How to compete with low cost Chinese rivals

In today’s digital economy, it’s no longer your local rivals that you compete with, sellers are up against anyone in the world who can provide their product competitively. And judging from the rise of apps like Temu and Shein, people like to buy cheap stuff! 

Temu has been topping the app download charts in regions across the Western world. [source] This is not surprising considering the amount they spend on advertising, with $1 billion spent on advertising with Meta and a SuperBowl ad.

So how can brands compete with rivals with a highly aggressive pricing strategy? 

Don’t race to the bottom 

Trying to compete on price alone is inadvisable. This often leads to a "race to the bottom”, where prices are continuously lowered in an attempt to undercut competition and become the cheapest choice in the eyes of the consumer.

This erodes profit margins and can even endanger the overall financial health of your business as the sales you make, won’t translate into meaningful earnings.

If you’re going head-to-head with Chinese sellers sourcing products from Alibaba and selling for a mark-up on Western marketplaces, then you will be operating with a small margin, leaving you with little to no room to decrease your prices.

Ideally, you would handpick a limited selection of products directly from the manufacturer, carefully choosing the best items for your market, and, if possible, branding them to make them your own—allowing you to charge better prices while maintaining competitiveness.

If you are selling your own brand or sourcing from Western manufacturers and you face competition from Chinese sellers, you could be competing with items made with very low labor costs or even governmental support. 

In this scenario, price certainly isn’t a battleground that you want to compete on, since your rivals will be able to produce items for much cheaper and have more of a margin to eat into while remaining profitable.

So how can you win if price cuts aren’t your primary enabler?

Emphasize product quality and build a trustworthy brand

One of the most effective ways to stand out is by emphasizing the superior quality of your products and building a strong, trustworthy brand. Consumers are willing to pay a premium when they are investing in a high-quality, reliable product. Here's how you can leverage product quality and brand trust to your advantage:

Create high-quality products

Investing in the quality of your products is fundamental. Here’s how you can ensure your products stand out:

• Source the best materials: Use high-quality materials that offer durability and superior performance. Highlight these materials in your product descriptions to inform consumers about what sets your products apart.
• Rigorous quality control: Implement stringent quality control processes to ensure each product meets high standards. This minimizes defects and returns, enhancing customer satisfaction.
• Innovative design: Focus on innovative and functional design elements that improve user experience. Unique design features can make your products more appealing and distinguishable from lower-cost alternatives.
  
  

Build a strong, trustworthy brand

Trust is a critical factor in consumer purchasing decisions. Building a trustworthy brand involves several key elements:

• Consistent branding: Maintain consistency in your branding across all channels. This includes your logo, color scheme, messaging, and overall brand voice. Consistency helps in building brand recognition and trust.
• Transparency: Be transparent about your sourcing and manufacturing processes. Share stories about how your products are made, where they come from, and the people behind them. Transparency builds trust and a deeper connection with your customers.
  
  

Sustainability can boost your brand

One of the main pushbacks on low-cost products shipped from China is the effect it has on the environment. The phenomenon of ‘fast fashion’ (when consumers buy cheap clothing to wear only once or twice), is particularly detrimental. 

If you can reliably claim to be a more sustainable option, this is a chance for you to positively influence a purchasing decision and strengthen your brand. 70% of 18-25 year olds are very (or extremely) worried about the environment, so this is a powerful issue, especially if young people are in your target market. Here are some ways to boost your brands’ sustainability:

• Use eco-friendly materials: Use and promote the use of sustainable materials.
• Ethical manufacturing: Ensure and communicate that your manufacturing processes are ethical and environmentally friendly.
• Reduced carbon footprint: Highlight efforts to minimize your carbon footprint, such as using renewable energy sources in production.
  
  

Optimized listings

The quality of your listings has a huge impact on your sales figures. If your listings are incorrect, incomplete, or don’t look compelling then the perceived value of your products will suffer and consumers will not see the benefit of purchasing from your brand when compared with a cheaper alternative. Here’s what you should include to make sure your listings stand out:

Enhanced titles

Titles are often the first thing consumers see on the marketplaces’ search engines, so it’s critical that you make them compelling and accurate. Make them:

• Clear and concise: Ensure the title is clear, concise, and includes the most important keywords at the beginning. The title should make sense to the reader and search algorithms.
• Feature brand and model: Include the brand and model if applicable, especially for electronics, appliances, or branded goods, as buyers often search for specific brands and models.
• Include key attributes: Mention any critical attributes that might be a selling point, such as size, quantity, color, or special features right in the title.
• Compliant with marketplace requirements: This is particularly important if you’re selling on multiple marketplaces. Most marketplace regulations differ, so if you’re selling on several, make sure you’re compliant or your listings will not show. Product listing software is the most efficient way to achieve this.
  
  

High-quality images

For consumers to finalize a purchase decision, especially on high ticket items, they need to have an accurate mental image of what the product looks like and its specifications. Ensure you make good use of imagery on your listing, including:

• Multiple angles: Upload images that showcase the product from various angles. This helps buyers get a comprehensive view of what they're considering purchasing.
• Detail shots: Include close-up photos to highlight the quality and texture of materials, unique features, and craftsmanship.
• Contextual and lifestyle images: Show the product in use, which helps customers visualize its application in their everyday life.
• Consistent style: Maintain a consistent photographic style and quality across all your listings to build a professional brand image.
• Utilize video where possible: If you have the option to include video in your listings you should certainly consider doing so. Video gives the consumer a complete impression of your product that images will never achieve, no matter their resolution. It will certainly make your listing stand out.

If you’re selling on Amazon, you should take full advantage of A+ Content. Studies show that A+ Content can improve conversion rates by up to 20%.

Detailed and keyword-rich descriptions

The descriptions on your product detail page, like images described above, can go a long way to boosting conversion rates. Include the following in your descriptions:

• Benefit-driven headlines: Start with a compelling headline that quickly communicates the primary benefit of the product.
• Feature breakdown: List all significant features in an easy-to-read format, such as bullet points. This might include dimensions, weight, material, compatibility, etc.
• Use keywords strategically: Incorporate relevant keywords naturally into the description. These should be terms potential buyers are likely to use when searching for products like yours.
• Answer common questions: Include information that addresses frequent buyer inquiries, such as care instructions, warranty information, or product origins.
  
  

Leverage reviews and ratings 

Positive reviews and high ratings can significantly influence purchase decisions on marketplaces. If you’re up against sellers that are using an aggressive pricing strategy, ratings and reviews are certainly an area where you’re likely to have an advantage. 

Here’s how you can maximize your positive feedback on marketplaces:

Encourage reviews proactively

• Follow-up emails: After a purchase, send follow-up emails thanking customers for their business and kindly asking them to leave a review. But be careful, some marketplaces won’t allow this, or have strict guidelines around what you can and can’t say when asking for a review. 
• Order inserts: Include a small card or flier in the package asking for a review. This can be especially effective as it reaches customers at a moment when they are most engaged with the product.
• Incentives: Although many platforms restrict offering incentives for reviews, you can encourage reviews more generally by creating loyalty programs where customers earn points for actions, including writing reviews. But again, be careful not to fall on the wrong side of marketplace regulations!
  
  

Respond to reviews

• Address negative reviews: Always respond to negative reviews professionally and promptly. Offer solutions to any problems and express your willingness to make things right. This not only can salvage a relationship with an unhappy customer but also shows potential customers that you’re committed to customer satisfaction.
• Thank positive reviewers: Show appreciation for positive reviews, which can encourage those satisfied customers to return and reinforces the positive feedback for others reading reviews.
• Clarify product information: Sometimes reviews contain misunderstandings about the product use or features. Responding to these reviews can help clarify how the product works for other customers.
  
  

Promise and deliver high quality service

Promising and delivering good quality service is fundamental in distinguishing your business from low-cost competitors, especially those from regions like China  with perhaps varying quality service perception.

This focus on service quality not only enhances customer satisfaction but also builds brand loyalty and reputation, which are critical in competitive markets. Here are some ways you can do this:

Offer fast shipping

One thing that is difficult for low cost Chinese sellers to offer is fast shipping. As the products are coming from the other side of the world, and are highly margin sensitive, slow delivery is an area where they’re likely at a disadvantage. 

If you are in a more premium space in the market, make sure that your delivery options are a differentiator. Make it fast, have a generous return policy and ensure you offer a good customer experience.

Invest in staff training and development

• Marketplace-specific training: Train your customer service team on the specific policies, tools, and features of the marketplace platform you are using. Ensure they understand how to navigate the platform's backend, manage orders, handle disputes, and utilize any native communication tools effectively.
• Product expertise: Since direct interaction is limited on marketplaces, ensure your team has in-depth knowledge of your products to provide detailed and accurate responses quickly to customer inquiries.
• Empower quick decisions: Empower your team to make customer-friendly decisions swiftly—such as processing returns or issuing refunds—within the guidelines of the marketplace, which helps in maintaining high ratings and customer satisfaction.
  
  

Leverage technology for enhanced customer support

• Automated responses: Utilize automated response features for common inquiries, which can provide immediate answers to frequently asked questions and free up time for handling more complex issues.
• Integrated CRM: If possible, integrate a CRM system that works with marketplace data to track customer interactions, orders, and preferences. This facilitates a more personalized approach when handling repeat customers or resolving issues.
• Utilize marketplace tools: Take full advantage of any tools provided by the marketplace that aid in managing customer relationships, such as analytics dashboards, feedback systems, or promotional tools that can improve service and visibility.
  
  

Create a strong customer-centric culture

• Align policies with customer expectations: Tailor your return, shipping, and warranty policies to be competitive within the marketplace environment. Make sure these policies are clearly communicated in your listings to avoid misunderstandings and negative reviews.
• Regular performance reviews: Regularly review your customer service interactions and policies based on marketplace performance metrics (like seller ratings, order defect rate, and return rate). Adjust strategies as needed to improve customer satisfaction.
  
  
  

Final words

Navigating the competitive landscape dominated by low-cost Chinese rivals requires a strategy that emphasizes differentiation over price wars. By focusing on enhancing your product listings, leveraging technology for superior customer service, and cultivating a strong brand reputation through quality and customer satisfaction, you can thrive against low-price competition.