with diligence.

It is only related to cognition.

The business world is just like the real world.

There is a strict hierarchy.

I call this patternCategory hierarchy theory.

Every product category, from the day it was born.

They come with genes that cannot be easily changed.

Some product categories are inherently defined by the requirement that they "must be cheap".

Some product categories are inherently "must be expensive".

This gene is deeply rooted in the collective subconscious of consumers.

It's not something you can turn around with just a few words of advertising or a few pages of product details.

When you fight against it, you are fighting against humanity.

I. What is a "low-priced product category"? Customers have already predetermined its low price in their minds.

First, understand the most core concept.

The so-called "poor people's category".

It's something that users subconsciously accept.

This thing "only deserves this price".

No matter how perfect you make it.

Its price ceiling has long been locked in.

Let me give you a few examples that you encounter every day.

For example, socks.

You use Egyptian long-staple cotton.

You hire a well-known designer.

You've done a perfect job.

It's still just a pair of socks.

In the minds of the vast majority of people.

Its perceived price is around ten yuan.

You want to sell them for 99 yuan a pair.

Consumers' first reaction is not "How high-end!"

Instead, it means "You're messing with me."

For example, garbage bags, basic white T-shirts, and ordinary noodles.

From the user's perspective.

These are purely consumables.

BeLifenecessity.

It's something that doesn't have much added value.

You emphasize high-end, quality, and scarcity in this type of product.

Users simply don't buy it.

They only compare which one is cheaper.

Which one is more cost-effective?

Which seller offers free shipping and free gifts?

They fight it out in the category of poor people.

You have only one destiny.

Cut costs more ruthlessly than others.

Iterate faster than others to improve efficiency.

They are more willing to engage in price wars than others.

Do you want to escape the price war?

almost impossible.

Because that's the only motivation users have to buy it.

It's about saving money.

II. What is a "luxury product category"? The cheaper it is, the less customers dare to buy it.

Completely opposite to the categories for the poor.

The underlying logic of aristocratic categories is...

Cheap = unsafe.

Cheap = unreliable.

Cheap = ineffective.

On this track.

Price itself is part of a product's competitiveness.

It's even a synonym for trust.

I will explain the logic behind the premium pricing of luxury goods.

They are divided into three most common types.

1. Business on the Face: Fear Premium

Let's start with makeup and skincare, which are the most familiar topics to girls.

A bottle of eye cream for 9.9 yuan with free shipping.

And a bottle of eye cream that costs 399.

The difference in raw material costs may not actually be tenfold.

But would you dare to put a 9.9 yuan eye cream on your eyes?

Almost no one dared to.

Because faces are too valuable.

Users' subconscious is very direct.

Such a cheap product applied to the face.

In case of skin problems such as breakouts, allergies, or skin damage.

Who will bear the consequences?

Therefore, they would rather spend more money.

Buy peace of mind, buy protection, buy brand endorsement.

Here, high price equals security.

Low price = risk.

The more you lower the price, the more suspicious it seems.

2. Children's Business: Anxiety Premium

Next, let's look at businesses related to children.

Education, milk powder, children's clothing, toys.

Parents' core demand is never the cheapest option.

Instead, it should be "better, safer, and more reliable".

The course is abnormally low.

Parents' first reaction was not that they had gotten a bargain.

Instead, they doubted whether the teacher was competent.

Are the textbooks compliant?

Will it harm the child?

To alleviate this anxiety.

They are willing to pay a high premium.

In this category.

Price is a screening criterion.

It is also a source of security.

3. Safe business: Worry-free premium

Many people involved in cross-border e-commerce have experienced this.

Electrical products, auto parts, smart home devices.

Foreigners are particularly willing to pay high prices.

It's not that they're stupid or have too much money.

Rather, they are simply too afraid of trouble.

Labor costs are extremely high overseas.

Something I bought broke after two days of use.

Repair costs may be higher than the product itself.

In order to avoid future troubles and risks.

They would rather spend a few dozen dollars more now.

Buy a stable, durable, and reliable product.

This is a typical example of a hassle-free premium.

Who can provide stable and reliable quality?

Whoever gets to take the high profits.

Instead of relying on low prices.

III. The Achilles' heel of 90% of e-commerce sellers: Taking the risks of low-end product categories while trying to make money from high-end ones.

I have witnessed too many tragedies for e-commerce business owners.

He was clearly holding a handful of "flour" in his hand.

But he spends all his time figuring out how to sell "gold" at a price.

This is not a matter of effort.

This is a wrong direction.

You're in a market where users are only willing to compare prices.

They insist on talking about quality, sentiment, and high-end products.

The result is.

You moved yourself.

Unable to persuade the client.

In the end, they were forced to lower the price.

Each price reduction thins out profits.

Lowering the price to the bottom means exiting the market at a loss.

It's not that you're not good enough.

You chose the wrong battlefield.

Fourth, if you want to escape the price war, you only have two real ways out.

If you're still relying on price to stay afloat.

You must stop and carefully examine your track.

Which category does your product belong to?

If your product belongs to...

The type who feels like they're missing out if they don't buy something cheap.

For example, tissues, garbage bags, and basic daily necessities.

You only have two paths to take.

The first rule is to accept reality.

We should honestly focus on achieving the best possible cost-performance ratio.

The competition is about supply chain efficiency, scale, and cost control.

Don't fantasize about high profits.

Second, change tracks immediately.

Shift towards customized products with a handcrafted feel.

Or functional products with technological barriers.

Upgrade products from the poor to the nobles.

But if your product category is one of them.

The type who won't feel at ease unless they buy something expensive.

For example, skincare, education, health, and precision equipment.

Then you absolutely must not lower the price casually.

Lowering prices diminishes one's status.

Price cuts destroy trust.

What you need to do is continuously enhance the value.

Use brand, service, results, and endorsement.

Tell users: You are worth the price.

Conclusion: Perception determines destiny

The cruel reality of the business world is that hard work doesn't always guarantee a reward; choices are the decisive factor.

You need to understand that product categories have their own genes.

Products for the poor are destined to win by price alone, while products for the elite naturally have room for premium pricing.

As the Harvard Business Review stated, "Consumers' psychological expectations often determine the upper limit of the price more than the product itself."

Therefore, true wisdom lies not in stubbornly competing in low-end product categories, but in escaping the trap of price wars and finding sectors where you can justify your high prices.

My view is simple: in business, making the right choices is more important than working hard.

Effort is tactics; choice is strategy.

If the strategy is wrong, no amount of tactical effort will help.

Remember this: the depth of your understanding determines the size of your profits.

Now, examine your product category, think about your industry, and do businesses that allow you to be "confident in your pricing power."