Are you selling in a Demand Constraint or Supply Constraint market? Most sellers probably don’t even know. Let’s find out.
I have a minor degree in Economics while getting my MBA degree and so I have a good understanding of supply and demand and how important it is to understand this for your eCommerce business. However, I never heard the use of these terms in eCommerce until my closed door meetings with eBay executives in early 2000 when they started showing me market opportunities called “Supply Constraint” categories. This process really opened my eyes on how “The big fish” view market opportunities and therefore how us smaller fish should view them as well. Let me show you what I mean.
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As an eCommerce consultant / coach, I spend a great deal of time helping sellers find their market opportunity and this is one topic we discuss when doing the market research on supply and demand.
Supply Constraint = Short Market
Demand Constraint = Surplus Market
Your sales strategy and product sourcing strategy will be totally different if you’re selling in a supply constraint category versus if you’re selling in a demand constraint category. So knowing and understanding the difference is step one. Once you know which market situation you’re in, it’s easier to focus on your strengths, find and source the products that will do well in this situation and get the results you’re looking for.
Unfortunately, I find many sellers don’t take the time to understand this simple but powerful concept and later wonder why their sales are slow or they can’t beat the competition. Better understanding supply constraint and demand constraint will help them better understand why.
Cheers to selling smarter!
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