Commodity goods or commodities are goods or services that can be purchased for various prices without any difference in quality. Commodities are, for example, consumer (home) electronics such as a specific cell phone, a specific car with a specific equipment, and so on.
From the customers’ point of view, the offer of various traders is 100% comparable, their goods being interchangeable. Therefore, the competition takes place at the level of price, offered ancillary services, loyalty programs and the like. The selling behavior of commodity traders can be observed on the example of e-shops where completely identical products are sold. Nonetheless, the pricing policy of selling commodity goods can be addressed in many different ways.
While selling commodity goods
When offering commodities, you can compete with price, supplementary services, or by means of building customer loyalty (through loyalty program etc.). The two most common price strategies for selling commodity goods are:
- Lowest price - can be offset by higher sales volume or by cross selling (selling other products from the offer as well) that is triggered once the customer’s attention is attracted
- Higher price than competition - this pricing strategy require a better offer of ancillary services or some sort of exclusivity (such as an exclusive sales channel)
While buying commodity goods
Unlike other products, when it comes to commodities, the purchasing decision can be made uniquely on a price basis. The buyer specifies the goods using some quality parameters. They can also define the goods by means of some other measurable properties (eg. steel grade + thread size for mothers, cement strength class, etc.) or by means of the product number (Part number part number} which is the unique identifier of an exact product, eg. ME433CS/A - Apple S5 silver, 16GB) or another unambiguous identifier, such as EAN (in Europe).