A Negative Business Strategy: Inappropriately Big Discounts
Wholesale business is mainly about selling wholesale products at a rate lower than the retail price
. Competition is indeed getting fiercer in modern wholesale industries. Lots of budding entrepreneurs are opting for almost similar business endeavors. This has made it absolutely hard for current businesses to survive and make their customers stay loyal to them. It has become a challenge for every business to maintain their position in the market.
As inflation rises in the global market, people have got more and more aware of the prices. This has compelled many of the wholesale suppliers to offer really huge discounts. The prime reasons for these discounts are to introduce new customers in business or to sustain the current customers by rewarding them.
However, it has been noticed that big discounts and bargains ruin the potential for business and as a result the business fails. It certainly offers temporary profits but as time passes, their business gets spoiled and it becomes less viable. Heavy discounts make you lose your brand identity. It is a common observation that people consider products with heavy discounts as inferior quality items. This is the main reason why branded companies never offer too much discount. People continue to buy their products even though it has exorbitant rates because these products are considered to be high quality products.
Heavy discounts by one brand forces other brands too to lower down their prices to stay in the competition. This becomes a cycle because of which lots of wholesale suppliers quit this industry.
If customers are offered a huge discount once, they expect it again and again. Ultimately it leads to devaluing of the products and they start assuming that their lower prices are reasonable enough according to the value they offer to them. Customers expect discounts every day and if the company stops offering discounts, it is bound to lose customers which leads to earning no profit at all. The ball is in the court of customers and hence they are free to approach another company which offers higher discounts than yours.