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Credit crunch and online business

By Bobby Buys

Republish: EasyPublish™ Published: 08Jun2009 Word count: 580 Viewed: 252 time(s) Get Free Content For Your Site

No matter how diligently and meticulously you take care of your online business, it is always possible that some greed-mongers half-way across the world pillage their country's coffers or that someone starts a war and sends petrol prices shooting up. As soon as that happens, the global marketplace which in good times works in your favour, allowing you to sell online all over the world, becomes your greatest foe, allowing outside factors and forces to affect your business adversely.

The online marketplace business model, where consumers transact directly with other consumers, to some extent thrives in a recession environment. In difficult economic times, people will be more than ever looking for bargains and will come to online marketplace. The new sellers will come too, looking to sell whatever it is they can sell. And on online marketplace, sellers very quickly become buyers.

While people will forego purchases of luxury goods when the times are hard, they will not stop spending for birthday gifts or household appliance that broke down. However, they will be more than ever looking for great deals, which is where online marketplace comes in. Buyers can actually save money by shopping on online marketplace. They will search for second hand goods instead of new ones or for last season's model instead of the latest version. Above all, they will take advantage of the fact that even the new items and the newest models will be cheaper on online marketplace than in shops, because online marketplace sellers sell directly to the user, doing away with expensive overheads like shop retail space.

Even so, you as a seller may need to adjust to the changed economic climate. You may want to switch your product portfolios. It is usually recommended to focus on the products that are in demand and likely to sell fast, while getting rid of the slow moving items by offering discounts. The "buy cheap - sell cheap" philosophy may serve you well when the consumers are strapped for cash. However, before you rush to mark down prices on all your products, consider some other options first. Research has shown that people simply love prices ending with the number nine. So, revisit all the items you sell at a fixed price and change the final digit to nine. And yes, you can go up. On average, people are 30 per cent more likely to buy something that costs R49 than something that costs R44 - meaning that you can increase the price and increase sales!

Economic downturn is also the time to trim the costs, for example the packaging and stationery expenses. Little things like printing in draft quality with black ink do add up and can make a difference.

Though sad, the fact that not all businesses will survive recession can work to your advantage. There are pickings to be had from bankrupt or liquidation stock. Look out for bargains and keep an eye on your competition.

Because, in the end, the economic woes will make many people forego expensive vacations and socialising. In other words, they will stay at home more - possibly in front of their computers. That is when they may stumble upon online marketplace. They may decide to sell something to raise much needed cash. That is all good for online marketplace sellers - because everybody knows, from their own experience, how quickly new online marketplace sellers become new online marketplace buyers. That means a wider customer base - and more potential customers for you.

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