What affects demand in online commerce

Imagine that one product in a shop sells dozens of units every day, while another is not in demand. The price is reasonable, and the photo is appealing, but why is this the case? It is a matter of demand. Specialists at Step Link Platform Inc. discussed the types of demand and its specifics in online commerce.

What is demand? It is the relationship between the price of a product and the quantity that consumers are willing to purchase within a certain period of time. If the price rises, fewer people are willing to buy. If it falls, on the contrary, more people are willing to buy. When analysing demand, it is important to consider not only the desire to buy, but also the real ability of customers to do so at a specific price level. Demand changes, it can be seasonal, hidden, excessive or disappear altogether. To better navigate sales, marketing uses a conditional typology of demand.

Main types of demand

Zero or negative. People are not interested in the product or even avoid it. Reasons: fear, mistrust or lack of information. What to do? Build trust and provide guarantees.

Hidden demand. People have a problem, but they don't know there is a solution. What to do? Don't wait for a request, show them the solution. This is how new product categories are created.

Growing demand. People already know about the product and are actively buying it. Demand is growing very quickly. What to do? Scale up, strengthen logistics and maintain the quality of the product and delivery.

Irregular demand. It fluctuates depending on the season or events. For example, gifts in December, school supplies in August. What to do? Be prepared for peaks, plan your inventory so you don't get stuck with goods after the rush.

Excess demand. There are more people who want to buy than there are goods available. For example, a limited edition shoe collection: there are 100 pairs available, but 1,000 people want to buy them. What to do? Increase the price, limit the quantity per customer. But be careful, if customers can't buy anything, they will leave.

Declining demand. Sales are gradually falling. Reasons: obsolescence of the product, new fashion or technology. Example: an old smartphone model. What to do? Sell off the remaining stock through promotions or bundles, while promoting the new model.

It is important to correctly diagnose what the current demand for your product is. This will help you make decisions based on the real market situation, rather than at random.

Demand in online commerce

Many economists once believed that people shop rationally, compare prices, look for bargains, and make informed decisions. But practice shows something completely different. People often act impulsively, trust the recommendations of others, and are tempted by sales, according to experts at the Step Link dropshipping platform. Demand in online commerce operates according to its own rules. It can grow overnight due to a viral video and disappear just as quickly. Influencers, trends, and the information background can raise or destroy demand in just a few hours. Demand is not a single entity. It is influenced by dozens of factors, from the economy and trends to the price and convenience of the website itself. Let's take a look at what exactly shapes online demand.

Price and economic situation. Price is the first thing an online buyer looks at. It is very easy to compare prices online, unlike offline. Marketplaces, aggregators, and Google Shopping provide this opportunity. But even if prices remain unchanged, demand may fall due to inflation or a decline in people's incomes. What should you do? Don't always lower the price. Sometimes it's better to offer a cheaper alternative or emphasise the benefits of the purchase.

Tastes, trends, and consumer culture. Demand is influenced not only by money, but also by cultural and social changes. Examples: the popularity of reusable packaging due to the trend towards environmentalism, or the growing interest in local brands due to patriotism. Trends are formed on social media and in the media, but they even influence basic goods.

Competition and substitutes. Online, customers only need one click to go to your competitors. There are no barriers, prices are visible instantly, and there are countless substitutes. Therefore, if you sell the same thing as dozens of other shops, you will have to compete with service, delivery, or a unique selling proposition.

Convenience and service. Even the best price and advertising will not help if your website is slow or the payment process is complicated and confusing. Typical reasons for losing customers include a slow website, inconvenient navigation, and few delivery or payment options. Users will go to competitors who offer all of these things.

External events. This factor is unpredictable but very powerful, according to Step Link managers. For example, during the coronavirus pandemic, there was high demand for protective masks and household goods. This is not marketing, it is a reaction to reality.

Demand is a living system. It is constantly changing along with people, their money, emotions, and circumstances. It is formed at the intersection of many forces, each of which has its own significance.